Category Archives: Android

Alphabet, Android, Andromeda, ChromeOS, Google, Mythology, Operating Systems

Google, Andromeda, Mythology and Hubris

September 28, 2016 Jan Dawson

Next week, Google is expected to unveil a new operating system named Andromeda, which in some ways combines the existing Android and ChromeOS operating systems. The choice of name is interesting – Andromeda is a figure in Greek mythology, and it’s worth briefly recapping her story. Specifics vary depending on the version of the story you consult, but here’s the gist: Andromeda was the daughter of Cepheus and Cassiopeia, king and queen of Aethiopia. Her mother boasted that she was more beautiful than the Nereids, who were the companions of Poseidon. As a punishment for Cassiopeia’s hubris, Poseidon sent a sea monster to ravage Aethiopia, and an oracle recommended to Andromeda’s parents that she be chained to a rock on the shore, where the sea monster would eventually claim her and be pacified. Fortunately for Andromeda, Perseus happened along and saved and subsequently married her. Below is one of many artistic representations of this story. Why do I bring this up? Well, given Andromeda is also the name of the hybrid OS due to be announced next week by Google, there are some interesting parallels. This past weekend Hiroshi Lockheimer, who owns Android and ChromeOS at Google, tweeted as follows:

We announced the 1st version of Android 8 years ago today. I have a feeling 8 years from now we’ll be talking about Oct 4, 2016.

— Hiroshi Lockheimer (@lockheimer) September 24, 2016

Think back to September 2008, and how Android was received then. Although Google had certainly talked up the new operating system plenty, and some of the early coverage was pretty breathless too, the reality is that early Android was pretty disappointing. The hardware was clunky and ugly, and it took several years for Android smartphones to begin to approach parity with the iPhone, both in terms of performance and in terms of sales. Of course, over time Android smartphones became very competitive and eventually began to outsell iPhones significantly, but if you were to plot the trajectory, it would look something like the chart below. My worry with Lockheimer’s remarks is that, in September 2008, Android wasn’t obviously going to be the hit it has since become. In hindsight, the launch of Android was enormously important, and helped create today’s smartphone market, but at the time the G1 launched it was a clunky and marginal bit of hardware. The concern is that whatever Google announces next week will be received – at least initially – in the same way. Perhaps some will see in it the promise of amazing things to come, but I suspect the initial impact will be marginal, and it will take years to see the true impact. And it’s entirely possible that the impact won’t be nearly as impressive as Google clearly thinks it will be. Although Lockheimer is saying that we’ll look back on October 4th as being a milestone event, he’s saying it ahead of time, and that’s where the hubris comes in. Interestingly, the mythological Andromeda’s personal trajectory fits rather nicely onto that curve above too – her mother’s hubris has her flying high, only to be brought low by Poseidon’s wrath and her parents’ intended sacrifice of her, though eventually she’s rescued by Perseus and things start looking up again. Google’s Andromeda might well go through the same curve too – overhyped up front by company executives, only to fail to meet expectations in its early versions, though perhaps redeemed as the vision plays out over time.

Alphabet, Android, Developers, Google, Operating Systems

Nougat Launch Highlights Android’s Slow Rollout

August 22, 2016 Jan Dawson

Google today released Android 7, codenamed Nougat. What this means in practical terms is that owners of recent Nexus devices can download and install the new version immediately, while the vast majority of Android device owners have to wait patiently for the update to be available for their device. This seems like a good time to revisit some of the stats around Android version adoption to put all this in context, because the reality is that it’ll likely be almost two years before even 50% of the base has access to the features in Nougat, while Nougat itself will likely never get above 40% penetration of the base.

For earlier posts on this topic, see:

Operating System User Bases (October 2015)
Contrasting iOS and Android Adoption Patterns (April 2015)
Updated Android Version Charts (March 2014)
Thoughts on Google’s Android Version Charts (December 2013).

Although those past posts have largely focused on the implications for developers, this time around I want to focus a little more on the implications for users.

