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Open always wins

ABI Research estimates that AOSP (or forked Android) is the fastest growing mobile operating system with a total share of units shipped of about 20%. This is not surprising considering that most Chinese vendors don’t include standard Android into their products. Indeed the current leader in China, Xiaomi has its own take on Android and includes a unique UI and set of services. This is also not a new pattern, Amazon’s fork of Android has been in development for many years and powers the second most used tablet in the US.

If one looks at the volumes of smartphones shipped by vendor, the most rapidly growing (Huawei, Lenovo, Xiaomi, ZTE, Coolpad and “others”) are likely to be using forked versions of Android.

Screen Shot 2014-08-07 at 7.06.09 PM

The reasons for this are many: a reluctance to deal with Google’s obligations,  Microsoft’s IP licensing costs[1] , potential litigation, politics (including bans on Google services in certain markets), etc. But the most likely reason is flexibility. Vendors competing on price and localization are looking to move quickly against each other and can’t wait for blessings from above. Belonging to some “Alliance” and all that it entails is just too much to ask for companies that are, so to say, delicate.

The result is that the “more open” version of Android is beginning to threaten the “less open” version of Android. China is already lost to OHA but India where penetration is still very low is up for grabs. Into this fray Google launched “One” a more low-end friendly version of sanctioned Android, hoping to retain opportunity.

The value of a singular Android version is not just being Google-friendly but also being better managed and more BOM-friendly. Google is trying to solve the control issue with ease of use, but still retaining control There will be alternatives however which are both easy and “open”[2]. It seems that there is an opportunity for a hardware-independent vendor to take AOSP and provide a complete solution to local phone brands so they don’t need to expend efforts on integration. A non-Google One, so to speak.

Why it’s likely is that openness in software makes sense when parts of the stack become commoditized. Google took advantage of the commoditization of operating systems (i.e. Linux) to deliver non-open services on top. However, it’s inevitable that some of those very services will also be commoditized and therefore that the portions of the stack which sustain Google will be forked as well.

Notes:
  1. which even Samsung seems to be eschewing []
  2. or Free as in speech []
  • JDSoCal

    Why do you use all of these acronyms without defining them, at least in a footnote?

    • r.d

      AOSP – Android Open Source Project
      BOM – Bill of Material
      OHA – Open Handset Alliance
      UI – User Interface
      IP – Intellectual Property
      ZTE – Zhongxing Telecommunication Equipment

      • JDSoCal

        Thanks, already Googled them, but it is standard writing style in most Western countries to define acronyms the first time one uses them. It is annoying and pedantic not to do so.

      • azazello

        What is standard is the _introduction_ of acronyms in technical, academic and scientific writing where regularly recurring phrases are bountiful and instead of tiresomely repeating the phrase the neo-acronym is placed in parentheses after the first instance (thereby _defining_ it) and then, subsequently, only the acronym will appear. Nobody, should spell out acronyms that are considered standard in technical writing as it is patronizing.

        QED

      • Tatil_S

        I agree with all of your list except ZTE. That is the name of the company and its consumer facing business is branded as ZTE.

        Nobody refers to IBM as “International Business Machines (IBM)” or ESPN as “Entertainment and Sports Programming Network (ESPN)” in any article either. The historical background behind the abbreviation is now an amusing footnote. The corporate identity and the brand starts and ends with those few letters now.

      • normm

        I thought he probably meant

        BOM – Business Organization and Management

        since his phrase was, “The value of a singular Android version is not just being Google-friendly but also being better managed and more BOM-friendly.” If so he should have defined it, since this acronym isn’t used in the US or Europe. It’s not even listed on the Wikipedia page disambiguating BOM (as of this writing).

  • stefnagel

    The fork forked. Sweet.

  • NavalGilles

    All those vendors you mention, outside of China are shipping Google android. The growth of AOSP outside of china is minuscule. Taking China and using it as a basis for analysis for the rest of the smartphone market is foolish. China is a very special place.

    • Flexxer

      Amazon forked Android in the U.S., Samsung is taking a long, hard look at Tizen, no-one else makes any real money with OHA hardware. The race to the bottom is in full swing.

      • NavalGilles

        Samsung is not taking a long look at forking android. Samsung is trying to diverse its options, with Tizen. Samsung forking android means that falling profit growth of theirs disappears as they can kiss goodbye to Europe and the Americas. Samsung forking android is not a reality.

