Google & Android – Closed source pt. II

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Google is inching closer and closer to taking Android proprietary. 

• It looks very much as if Google’s Nexus devices this year will show the first signs of a badly needed move to take Android from open source and make it proprietary like iOS and Windows.
• Google typically updates its Nexus line of products in the autumn to coincide with the availability of the latest version of Android (N).
• This has been done to demonstrate to handset makers what it thinks the ideal implementation of Google Android should look like.
• To date, the Nexus project has produced pretty good devices but with tiny volumes that have been largely ignored by the handset industry.
• Google has already said that it intends to become more opinionated about the design of phones which to me is the first step in accelerating a trend that is been ongoing for three years.
• Google Mobile Services (GMS) is a proprietary piece of software that contains all of Google’s ecosystem and sits on top of the open source Android OS (AOSP).
• For the last three years Google has been gradually migrating functionality from AOSP into GMS because Google can prevent fragmentation in GMS as well as distribute updates directly to users.
• While, this has enabled some improvement in the Android user experience, the AOSP is more fragmented than ever, with most handsets never being updated resulting in a poorer user experience for users driving lower usage and loyalty.
• It is of paramount importance that Google’s fixes these problems because if they continue, revenue generation from Android devices will continue to substantially undershoot its potential.
• I have long been of the opinion that the only option for Google to fix this is to take the entirety of Android proprietary and thereby prevent fragmentation in future versions of its ecosystem devices as well as take full control of the updates.
• The net result should be a user experience that is more likely to delight users that has the scope to be much more secure resulting in much needed higher usage and loyalty.
• It looks very much as if the new Google devices that it will launch in the coming weeks will herald a real move in this direction, which I expect to continue with the launch of Android O at Google i/o in May 2017.
• For the creators of Android forks such as Alibaba, Xiaomi, Tencent, Cyanogen and so on, this means that they will also be forced down the same road resulting in a series of proprietary operating systems all based on a common kernel.
• For developers, this will make their lives generally easier as developing apps for Google Android devices will become much easier but more work will be required to also develop for others.
• I continue to believe that this is the only way that Alphabet can reach the market’s expectations in terms of medium term revenue growth for its Google business.
• This is why I see risk in Alphabet’s numbers because the path to making Android proprietary will be difficult as developers will need to be convinced that this for the best.
• Furthermore, Alphabet will also still have to contend with the EU which is already concerned with what it considers to be Alphabet’s monopolistic practices in Android.
• Hence I think that in the best instance, Alphabet’s share price is fair leading me to want to look elsewhere.
• Samsung, Microsoft and Baidu are the places where I would be looking while I am waiting for the right time to look at Facebook.