Overview of Android version adoption

If you’re reading this, you’re likely familiar with how Android rollouts work, but here’s the process in brief:

Google finalizes and releases a new version
Device makers, who have had access to beta versions, work on customizing that final version to run on their various devices, incorporating their own software customizations, user interface elements, and so on
In the vast majority of cases, that updated software is sent to mobile carriers, who also have to spend time testing and approving the update
Once the device-specific version is approved by the mobile carrier, it is made available to users of that carrier.

The end result is a very slow rollout of new Android versions, when compared with, for example, Apple software releases, which are instantly available to all users everywhere on day 1, or even Microsoft’s Windows updates, which are available to consumers immediately at launch (although business users likely have to wait for their IT departments to approve and push out updates).

The history of what this process looks like in practice from a user adoption perspective is shown in the chart below:

I’ve grouped released into the major dessert-denominated categories so as to simplify things here. As you can see, there’s a clear pattern early on which morphs over time:

Early on (2009-2011), adoption quickly spikes to rates in the 60-70% range, falling gradually over time
Over time, the time to hit this milestone lengthens, but peak penetration remains similar (2012-2014)
More recently, peak penetration drops significantly, to around 40%, while the drop off happens more gradually too.

Let’s drill into all that a bit more. But first, a quick note on the quirks of how these versions have been released in the past. The chart below shows the gap in months between Android version releases, which has varied greatly over time:

Early on, major new (“dessert”) releases showed up every few months, with the C, D, and E releases following particularly quickly on each others’ heels, while the F-J releases came slightly less quickly, and the most recent releases have occurred a little either side of a year apart. It’s worth noting that the H release, which isn’t in the chart above, was for tablets only, while the I release converged the smartphone and tablet flavors, and also that the K release (KitKat) took a very long time to follow Jelly Bean, which as a result had that much more time to build a substantial base. This will be important context as we look at some of the trends below.

Peak penetration has fallen dramatically

To start with, peak penetration rates – i.e. the maximum penetration of the Android base – have fallen dramatically with recent releases, as shown in the chart below:

There are a couple of anomalies here, which mostly relate to the quirks of release timing and other details I just referred to. But in general it’s very clear that earlier releases hit peak penetration rates in the 60-70% range, while the two most recent releases have hit maximums of 41% and 36% respectively (Marshmallow hasn’t peaked yet).

Time to peak penetration is long

One of the reasons for the lower peak penetration rates is likely that adoption as a percentage of the base has been that much slower. The time taken to reach peak penetration has lengthened since those early days, despite the fact that peak penetration rates are lower. The chart below illustrates this:

The pattern here is marred by a couple of outlier data points – notably the Gingerbread release, which took an unusually long time to reach peak penetration for an early release, and the Lollipop release, which did so quite quickly. But the trend is generally upward – early releases mostly took 10-12 months to hit their peak rates, while later releases have mostly taken 14-18 months to do so. That means releases often don’t peak until after a new version is released.

This is particularly striking right now, when Nougat is being released, but its predecessor Marshmallow is currently only the third most widespread version of Android, behind the two previous versions. The top version is actually the version from two years ago, while the next most popular version is the one from three years ago.

Put another way, the version of Android Google “released” in October last year is currently outranked by the version released in July 2012, as well as the versions released in October 2013 and November 2014. And of course that will be the case for the Nougat version too for the foreseeable future.

The user perspective – 18 months for the average user

As I mentioned up front, I’ve often focused in these analyses on the developer perspective – after all, targeting a base which is fragmented across so many different versions is tough. But Google has addressed that fragmentation at least in part over the last several years, and that path has been well trodden both by me and by others. Today, I instead want to focus on the user perspective – what does all this mean if you’re an Android user?

I think a useful way to think about this is how quickly a majority of Android users can expect to be able to experience the features and functionality in a new version of Android after it’s launched. The chart below shows how long it takes versions of Android to reach 50% penetration of the base from launch. Because recent versions have peaked before hitting 50%, I’ve included the combined total for that version and the subsequent version (which of course also offers those features):

As you can see, from the Eclair to Gingerbread releases, it took a year or less for new versions to reach 50% of the base. But the ICS release took 18 months to reach that milestone together with Jelly Bean, which itself took just a little less time to reach 50% on its own. And the KitKat and Lollipop releases took over 18 months to reach 50% of the base.