      • Flexxer

        So how do you suggest Samsung can differentiate from the other OHA vendors, now that they are squeezed from the Top (Apple) *and* the bottom (cheaper Android and even Windows handsets)? They can either try to take their smartphone destiny in their own hands or watch their profits vanish.

      • obarthelemy

        Or they can… make better devices ?

    • http://sumocat.blogspot.com Sumocat

      Xiaomi doesn’t ship Google Android, and they’ve expanded into India and the South Pacific with further plans for major markets like Russia, Turkey, Brazil and Mexico. The pressure they exert on competitors – they’ve already surpassed ZTE and are primed to overtake Huawei and Lenovo – could push some to reconsider the pros and cons of being OHA members. Frankly, their peers should already be worried. The only thing holding Xiaomi back at this point is production capacity.

      • NavalGilles

        You’re quite wrong. Outside of China all Xiaomi ships google android with google apps and google play store.

      • Flexxer

        Then give us a link, please, to a store where we can buy a Xiaomi handset with Google apps and services pre-installed.

      • NavalGilles

        Every Xiaomi phone sold outside of china is sold is google apps.

        Xioami is what google calls “compatible fork” same as cyanmod. Meaning they can recieve google apps and play store form google. You dont have to be part of the OHA. OHA alliance means nothing under androids new boss. Under rubin it was a big deal. the new important factor is being google services compatible, which all major chinese oems are. Which is why Chinese OEMS, all of them, Xiaomi sell, google android outside of china, from idea to brazil, to malaysia.

        http://thenextweb.com/gadgets/2014/03/06/xiaomi-mi-3-review-an-android-smartphone-that-delivers-high-end-performance-at-a-mid-range-price/

        http://indiatoday.intoday.in/story/xiaomi-mi-3-review-the-game-changer/1/373750.html

        if you want the Mi3 go order it on fliptcart and it comes littered with google apps. Fliptcart is an the Indian equivalent of Amazon.

      • http://sumocat.blogspot.com Sumocat

        By this reckoning, every version of Android that can install and use Google services is “Google Android,” which means even Amazon’s Fire OS is “Google Android.”
        http://www.gizmag.com/how-to-install-google-apps-kindle-fire-hd-hdx/30736/
        If that’s how you want to count it, okay, as long as it’s not broken to the point of incompatibility, I guess every version of Android is “Google Android.”

      • NavalGilles

        Amazon android is not a “compatible fork” its a full fork.
        Google android is android phones that come with google preloaded (has google’s speicial apis). Therefore amazon android is not Google android.

        Xiaomi gets approval from google, so does every other chinise, indian, brazilian oem that have google preinstalled.

        amazon android can’t be google andriod as is does not have google play services APIs. Xiaomi outisde of china does.

      • http://sumocat.blogspot.com Sumocat

        Really? Well, you described Xiaomi as a “‘compatible fork’ same as cyanmod” (sic) meaning it can “recieve google apps” (sic) and yet the CyanogenMod wiki says “Due to licensing restrictions, [Google apps] cannot come pre-installed with CyanogenMod and must be installed separately.”
        http://wiki.cyanogenmod.org/w/Google_Apps
        Technically though, I am the one who inferred you meant CyanogenMod instead of “cyanmod,” so I could be at fault here. I have no idea if a “cyanmod” OS ships with Google apps. That said, the only requirement you previously described for “Google Android” was that it be “google services compatible.” I apologize for not reading “compatible” as “preloaded.”

      • NavalGilles

        Let me make it simpler.

        Google android= android with google apps and app store preinstalled

        Google can give its apps to any OEM, OEM needs only ask for permission and has to pass a certification test. OHA members and non OHA members must pass this test. When you “pass” (agree to showcase google apps and have a google account and google play stote ) google gives you its closed source APIs.

        Having google provide you with services to run android is easier than building your own. And surviving without google apps and app store outside of China is hard work. Hence Chinese OEMS going to google for that certification.

        Cynagenmod went is compatible with google apps and app store. Which is why both the one± and oppo phones which run cyanagenmod have google preloaded.

      • http://sumocat.blogspot.com Sumocat

        I’ve been running off outdated data it seems. The Android blogs have been insistent that Google apps are exclusive to OHA members.
        http://www.droid-life.com/2012/10/13/understanding-the-difference-between-aosp-and-the-open-handset-alliance-opinion/
        Yet there is absolutely no mention of OHA in the AOSP compatibility FAQ.
        https://source.android.com/faqs.html#compatibility
        I had assumed OHA was unofficially dissolved anyway, but now it seems official. Regardless, as long as they don’t break compatibility, any vendor offering an AOSP fork can apply to preinstall Google services, which then makes it “Google Android.” Of course, that also means AOSP and Google Android is not an either/or proposition per your initial argument.

