Game of Phones: Google Vs. Facebook Vs. Samsung Vs. Amazon
I wrote an article last week on the potential impact of Facebook Home on Android. With it's release, I wanted to dig a bit deeper and take a larger look at the ramifications of 3rd parties hijacking an open source platform. Also what Google may be doing to stop it or pivot in a new direction.
I encourage everyone to read or listen to Horace Dediu of Asymco's brilliant "Rain maker" analogy. He explains Google's philosophy on creating technology by calling them 'rain makers', which is to say, they create software/services to get as many people to use the Internet as possible. Seeing the internet as a river of people in which there are fish to catch (money) eventually down stream. Simple put, make more rain and inevitably you'll get more fish.
To get some history out of the way, Google bought then developed Android to make sure they wouldn't be shut out from the web (read: ads) on mobile in the future from Microsoft and Apple. It was to be open, free and used by various manufacturers to enable the largest amount of users as possible. Making Android open wasn't done for altruistic reasons, Google is an advertising company. An open platform suits the 'rain maker' philosophy, get as many users to use the product and they'll collect 'fish' down stream. The more users, the more fish.
So far, the strategy has been extremely successful. It started off rocky in the beginning but they stuck with it, steadily improved the software's functionality and design and now it's considered good enough or better in some aspects than any mobile OS on the market. Fragmentation of hardware and operating system versions has always been somewhat of an achilles heel with Android but nothing Google really has to worry about from a big picture perspective. As long as Android keeps growing, rain will continue to be made and fish will eventually be caught at the mouth of the river. But in the last couple of years there have been strategic moves made by some of Google's indirect competitors as well as allies that may threaten the flow of fish to the mouth of the river.
Amazon released their Amazon Appstore in March 2011 and the Kindle Fire in September of the same year. They created their own version (fork) of Android that bypasses most of Google's software and services available to normal Android users and replaces them with their own ecosystem. Using Horace's analogy, this is Amazon putting a 'net' upstream to collect 'fish' using Google's river before they can. Amazon doesn't release official sales numbers but estimates have the Kindle Fire at over 10 million units sold and makes it the second-best-selling tablet behind Apple's iPad. While other Android tablets like the Nexus 7 are selling decently, the Kindle is the single best selling version while Samsung maintains a large percentage of the overall Android tablets on the market. Google doesn't earn much fish from Kindle Fire users because Amazon has became a firewall. They are not only missing out on sales generated from apps sold in the Google Play Store but searches for products that may have been made in Google Search are now directed to Amazon instead. There is still Google Search and other products available on the Kindle Fire but the river has been reduced.
To further complicate things, there has been rumblings for a while that Amazon is working on a smartphone. With the recent hire of former Windows Phone Manager, Charlie Kindel, it adds more validity to the rumors that Bezos' is looking to enter the now crowded smartphone arena. Amazon sells their devices near cost expecting to make up the difference by using Kindle as a gateway into the Amazon store and larger ecosystem. This strategy makes it extremely difficult for other manufacturers whose business models are to make a profit on hardware to compete on price without sacrificing quality. Jeff Bezos is a shrewd business man and with Amazon being one of the largest retailers in the world I wouldn't bet against him.
Instead of using brute force like Amazon, Facebook seems to be taking a more craftier approach to infiltrating mobile with Facebook Home . Instead of building a mobile OS from scratch or forking Android they've decided to take a more subtle approach, a launcher. Looking at this as just another launcher is entirely missing the point. Not only is this the most well designed launcher to ever be released on Android it was created by a company with over 1 Billion customers and the resources to continue developing the software and features. Mark Zuckerburg talked about how the openness of Android allowed them to do a lot of things they wanted to do with Facebook Home that would be impossible to do on other platforms. What on the surface sounded like praise for Google and a slight job at iOS, the cynic in me heard a burglar thanking someone for leaving their door open. Rene Ritchie of iMore.com aptly described Facebook Home as the face sucker from the movie 'Aliens' that has attached itself on to Android and will slowly take over from the inside out. In my opinion, this is just the first salvo in a slow and methodical move to an eventual true Facebook OS.
It's no secret Facebook has hired former iPhone and iPad engineers in the past year that many have assumed are working on a future Facebook OS and probably helped develop FB Home. For now everything from Google is still accessible, although pushed to the background. Continuing with the 'rain maker' analogy, a small dam was put upstream but water is still flowing through. Facebook is attempting to funnel users into it's world of software and services without setting off any alarms. This is to not make Google feel threatened while they see what the reaction is to Facebook Home. Facebook has made a number of apps, deals and acquisitions as of late to create the pieces needed for a complete mobile ecosystem. Poke, FB Messenger, Instagram, FB Apps, Graph Search, are all pieces to a larger puzzle. What they're doing with Facebook Home is testing the waters without ruffling any feathers before the hostile takeover.
Of course that's a lot easier said then done. The initial reaction from most of the tech crowd is that while the UI and implementation of the unified messaging app, Chat Heads is nice, it's still Facebook, so no thanks. Facebook Home is currently only offered on 3 of the newest top tier Android phones (Galaxy Note 2, Galaxy S3 and HTC One X) which also limits it's initial reach. HTC just released the HTC First phone that comes with Facebook Home pre-installed and the upcoming HTC One and Galaxy S4 will support Facebook Home as well. It's still too early to know how many people will try Home or if they'll keep it installed but Facebook has said they will update the launcher monthly which tells me they see this as a long play that could slowly gain momentum over time. Early adaptors will scoff at nearly anything Facebook releases but the real test is what 'real' people think outside of the technology websites and blogs. Facebook has to have more of an space in mobile if it wants to survive another decade so there's a lot riding on this and Google knows it.