In other words, the average Android user can expect to wait over a year and a half (and probably six months from the release of the subsequent version) to be able to use the features in a new version of Android. If you factor in the months from when a new version is demoed on stage and announced at I/O or before, it could easily be two years before many users see these features.

No wonder Google appeared to de-emphasize the core features in the N release of Android at I/O this year. The core features of Android N for smartphones got just 14 minutes of stage time in the nearly 2 hour keynote – compare that to an hour for iOS at WWDC. And that makes sense if most users won’t see those features for two years.

But of course from a developer perspective it also applies to things like the VR features in the new version of Android, which also require new devices. The addressable market for Daydream on Android will be tiny for the foreseeable future – if Nougat adoption follows the path of the two previous releases, it can hope for roughly one-third penetration of the base in two years.

Alphabet, Android, EU, European Union, Google

EU Android follow-up

April 22, 2016 Jan Dawson

I wanted to post a quick update to my post earlier in the week about the EU’s Android antitrust action, to cover a specific topic in a bit more depth, namely the issue of the EU’s narrow definition of the relevant market. We also discussed the EU’s action against Google in depth this week on the Beyond Devices podcast.

As I said in that earlier piece:

The key to the EU’s finding that Google has dominant market share is a narrow definition of the relevant market here. Instead of treating mobile operating systems as a whole (or even smartphone operating systems) as the relevant market, the Commission has chosen to use “licensable operating systems” as the basis for its determination that Google has dominant market share.

The basis for the EU’s action is that it has to determine three things:

the definition of the market in which Android operates
a determination that Google’s share of that market is dominant
a finding that Google seeks to abuse that dominant position.

The definition of the market is therefore the first item on the list, and an important one. As I mentioned earlier in the week, the EU deliberately narrowed that definition so as to make Google seem more dominant. To illustrate this, the chart below shows Android’s market share as it is normally measured (as a share of smartphone sales) and as the EU would measure it (as a share of sales of devices based on licensed operating systems) in the five major European markets, as estimated by Kantar Worldpanel:As you can see, by eliminating iOS (and to a far smaller extent BlackBerry and other operating systems) from the equation, the EU quickly raises majority but not dominant market shares into market shares close to or above 90%, which is the figure it cites in its documents this week. In the UK, the difference between the two numbers is enormous – traditional market share is just over half, but share of licensable operating systems is 85%. There’s a certain logic to the EU’s actions given its focus on the relationship between Google and its OEMs, but it’s also very convenient for reaching the conclusion it wants to.

Android, Competition, EU, European Union, Google, Regulation

The EU’s Android Mistake

April 20, 2016 Jan Dawson 3 Comments

The European Commission announced this morning that its preliminary finding in its investigation of alleged anti-competitive practices by Google in relation to its Android operating system is that Google is indeed breaching EU rules. The action from the EU is misguided and unnecessary, but it will likely be disruptive to Google and have several unintended consequences anyway.

A quick primer

Note: I’m including links to three relevant Commission documents at the end of this piece, in case you want to read the sources.

As a brief primer on the basis for the Commission’s action here, having a dominant market share is not itself grounds for intervention, but abusing that dominant position is. The argument here is that Google is indeed abusing that dominant position by leveraging its high market share in mobile operating systems to force OEMs to pre-install Google services on their devices in return for being able to use the package of Google mobile services including the Play store, search, and so on. Specifically, the Commission has three objections here:

That Google forces OEMs who wish to license Android with the standard Google apps to pre-install the Google Search and Chrome apps and set Google search as the default
That Google won’t allow OEMs to sell phones using this flavor of Android as well as flavors based on AOSP
That Google pays OEMs to exclusively pre-install the Google Search app.