      • NavalGilles

        China is lost to google. So what happens in China google can’t control. You can do AOSP outside of China all you want, but if you fork android outside of china, google uses its carrot and stick tools with google apps and google app store. Xioami with google apps outside of China is a lot easier sell then xiaomi without google apps.

      • Tatil_S

        That is my understanding as well. If an OEM sells forked Android only in China, they can still be Google friendly everywhere else. I believe Samsung sells non-Google Android handsets in China without affecting its relationship with Google.

      • http://sumocat.blogspot.com Sumocat

        First, only Open Handset Alliance (OHA) members can ship Google Android with Google services, and Xiaomi has never been a member.
        http://www.openhandsetalliance.com/oha_members.html
        Second, OHA members are not allowed to fork Android, which Xiaomi clearly does.
        http://en.wikipedia.org/wiki/MIUI
        http://en.miui.com/
        Unless Google granted secret OHA membership and an exclusive waiver to them, Xiaomi cannot ship both Google Android and their MIUI fork. At one point, Xiaomi did include Google services in MIUI (probably not legally), but MIUI was always an AOSP fork, not Google Android. Therefore, you are wrong.

      • handleym

        “The only thing holding Xiaomi back at this point is production capacity.”

        Xiaomi is expanding very aggressively into the part of the world that has weak IP laws. Their business model (so far at least) doesn’t really allow them to jump from India or Vanuatu to Japan, Europe, the US — the countries with real money.

        Mexico will be an interesting case. I don’t know enough about their law or business environment to predict how Apple will respond.

        But I’m sure Apple has to have some red lines that they won’t allow to be crossed, and even if the response is not legal, it may consist of something like an ad campaign aggressively mocking Xiaomi and those who buy it — something like “You can buy the good stuff and show the world you have taste — or you can show the world you’re a clueless fool”.

        Maybe ad campaign in a bar. Classy girl with an iPhone starts talking to a guy dressed in a suit. Things are going well till he pulls out his Xiaomi. She looks disgusted and tells him she has no time for people who are fakes. Cut to a set of screen shots from the Xiaomi website each paired with the Apple equivalent.

      • samsungad

        This sounds like a Samsung ad.

  • stefnagel

    Open wins. But what? Open a golf club to anyone and you will get lots of … not golfers necessarily. Gardners. Picnickers. Ya, know. Users.

  • deemery

    I’m not convinced “open always wins” and I point to the continued success of Apple as the counter-example. ‘open’ provides substantial advantages in a commodity marketplace, but ‘closed’ can provide enough advantages (superior user experience, more security, etc) to outweigh the ‘open advantage’. (p.s. this is a great read on the topic of modularity and ‘open': “Design Rules, Vol. 1: The Power of Modularity”, by Baldwin and Clark)

    • http://www.jlist.com Peter Payne

      I think the “Open always wins” title was intended to be ironic.

  • Naren

    “more BOM-friendly” – specifically MediaTek off-the-shelf chipset friendly. Let’s see who reaches there first – CyanogenMod or AndroidOne

  • http://sumocat.blogspot.com Sumocat

    Following my discussion with NavalGilles and further research into the matter, I have determined the terminology used in this topic is erroneous and based on outdated knowledge.

    First, a basic point: the terms “standard Android” and “forked Android” are used incorrectly. Android refers to the operating system (OS) under the care of Android Open Source Project (AOSP). There are many platforms that are built on the OS, but the underlying OS remains the same unless its compatibility with Android SDK and NDK is altered. If and only if that compatibility is altered is the product not considered “Android”.
    https://source.android.com/faqs.html#what-does-compatibility-mean

    This means that Xiaomi’s MIUI and even Amazon’s Fire OS are still Android because they are compatible with apps written with Android SDK/NDK. This is regardless of whether Google Mobile Services (GMS) are preinstalled on the device. That difference is determined by the platform built on top of the OS. Android is the OS, not the platform.

    The platform war is the heart of the post topic. Xiaomi’s MIUI and Amazon’s Fire OS are both platforms. So are Google’s GMS and Samsung’s suite of services (S Voice, Samsung apps, etc.). Inarguably, GMS is the most complete of the Android platforms, but that doesn’t mean the others aren’t platforms. The post splits the camps into “more open” and “less open” versions of Android, a false divide, when it should be referring to Google’s GMS platform vs. the non-GMS platforms.

