I am a known Apple loyalist. From my experiences of using Mac since 1985 (30 years soon) and observing the IT industry closely, I have to say that Google-Android platform will not enjoy its dominance for long. Indeed, I will not be surprised that Android may even die out in the second decade of the 21st century.
1) The market share surge in Android has mainly been due to the DUMPING of pre-2012 Android models that OEM’s could not sell before the public wholesale moved from non-touch-screen phones to touchscreen models. This applies to Android tablets as well.
High end Android phones, as a group, sell not even half in volume vs Apple iPhones and the high end Android tablets have even less success vs iPad even the last 18~24 months.
2) These dirt-cheap tax-write-off models (phones and tablets) and public expectations now force all Android OEM’s to low margins and also create dilemma for the high-end makers.
The known brand names had suffered carnage from initial Android failure. They are now facing the Replacement Cycle for this dirt-cheap tax-write-off Android models (mostly phones) in 2015.
Without equally low pricing and after more education about smartphones and tablets, these Android users will have to make decisions on NOT just on pricing alone come 2015. 2015 will also see improvements in European economy and sustain recovery in US itself. This allows more to move from low end models.
3) The sale of apps on these pre-2012 models has been low as Android 2.3 is not popular among app developers. App developers are aware of this. App developers also have multitude of OEM’s to deal with in app sale lowering the profitability of app sale even more vs Apple iOS apps.
4) The leakage from Android to Apple iPhone-MSFT Windows phones from 2015 will be a certainty. Most Android OEM’s are not making significant profit and their choices will be stark from 2015.
Will they stick with low end Android models or focus on high end offerings?
Will they switch back to MSFT-Windows platform en-mass?
5) Why would known brand OEM’s switch back to MSFT-Windows platform en-mass?
MSFT must have learned the lesson of the chaos and carnage within the Android sphere. The known brands have lost, as a group, tens of billions in cash on Android since 2008. Ironically, it is the Window-pc sales that still prop up their cash flow for most known OEM’s except for Samsung.
MSFT will hence not give Windows license to just any OEM’s the way Google allow Android to be used by anyone. MSFT will know that to protect itself (its own Nokia brand and Surface tablet efforts) and OEM as a whole, it has to be selective. Among the known brand names, this is a safe bet from MSFT.
The known brands will appreciate MSFT as a result while they will be reminded of the carnage-pains that Google-Android have wrought on them.
6) That is, once the CRITICAL MASS market share is reached for Windows mobile devices, the momentum will not be stopped by Google-Android at all.
The brand name OEM’s will then stick with the high end for Android phone-tablet models while they benefit from wider spectrum offerings in the Windows mobile devices with this LIMITED OEM selection policy by MSFT. They know which side of the bread the butter is spread on.
7) Why I am confident with this?
Well, Android presences in the enterprises are limited and alarmingly low after 5 years. It has hardly made a dent against Apple iOS which till 5 years ago was seen as no-no for enterprises. What makes it worse is that OEM’s have tried their hardest in bringing Android to the enterprise without much success. Even Samsung has no luck.
This leaves MSFT Windows mobile devices left for known brand OEM’s to fight against Apple iOS on the enterprise front- high end phones and tablets in general.
With losses in both consumer and enterprise segments in the Android efforts, most known brand OEM’s will abandon Android in not just the low end but also the enterprise segment by 2017 end.
8) The Critical Mass for MSFT Windows mobile devices will reach at the expense of Google-Android. Google, in the meantime, will continue to lose market share in advertising revenues as OEM’s, small and large, fighting to get sales to cover their loss-low margin in hardware.
The critical mass for MSFT Windows once reached means app developers will switch also en-mass to this platform. I am sure many are waiting for this inevitability and save their bullets on Android for the moment.
At the end of the day, Android more than likely will end up as consumer smartphone-tablet offerings. The market share for Android will continue to shrink gradually. The main war will remain between Apple and MSFT Windows from 2017 for a few years.
9) I am sure Steve Jobs, Tim Cook and et la in Apple would have anticipated MSFT march into the mobile devices. Google-Android was a bit of surprise to Apple and its management in 2008.
