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What if Microsoft made Android smartphones?
Credit: JD Hancock
Microsoft is still floundering in the mobile market, some might even say failing. Is there a case to be made for adopting the Android platform? The idea has been the subject of some interesting debate in the last few days. With a new CEO coming in and news that the Nokia acquisition will be preceded by an Android smartphone release, it seems like a real possibility.
Tech press debates Microsoft forking Android
The Guardian’s piece Satya Nadella must kill Windows Phone and fork Android built an interesting argument. Essentially it suggested that Windows Phone is not taking off, and that forking Android would solve the lack of apps problem and make it easier for people to switch from Google to Microsoft. It further suggested that Microsoft could use its patent licensing deals to lure OEMs to work with its version of Android instead of Google’s.
Over at Ars Technica we got the retort that Neither Microsoft, Nokia, nor anyone else should fork Android. It’s unforkable. An article which questions how open source Android really is and argues that the split between AOSP (Android Open Source Platform) and GMS (Google Mobile Services) is already significant and widening. AOSP can be freely adopted and built upon, GMS is where Google adds a lot of value with its own services. The article suggests that Microsoft would have to put in more work than is worthwhile to match Google’s Android offering.
If you do read the Ars Technica piece then make sure you follow it up by reading what Dianne Hackborn, a Google Android Framework Engineer, has to say in the comments.
By the numbers
It’s easy to demonstrate the relative failure of the Windows Phone platform in the smartphone market. Microsoft has carved out a niche, and it’s not insignificant, but it is woefully short of expectations.
The software giant has made gains with Windows Phone and secured third place, but that may have more to do with its competitors for that third spot falling away than with any major success for Microsoft’s platform. Take a look at the numbers for 2013 from Strategy Analytics and we can see Android on 78.9%, iOS on 15.5%, and Windows Phone on 3.6%. That’s an increase of 0.9% compared to 2012.
If we rewind a little, Microsoft’s failure to capitalize on its competitor’s downfalls becomes more obvious. IDC research gave Windows Phone and Windows Mobile a combined market share of 1.8% in 2011, rising to 2.5% in 2012. In the same period, BlackBerry fell from 10.3% to 4.5% and Symbian fell from 16.5% to 3.3%. For 2013 they’re both included in SA’s “Others” category which totals 2% of the market. Apple’s iOS maintained its 18.8% share from 2011 to 2012, but in 2013 it fell to 15.5%.
We all know where those percentage points went and it wasn’t to Microsoft. Android has gone from 49.2% in 2011 to 68.8% in 2012 to 78.9% in 2013. As Windows Phone grew 0.9%, Android grew 10.1%.
It’s easy to point to trends when the numbers are in, but analysts frequently get it wrong when they make predictions. This Gartner press release from 2010 predicted a 3.9% market share for Windows Phone by 2014 and it was interpreted as very pessimistic. An IDC prediction from around the same time suggested a market share of 9.8% for Microsoft’s platform by 2014. Does anyone really still believe that Microsoft will make major gains in mobile with Windows Phone?
Microsoft has stated that it can break even on 50 million Windows Phone smartphone sales a year. It sold 35.7 million in 2013.
The Nokia factor
Microsoft’s purchase of Nokia is surely a double-edged sword. It’s very hard to imagine why any other OEM would develop for the Windows Phone platform now. Google couldn’t make it work with Motorola and a more accurate parallel with the Microsoft Nokia deal would be if Google had acquired Samsung. If the only Windows Phone devices on the market are coming from Microsoft’s Nokia, it’s tough to see how the platform’s prospects will improve.
If the reports are true and Nokia unveils an Android smartphone at MWC, then Microsoft will inherit that Android device. You might imagine that one of the first actions from Microsoft after the Nokia deal closes will be to kill it, but there’s a good chance Microsoft will let Nokia’s Android phone live. Windows Phone is weak in the entry-level market and Nokia’s Android device fits that segment.
The rumors are that Nokia has forked Android already and replaced Google services with its own Here Maps, Nokia App Store, and Mix Radio. It’s not much of stretch to imagine Bing as the default search provider and Outlook as the email service. Nokia has always excelled at producing budget hardware and the incredible growth in emerging markets could make this device a winner.
Microsoft and Android
It’s never been entirely clear exactly how much Microsoft currently earns from the Android platform. It sued a number of Android OEMs and forced them into licensing agreements. The most recent estimate suggests that Microsoft earns $1.6 billion a year from Android already. That’s five times the profit that Windows Phone generates.
That certainly gives Microsoft some leverage. If it could provide viable alternatives to Google services in a forked version of Android, maybe it could peel some OEMs away from Google. Microsoft has no love for Google, but is that enough to drive the company to fight Google for control of the Android platform? Microsoft makes money from Android without needing to release an Android device.
Dead weight slows you down
Microsoft is still a big successful company and it’s not going to fall apart if it doesn’t jump on the Android bandwagon. If Windows Phone 8.1 has enough compelling features and it pushes forward the long overdue consolidation of Microsoft’s ecosystem, then the market share could creep up. If it could bring Android apps to Windows Phone it would tackle the platform’s biggest weakness. It can certainly create a profitable niche and that’s more than you can say for some other parts of Microsoft’s empire.
Last summer, Business Insider reported that Microsoft’s online division has lost $10.9 billion since the first quarter of 2005, largely in a Bing-shaped attempt to compete with Google on search. It’s about to spend $7.4 billion on Nokia’s phone-making business which is mostly making a loss, although it does come with some patents. Microsoft isn’t easily budged from its glacial course.
What should Microsoft’s new CEO do to make Windows a true competitor to Android? It’s far from an easy question to answer. Realistically, Microsoft will not drop Windows Phone; it will probably edge towards more consolidation, and that starts with more code sharing between Windows Phone 8.1 and Windows RT. Continuing to build Windows Phone is not incompatible with some Android releases. Nokia is potentially offering Microsoft a way to dip a toe in the water with Android and see how warm it is.
There has been some appetite for a Nokia Android smartphone for quite some time, though the one we’re apparently about to get isn’t what most people had in mind. It looks like a potential low-end strategy as Microsoft continues to push Windows Phone in the mid-range segment and tries to find a way to crack the premium end of the market. The hope will be that an entry-level Nokia Android, skinned to look like Windows Phone, will act as a gateway device to the Windows Phone platform.
Who would buy a Microsoft Android phone?
It’s worth pointing out that there’s no guarantee that people would buy a forked Android phone from Microsoft. Dedicated Microsoft fans would likely be annoyed by such an approach. There would have to be something compelling about Microsoft’s take on Android to tempt people. Actually an Android smartphone from Microsoft would be a much more attractive proposition if it retained Google services, but that possibility calls snowballs and hell to mind.
It’s tough to imagine a Microsoft version of Android beating Google’s offering, but the fight would undoubtedly weaken both of them.