    Also note the references to Open Handset Alliance (OHA) are outdated as OHA membership is apparently no longer a requirement to run GMS. Any vendor with a device compatible with apps written with Android SDK/NDK may apply for Google Play/GMS. Non-OHA members Xiaomi and OnePlus both ship phones with Google Play preinstalled. (Sorry, while there is proof the requirement was lifted, I have found no reports stating this.)
    https://source.android.com/faqs.html#what-is-the-role-of-google-play-in-compatibility
    http://gigaom.com/2014/04/23/the-oneplus-one-smartphone-runs-cyanogenmod-will-cost-299/
    http://gadgets.ndtv.com/mobiles/reviews/xiaomi-mi-3-first-impressions-559456

    This also means the graph showing smartphone shipments is mostly irrelevant. It shows vendors, but not platforms. We know the OHA members were shipping with GMS (at least until recently), but we don’t know which non-OHA members started shipping with GMS, when they started, and what the split was. Xiaomi ships with and without GMS. The graph doesn’t show what the split is.

    None of this means I disagree with the core premise of the post. In fact, Google’s essential dissolution of OHA signals their recognition that they need to expand their platform more than maintain the facade of an Android alliance. However, I wish to make clear that the language being used is based on old data and that I capitulate to the updated knowledge of NavalGilles.

    • Jimmy O’Neil

      The term forked means the code base is forked. This just means the code is branched and not the mainline google produced stuff. Of course you can use the same SDK but only until the fork.

  • handleym

    ‘The result is that the “more open” version of Android is beginning to threaten the “less open” version of Android.’

    The one threatens the other in the same way that a hyper-deadly virus mutation threatens the less deadly original, by killing off the entire host population. And then what?
    This collection of non-Google Android vendors may ship a lot of units but do ANY of them (even Xiaomi) make profit? None of them seem to have a realistic plan for changing that. And none of them appears to have the bench (in part because they have no profits) to create anything sufficiently innovative to actually result in profit.

    Where does this end (for Google as well as the Chinese companies)? I’ve no idea. No comparable situation comes to mind. Commodity markets, of course, are nothing new. But commodity markets where marginal cost is (or at least should be) a very poor predictor of manufacturing cost (because of a substantial front-loading of R&D amortized against every device shipped) of this aggressiveness are something we have not seen before.

    • charly

      Every one of them see it as a way to make profit, at least for the bosses of the companies. There is also the simple fact that it is not the phone makers that need to invest a lot of money but the SoC makers. They are also the ones that make Android run on their hardware and they are the ones you have to ask are they making money?

    • obarthelemy

      “commodity markets […] of this aggressiveness are something we have not seen before.”
      Wintel PC market ?

      Also, the “virus” moniker seems iffy: Android is fulfilling the needs of 85% of the smartphone market, and generating billions in profits for the OEMs that do it right ?

      • twilightmoon

        The “billions in profits” for “OEMs” seems very sketchy. If we remove Samsung from the equation, which already seems to have seen a decline in profits, can you please list a vendor or a combination of vendors that are seeing “billions” (which to make it plural would require a combined profit of over 2 billion)?

        From every source I have ever read, there’s iPhone and Samsung making over 100% of the profits and everyone else (either making negative profits or breaking even at best). Please provide a credible source for any response you may care to offer.

      • obarthelemy

        Major OEMS making profits in recent quarters:
        Samsung, HTC (that’s recent, but they also made a killing a while back), Asus, Motorola, Lenovo, Huawei, LG, Xiaomi, ZTE
        Not making profit: Sony
        Unknown: the gaggle of 2nd and 3rd-tier OEMs, who are probably not in the business for art’s sake though.

        Since you didn’t provide any credible source with your allegations either, you’ll have to look mine up yourself, too. Turnaround is fair play.

      • Jimmy O’Neil

        AppleInsider in May : Apple & Samsung = 106% profits.

        http://appleinsider.com/articles/14/05/08/apple-samsung-combine-for-106-of-handset-profits-as-competitors-continue-to-bleed-cash

        Insane maths but they mean that the rest add up to losses = 6% of total revenue.