In a matter of 2-3 years, Samsung has quickly built their Galaxy brand of phones into unarguably the second most recognized smartphone name in the world. While all Galaxy phones run some version of Android you will hardly ever hear the words Google or Android mentioned in any of Samsung's ads or press releases. Speaking of ads, they've spent a jaw dropping $480 Million in the U.S. alone on marketing in 2012 dwarfing everyone else in the space, including Apple. As of March 2013 the term 'Galaxy' is more popular than 'Android', the average Samsung customer sees their phone first as a Galaxy or Samsung branded phone not an Android phone. Sure, the well informed that read tech sites and blogs (like this one) know that it's Google's OS underneath Samsung's skin but they're a minority. The average consumer doesn't know and more than likely doesn't care what operating system their phone is running as long as it does what they need it to do.
As of now, Apple and Samsung bring in over 80% of the profits in the smartphone market. Other Android manufacturers like HTC and LG are struggling to make any money in the handset business, which could eventually leave Samsung as the sole 3rd-party manufacturer using Android (unforked) outside of China. This could potentially leave Google in a vulnerable position as Samsung continues to build it's reputation and brand recognition. While not out of the ordinary with open platforms, Samsung has increasingly tried to push their services as an alternative to Google's. Some have even suggested that Samsung could eventually go the Amazon route and fork Android and create their own ecosystem that would box Google out of all of that data. On top of that Samsung has been working with Intel on their own mobile operating system named Tizen. Shortly after showing off their new flagship phone 'Galaxy S4', they announced a Tizen powered phone would be released later this year. This could be catastrophic to the Android ecosystem if Samsung were to eventually switch to Tizen for the Galaxy S5 or S6.
Of course creating an ecosystem isn't easy (ask Microsoft and Blackberry) and getting 3rd party developers on board is a daunting task. Tizen seems like a play for the future as they continue to build up their services while trying to woo developers. For now Samsung benefits by letting Google do a lot of the programming leg work for Android then slapping their stuff on top. As time goes on and the line between partners and competitors continue to overlap Android is becoming a launch pad for Google's competition to get into the mobile space.
So how does Google continue to offer Android as an open platform and reap the benefits of the 'rain' without giving it's competitors a leg up in mobile. I don't necessarily see Google locking Android down in any shape or form anytime soon. The amount of people running stock Android so far is minuscule compared to those running 3rd party skins or forks so they have to make more of a concerted effort to strengthening the Android brand themselves. They've continued to release their Nexus line of phones yearly which offers stock Android and a promise of continued OS updates but they aren't selling nearly as many as Samsung. In fact, while Nexus phones are must buys for Android purist most people are barely aware they exist or what the benefits of owning the phones are.
The Nexus 7 tablet has seen the most promise of breaking into mainstream as of late and Google has tried to capitalize by putting more marketing dollars behind the Nexus brand. They released the Nexus 4 phone and the Nexus 10 tablet last year but both have had only moderate success. But this year might be different. Google purchased Motorola's mobile arm in 2011 and there have been tons of rumors and excitement around the so called 'X Phone' as the next Nexus device. The 'X Phone' is to be the first phone designed by Google and made by Motorola and was expected to be announced at Google's annual I/O conference in May. (Rumors of delays are swirling) They need to put real marketing muscle behind this phone without alienating 3rd party handset makers. If the Nexus brand is viable, if or when Samsung does decide to pull the rug from under Android they won't take such a large percentage of users with them.
With the Nexus 4 Google tried to produce a phone that was unlocked and affordable enough to be purchased off contract. The carriers, being the tyrants they are, wouldn't allow it to run on their LTE networks without compromises Google wasn't willing to make. Although Android is an open platform, Google can not sit back and let other companies dictate the future of Android. A Nexus phone without LTE in 2013/2014 is dead on arrival so it'll be interesting to see if Google can negotiate with the carriers this time.
The alternative is to build out an operating system they do totally control, Chrome OS. Chrome OS is a browser based operating system that allows users to live completely in the cloud. No installing and running native software, everything is done within the Chrome browser, using the Chrome Web Store. Google released the very economical ($250+) Chromebooks a couple of years ago targeting primarily businesses and students. The consensus on Chromebooks being a viable laptop replacement have been a mixed bag. The recent release of the ultra-highend Pixel finally brought Chrome OS to cutting edge hardware but the lack of apps and current capability of the Chrome browser make it extremely hard to justify spending $1299 on a browser based computer.
With the recent departure of Android's creator Andy Rubin from the Android team and the head of Chrome OS, Sundar Pichai replacing him, made everyone question what the future held for both platforms. For now Google says they will keep Chrome OS and Android separate but for how long is the question. Chrome as a browser has been very successful, and now leads web usage on desktops. Their recent announcement of forking webkit, the web rendering engine used by Chrome, Safari, iOS and Android into what is being called 'Blink' also suggest they have something bigger planned for Chrome OS in the future. There is speculation that Bink will be a way for Chrome to run more sophisticated apps from within the browser using NaCL. NaCL allows for native code to be ran directly from the browser, getting the performance of natively coded software without having to install anything while keeping the sandboxed security of a browser. Imagine being sent a link to run the hottest new video game or photo editing software without have to install anything to your machine. This opens the door for making Chrome OS a true competitor to traditional computers without as many compromises.
Google may be hedging it's bets with Android and preparing to usher in a new generation of browser based operating systems that can be ran on desktop and mobile in the future. Only time will tell what Samsung or Facebook plans are for Android in the future but the irony of former allies turning into competitors cannot be lost on Google.