by Jay Yarow
The mobile story for 2011 was the rise of Android.
It looks like the mobile story for 2012 is not going to be so good for Android. It appears as though the operating system is in choppy waters, and is suddenly facing a lot of trouble.
We’re going to lay out all the small and big problems we’re seeing for Android in this post.
Let’s start with the number one news story of the year: Facebook buying Instagram for $1 billion. This is bad news for Android, because it shows that a developer can build a massively successfully product that the world goes crazy for without even using Android.
You could argue that Instagram wouldn’t have sold for $1 billion if it hadn’t gone to Android and seen an immediate spike in activations. But, the truth of the matter is that Instagram was fielding offers from Facebook before it was on Android, and it could have raised a round at $500 million without Android.
This sends a clear message to developers: Build on iOS first, Android second.
The tablet space was another chance for Android to clobber iOS and take over the world. It has not happened.
What this suggests to us is that the main reason Android succeed in the first place was because of restrictions put in place by carriers. Android beat the iPhone because you could only get an iPhone at AT&T. As great as the iPhone is, it’s not worth the headache of switching carriers.
The success of the iPad over the dozens of Android tablets shows that on a level playing field, where a consumer is just picking out the best gadget, he or she chooses the iOS gadget.
This is a much bigger, scarier idea for Android. It means that it has still not caught up to Apple in the eyes of the consumer. Either this is because the operating system is worse, or it is because Apple has done a better job marketing to consumers. Regardless, it’s not good for Android.
There’s only been one Android-based tablet that’s been a success — the Kindle Fire. This, too, is bad for Android.
The success of the Kindle Fire shows that you don’t need Google’s approval to create a great Android product. This is only going to lead to more companies doing the same making Android more fragmented and causing Google to lose control over its mobile operating system.
We spoke with a plugged-in industry source a few weeks ago and he said this year was going to be the year of “Android forking,” which means using the base layer of Android then making something totally different on top of it, like Amazon.
Big handset makers who don’t want to be just another Android provider are going to start introducing their own flavors of Android for their phones. This is the risk of being open — Google can lose control of its platform.
Another source we spoke with said that the only thing big handset makers want to talk about is Google’s decision to buy Motorola. They’re obsessed with it, and they’re furious that Google is about to try to turn into Apple making its own hardware and its own software. This is going to alienate its biggest partners.
However, their anger is going to manifest itself in the form of Android forking. Handset makers are going to go from being partners with Google to rivals. Even if they fail, it’s another level of fragmentation and competition for Android.
It’s not just handset makers, that are revolting. One of Google’s key carrier partners just announced that it’s going to do its best to undermine Android. Verizon CFO Fran Shammo says the company plans on putting its weight behind Windows Phones:
“We helped create the Android platform from the beginning and it is an incredible platform today, and we are looking to do the same thing with a third ecosystem.”
It’s not just Verizon that’s going to push Windows Phones. AT&T is reportedly spending $150 million to market Windows Phones.
We’re skeptical carriers can actually create consumer demand, but the fact that they’re openly subverting Android is yet another bad sign for Google.
Most of what we’ve just talked about is circumstantial. Here are a few data points that have to have the people working on Android worried.
According to data on Google’s Android developer site only 2.9% of Android devices are running on “Ice Cream Sandwich,” or Android 4.0. The vast majority of Android devices, 63.2%, are on Android 2.3, or Gingerbread. The next most popular flavor is Froyo, or Android 2.2, at 23.1%.
That means that 86.3% of Android users are using an outdated version of the software. They are significantly behind the times!
Either they just aren’t buying the newest Android devices, or they can’t get the newest software update. Either way, it’s a disaster for Google, which puts a lot of effort into creating the best possible operating system with each new update.
It also creates a perception problem. iPhone owners can boast about all the latest, greatest stuff Apple has in its OS. Android users are stuck with an OS that’s a year behind.
Here’s one more data point that shows Android is in trouble: This week Verizon revealed it sold 3.2 million iPhones in the first quarter. Its overall smartphone sales were 6.2 million, which means it sold more iPhones than all other smartphone types combined.
AT&T reports later, but there’s no reason to believe it won’t have a similar ratio. And Sprint doesn’t reveal its ratio, but it would be strange if it was the only carrier that didn’t follow a similar pattern.
This year, thanks to an expansion of carriers, the story is reversed. Now Android’s market share appears to be dead in the water, and Apple is back on the rise.
Couple that with the aforementioned problems — waning developer interest, pissed off handset partners, a super fragmented operating system, and carriers preparing to support Windows — and suddenly you can see that Android, which looked like it was ready to take over the world, is suddenly on uneven footing.