      • charly

        If you read the article you would see that they didn’t include the Chinese profits/loses so you are literally talking about every company if you also name Nokia, Blackberry & Motorola

      • Jimmy O’Neil

        They say:

        “The biggest loser in the quarter was Nokia, which was estimated to have had a net impact of -3 percent on industry profits. Also losing money were BlackBerry and Motorola, both of which accounted for -1 percent.”

        Refuting some of the positions here. Are the Chinese making money? I can’t imagine the margins are too high.

      • obarthelemy

        That number is striking, interesting, actually mildly funny… and deeply misleading, when people without a clue or with a very partisan agenda misconstrue/mispresent it as meaning “only Apple and Samsung make money, all other Android OEMs are losing money”.

        First, the figure includes zombie ecosystems (RIM, Windows), which are rather irrelevant to the Android (or iOS vs Android) discussion, though they bump up the 106% nicely for a more click-worthy headline.
        Second, that figure does not include Huawei nor Lenovo… who are only 2 of the top 5 smartphone OEMs wwide (and are *not* AOSP-only OEMs, contrary to what this present blog would try to have you believe)
        Third, those two profitable OEMs are replaced by other, money-losing of course, OEMs. Not even the next biggest ones, just some money-losing ones.
        Third, that figure does not include any of the other Android OEMs… who represent only 40% of the smartphone market, ie 4x Apple.

        This is just ridiculously silly. Amazed people don’t even realize how fake it is.

      • Jimmy O’Neil

        I’m amazed you don’t have any links yet. That’s not just an Apple insider article but links to an external report. It’s about all handset OSes, not just android vs iOS ( why wouldn’t it include others). In any case if you have links to the vast profits made by Lenovo or the 40% others please post em.

      • hmmm

        Motorola Solutions is not Motorola Mobility, etc

  • obarthelemy

    1- AOSP is for China, GMS is for ROW. That’s it. No AOSP-OEM vs GMS-OEM, only one AOSP market vs GMS ROW. Huawei, Lenovo et al. do have the Google goodies on the devices they sell outside China. For example, my former Huawei Ascend Mate, purchased in Europe last year, had the PlayStore from the get-go. My newer Huawei X1, purchased in China last month, didn’t. (funnily enough, Google’s PlayStore for the X1 is available for download in Huawei’s AppStore…)

    2- Google’s absence from China is an issue indeed, they’re obviously missing out on a huge market. The AOSP fix isn’t a bad idea though: OEMs get to recoup their investment in both AOSP and GMS markets. And if the Playstore’s availabilty on Huawei’s AppStore tells us anything, it’s that Google is at least looking the other way, maybe even helping.

    3- Maybe a few other OEMs at the very low end go the AOSP route in non-China markets to save on the GMS certification costs (a few $k) and mostly on the BOM (a few $/device: GPS/GLONASS, BT, accelerometer, compass…). That’s probably anecdotal, and on the wane with Google’s own $100 platform coming up.

    • cynical

      “for ethics and political reasons that do Google honor”

      Usually you seem more cynical than this face value reading suggests.

      • obarthelemy

        I know… Do *you* have any other explanation as to why Google left when they did ?

      • obarthelemy

        Also, I’m surprised I haven’t seen an analysis of Google’s policies to make the basic OS FOSS and to make taking one’s data out of Google’s servers from the perspective of the innovator’s dilemma.

  • praxis22

    Good news for Android and the ecosystem then, more users = a bigger market for apps, not to mention pushing Google to create a better base version of Android, even where they won’t include the store, etc. The pie chart on the link above is fairly amazing. Android dwarfs IOS, and Windows mobile is a rounding error. For users this strikes me as good, it’s even good for Google at the margins I imagine.

    The way I see it, if Google makes a localised version of Android, which bundles most of the revenue generating stuff (metrics, location, search) into the base OS, for most of the world, (possibly ex China) Then most handset makers will build on top of it, in an attempt to differentiate, rather than spend too much time trying to eldlessly fork or fiddle. Especially if other telco’s or handset makers are getting to market quicker. India alone is a massive opportunity. There is no competition for maps, (and the location rich motherlode) they could use that as a stalking horse for access.

    On the ground I imagine this is a play for shelf space. Everyone sells the iphone, you only have to ask, so much so that they never put them on display. Not in Germany, the UK & France anyway. As such it’s all about what’s new. Going into a retailer or a phone shop these days is an excercise in see when new Android phones there are.

    Android, and the phones it runs on are a commodity, in a time when scarcity is giving way to abundnance that seems like the best place to be.