Duopoly Discouragement

Who Can Challenge This Two-Party System?

OS_rivals_lBy CCS Insight’s estimates, the top-two smartphone platforms had more than 96% global market share during 2014 (the top three combined for more than 99%). The market for mobile operating systems has never been so concentrated, despite a long series of attempts by challengers to break into a business currently dominated by Apple and Google.

The lack of success in establishing a major competitor to Android and iOS demonstrates the difficulty in developing and maintaining an operating system and app environment. Even the Chinese players that were expected to gain scale through a home-field advantage and government encouragement have struggled to break their dependence from Western players, particularly Google.

Alibaba and Baidu are among major Chinese technology companies having worked on a smartphone platform. However, OS success has eluded the rivals despite some encouraging early signs. Alibaba’s long-term intentions for its Yun OS have become vague, and Baidu is expected to stop developing its Yi mobile platform altogether.

It should be noted that Chinese brands are also being challenged by Microsoft’s Windows smartphone platform. CCS Insight saw a number of new “no-name” Chinese Windows phones at Mobile World Congress earlier this month. The brands are unknown, but Microsoft is gaining mindshare among handset makers.

The lack of traction aside, CCS Insight believes it’s too early to discount the efforts of Chinese players in establishing an exclusive platform. Alibaba appears to best understand that OS opportunities also lie in the connected home, where there are fewer established standards, and developing such a platform could be the best home-field advantage for companies.

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