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
Xiaomi resists the market trends of bigger phone screens and smaller bezels with its new Mi 6 flagship handset: https://t.co/w4oYNPd2yO
Follow CCS Insight
Shaun Collins
RT @kestermann: Orange the latest telco to launch personal assistant. CEO @srichard introduces and demonstrates #Djingo on stage. #ShowHello
Follow Shaun
Ben Wood
RT @nickmcquire: Half of UK workers "relaxed" and positive on #workplace #AI as a means to improve jobs, creativity & flexibility https://t…
Follow Ben
Martin Garner
@amazon launches DIY subscriptions service marketplace - interesting move with high potential for disruption. https://t.co/o6WxjfpYjv
Follow Martin
Geoff Blaber
RT @Mikel_Jollett: TRUMP: The protesters are paid. These marches are small. Well, here's Chicago today: https://t.co/iyfVfmFy8O
Follow Geoff
Marina Koytcheva
@nickmcquire @benwood @facebook @geoffblaber @martin_garner @shauncollins @George_CCS Don't judge too fast, dummy t… https://t.co/eokzYz2EdN
Follow Marina
Nicholas McQuire
Half of UK workers "relaxed" and positive on #workplace #AI as a means to improve jobs, creativity & flexibility https://t.co/E9kduUhFxL
Follow Nicholas
Paolo Pescatore
#NABShow: Time for ShowStoppers. One of my highlights of any show https://t.co/myJSTCSEJ1
Follow Paolo
Kester Mann
Just published – latest @CCSInsight Hotline provides an in-depth assessment of progress, achievements and challenge… https://t.co/oTpd8PLpg9
Follow Kester
George Jijiashvili
RT @benwood: Huge potential for VR beyond games. Smart move by @unity3d to move in this direction. https://t.co/OZSuFtG0M0
Follow George
Katie Taylor
Working on a new study on @SketchBookPro with the @AdonitNews Jot Touch stylus https://t.co/4m2Q9v0eUl
Follow Katie

Recent Blog Posts

Blog Post
Miles of Light Verizon to Buy Miles of Fibre for Fixed-Line and Wireless Se... Read more
Blog Post
Xiaomi Didn't Get the Big Device Memo Reveals Its New Mi 6 Flagship Phone On Wednesday at an even... Read more
Blog Post
Facing Reality Will Users Take to Facebook's New Dual Realities? For Faceb... Read more
More blog

Latest Company News

Blog Post
Sales of 5G Smartphones to Hit 100 Million in 2021 Over 10 billion mobile phones to be shipped in the next five... Read more
More news