Android at CES 2012: The Unspoken Reality

Huge Support for Google's Platform Could Benefit Microsoft

 

As predicted, this year's Consumer Electronics Show (CES) is dominated by Android. Google's platform can be seen on the lion's share of smartphones and tablets, not to mention TVs and other connected devices. It's a clear illustration of Android's dominance and the breadth of support from partners and developers.

At least, that's how it appears. Few can question what Google has achieved and Android's phenomenal position, particularly in smartphones. But the operating system faces fundamental challenges that the hordes at CES can't see or, more likely, choose to ignore.

This isn't the first time CCS Insight has pointed out that Android is unsustainable in its current form. Scope for differentiation is limited and essentially disappearing as a combination of the pressure to get products on the market and Google's need for control restricts manufacturers' ability to set their products apart from other Android-powered devices.

A lucky few, such as Samsung, Sony and HTC, have the assets or financial means to invest in their own services, but this is a risky and capital-intensive approach, as Nokia can testify. And the likes of Facebook, Amazon and Google are formidable competitors when it comes to services.

But more importantly, the economics don't add up for the majority of companies using Android. Few are competing profitably, with Samsung and HTC the enviable exceptions. Add to this Android's accessibility and the burgeoning number of licensees, and falling prices become inevitable. Good for Google, but bad for manufacturers.

The backdrop to CES in this context is HTC's challenges in the fourth quarter of 2011. HTC is by no means on the ropes, but its financial results do reveal the fundamental problem for all Android manufacturers. The appearance of Peter Chou, HTC's CEO, alongside Steve Ballmer to reveal the Windows Phone-powered Titan 2 is little surprise in light of these challenges.

If these dynamics aren't enough of a problem, intellectual property disputes are further rocking the good ship Android. They'll play out for some time to come, but could well be the final straw if royalties and licence costs further strain gross margins.

Google intends to buy Motorola Mobility to strengthen its patent position. But given the predicament of many of its partners, it is surely also an insurance policy that will allow it to push its own agenda should support for Android begin to wane.

Android won't see a sudden and dramatic decline in market share. However, it's hard to see how it can continue to accommodate such a vast number of manufacturers when the economics favour a precious few. There are of course few alternatives, but the scenario certainly validates Stephen Elop's case for a "third ecosystem".

As counterintuitive as it seems, the sheer weight of support for Android at CES could be more to Microsoft's long-term advantage than Google's.

This entry was posted on January 12th, 2012 and is filed under Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Posted By Geoff Blaber On January 12th, 2012


Comments
Jonas
- 2012-01-12 at 09:07
I can not see how manufacturers can differentiate more with Windows phone than with Android. There is no benefit for consumer in having many different OSs. Differentiation needs to happen in HW and services (not trivial but it is the only way IMHO).
WP
- 2012-01-16 at 09:15
Is this paid by MSFT? You have totally forgotten the bigger picture. As was seen in CES whole home is becoming connected and frankly after game consoles move to handsets MSFT is left with phones and PC/laptops whilst Android is used everywhere. how is that in benefit of MSFT? if I were them I would be really worried...
Leave a Comment

Hot News

Team Tweets

CCS Insight
Once the leader in mobile technology, Europe has seen its role in the global wireless market diminish: https://t.co/zkDB1e7rCW
Follow CCS Insight
Shaun Collins
Connected trainers from @underarmour is an interesting & different strategy to @Nike pushing apps / wearables. https://t.co/Ie1v4Z2in0
Follow Shaun
Ben Wood
Forefront of fashion (!). Maybe not... https://t.co/ei0eq5ZL5q
Follow Ben
Martin Garner
@google for work overhauled: Google Cloud more like an IT co., parallels with @Microsoft for productivity/analytics. https://t.co/AbiSLsKppQ
Follow Martin
Geoff Blaber
RT @CCSInsight: Eyes on the road: how connected cars from Audi, BMW and Daimler will detect road hazards and share traffic data: https://t.…
Follow Geoff
Nicholas McQuire
Wow some cages rattling inside #LinkedIn at mo> #Salesforce tries to block #Microsoft's LinkedIn $26.2bn buy via EU https://t.co/tQt3xrSFTb
Follow Nicholas
Paolo Pescatore
#UBBF2016: Great to see lots on #UBB #video #4K #VR #IoT but surprised NOT to see more on #games; big driver of traffic @Huawei @FixedHuawei
Follow Paolo
Marina Koytcheva
Something to think about. UK economy can't claim big exposure to tech. Political events from last month don't help https://t.co/ctO3y9zQvT
Follow Marina
Kester Mann
RT @benwood: Telegraph reports Telefonica lining up @O2 for a £10 billion IPO. Little surprise after Three UK deal fell through. https://t.…
Follow Kester
George Jijiashvili
@OverclockersUK you guys are cute. https://t.co/lhCwGNtdGQ
Follow George
Rebecca Morley
@PPPAcademy is this for all parents?
Follow Rebecca
Katie Taylor
A future of mobile-centric healthcare could save lives https://t.co/x1phTH7f4v
Follow Katie

Recent Blog Posts

Blog Post
European Mobile Crisis Deepens Ericsson Uncertainty Creates Unknowns for Wireless Europe F... Read more
Blog Post
Sensor Mesh Here Launches a Real-Time, Crowd-Sourced Sensor Sharing Netw... Read more
Blog Post
Huawei's "Make in India" Initiative Huawei to Begin Manufacturing Smartphones in India Back in ... Read more
More blog

Latest Company News

Blog Post
The Mobile Phone Market Has Peaked   Shipments hit a plateau of about 2 billion units a year ... Read more
More news