However, Google has made a mess of Android sphere as Google-OEM’s and the public in general did not understand the mobile device market in its initial stage. This has allowed time for Apple to consolidate.
The strategies of ‘high end’ Apple iOS devices and non-use of OEM have been good in term of cash building for Apple.
10) Apple is now using its cash-flow from iOS to reduce costs across the board.
Apple bought an old semi-conductor plant in Taiwan after TSMC rejected 25% stake investment. 25% stake is about 4~6 plants. 4~6 plant capacity is not small ambitions. It would not be just chips but also for LED.
Apple also have bought sapphire lens maker. It also has started to buy and ship parts for its contractors to reduce cost.
11) That is, Apple, as Steve Jobs and Tim Cook would have anticipated, is preparing for the war in the mobile devices.
Vs Apple, OEM’s as a whole (except Samsung) has been bleeding cash since Android. They will not easily forget this episode. However at the same time, they will not be in the similar position as Apple in reducing margins even more. Certainly no one besides Samsung could make chip in-house and could even source parts for contractors in the immediate future.
The MARGIN WAR is only starting between Apple and MSFT OEM’s and Wintel alliances (with Android on the sideline from 2017).
12) Google, the initiator of Android and the cash-carnage of the OEM world, is the only one benefit from Android besides Samsung. However its advertising revenue market share is going to be shrinking as OEM’s of one size or another start to drain the own advertising revenue from their own devices. This trend is clearly setting.
Google own Android hardware is not significant as a whole. The contribution is minimum. The strategy of even low end Google-Motorola models will only mean more fierce competitions from OEM’s. Google will bleed the way OEM’s have in Android hardware.
13) Google Glass, it seems to me, will be nothing but a specialist use only. By all accounts the average people have reservations about Google Glass. It certainly will not be a consumer item in the same popularity of watch or smartphone at all. Otherwise, Google would have sold it to the average consumer by now.
In my sceptical assessment, Google started the Google Glass hype and after some time understand it will not be a consumer success. So Google is probably cynically using Google Glass hype as a trojan horse to PICK THE BRAINS of app developers and the specialist user sector for its own future uses.
14) Chromebooks are Cloud computing. The chief reason for the success of pc as a whole is it takes the average user and business people from the shackle of centralised computing. The whole CLOUD COMPUTING, to me, will end up to be no more off-site data storage for most.
PC sales and mobile devices will, against Chromebook-Cloud, continue to be the preferred choice of most.
15) Google, in Android, is facing a difficult period from 2015~2016. Besides notoriety, it has not got much from Android’s success as advertising revenues are still mainly from Apple iOS. Now, Android OEM’s are taking market share of advertising from Google. Google Android hardware is not making a dent in market share to provide a secured cash-flow for Google.
Known brand OEM’s sufferings from Android will be remembered when MSFT insure their financial security with limited selection of Windows mobile device licensing.
16) Google did NOT learn well from Windows experiences with malware. Had it adopted strict sandbox approach as Apple with iOS, the enterprises would let Android in en-mass while MSFT-Windows still struggling.
This is one of the lesson that IT and MBA would learn. There is a known clear weakness and known concerns with OPEN-SYTEM PROGRAMMING for 3 decades. Google simply did not learn it would be a major obstacle in some field. It could have easily fixed the weakness but it chose not to. This has allowed MSFT-Windows time to recover itself while Apple makes some inroad in to the enterprise field.
At the end of the day, Google also has made a strategic mistake of allowing any OEM’s to make Android devices and it has not kept Android in-house. An in-house strategy while iPhone was still new would have created much more cash for Google. Even with MSFT Windows OEM’s, cash flows would benefit more for Google. After all, it is more than likely MSFT-Windows will dominate over Android platform sooner or later.
17) To challenge MSFT with Android without fixing the main weakness of the Open-System Programming that MSFT-Windows suffers and without considering for the benefits of OEM’s, Google has made a monumental strategic mistake that is worthy of MBA case studies, business textbooks, and economic history and Pulitzer Prize winning writings.
jiaberg 