The key to the EU’s finding that Google has dominant market share is a narrow definition of the relevant market here. Instead of treating mobile operating systems as a whole (or even smartphone operating systems) as the relevant market, the Commission has chosen to use “licensable operating systems” as the basis for its determination that Google has dominant market share. In other words, this isn’t about Google’s dominance of consumer mobile operating systems, but about its dominance of the market for operating systems that can be licensed by OEMs. That’s a really important distinction, because it leads to a finding of much higher market share than were the Commission to consider this from a consumer perspective. Specifically, the Commission says that Google has over 90% share on this basis, whereas its consumer market share in the EU is well under that threshold in most markets, including the five largest markets.

This narrow definition also means that the main class of companies the Commission is seeking to protect here is not consumers but OEMs and alternative providers of search and browsers for mobile devices. Clearly, the Commission has some belief that it would be protecting consumers indirectly as well through such action, but it’s important to note the Commission’s primary focus here.

OEM choice

If the Commission’s main focus is on OEMs rather than consumers, it’s worth evaluating that a little. The reality is that OEMs clearly want to license the GMS version of Android, because that’s the version consumers want to buy. As Amazon has demonstrated, versions of Android without Google apps have some appeal, but far less than those versions that enable Google search, Gmail, Google Maps, and so on. Vestager’s statement alludes to a desire by at least some OEMs to use an alternative version of Android based on AOSP (presumably Cyanogen), but doesn’t go into specifics. Are there really many OEMs who would like to use both forms of Android in significant numbers, or is their complaining to the Commission just a way to push back on some of the other aspects of Android licensing they don’t like?

It’s certainly the case that OEMs and Android have a somewhat contentious relationship and Google has exerted more power in those relationships over the last recent years, but the main reason for the change in leverage is that Android OEMs have been so unsuccessful in differentiating their devices and hence making money from Android. Inviting the Commission to take action may be a roundabout way to change the balance of power in that relationship, but it’s not the solution to OEMs’ real problems.

Consumer choice

Here’s the critical point: this initial finding is just the first step – the ultimate outcome (assuming the Commission doesn’t materially change its findings) is that the EU will impose fines and/or force changes to the way Google licenses Android. Specifically, it would likely require the unbundling of the GMS package and the forced pre-installation of Chrome and search, much as Microsoft was forced in the past to provide a version of Windows without Windows Media Player bundled in and later to provide a “ballot box” option for consumers to install the browser of their choice.

The big question here is, of course, whether this would make much of a difference in a world where consumers are already free to install alternatives and set them as defaults if they choose to. There are several competing search engines and browsers in the Play Store today. Of these, the three most prominent search engines (Bing, Yahoo, and DuckDuckGo) each have 1-5 million downloads, while alternative browsers have been more popular:

Firefox – 100-500 million installs
CM Browser – 10-50 million
Opera – 100-500 million
Opera Mini – 50-100 million
Dolphin – 50-100 million.

On the one hand, then, there seems to be very little demand for alternative search engines on Android smartphones downloaded through the Play Store. And that shouldn’t surprise us, given that the Commission documents also tell us Google search has over 90% market share in the EU. As is the case elsewhere in the world, Google search is the gold standard, and there’s very little reason for most consumers to install an alternative. However, the small number of consumers who want to can do so today.

When it comes to browsers, it’s clear that there is more interest in alternatives, although in fairness many of those downloads of alternative browsers likely happened before Google introduced Chrome to Android and made it broadly available through OEMs. But, again, it’s clear that many consumers have already taken the opportunity to download alternative browsers under the current system. Would materially more consumers install these alternatives under a forced unbundling arrangement, and would the benefits to consumers and/or the browser makers outweigh the damage done to Google’s business through such action?

The Microsoft history

It’s inevitable that there will be comparisons between this case and the EU’s earlier cases against Microsoft. The Windows Media Player case took three years from the formal start to its preliminary decision (although the investigation started well before that), and by the time the process worked itself all the way through the outcome was essentially irrelevant. The market had moved on in such a way that the focus of the case was entirely misguided, and the effect on the market minimal. There’s a danger that the same thing happens here – the case takes years to complete, and by the time it’s completed the competitive dynamics have changed to an extent that things have either sorted themselves out or competitive worries have moved to an entirely different sphere.

One of the reasons for this is that competition and market forces in general had largely taken care of the issue in the interim, and that’s the key here – these markets are so fast moving that any regulatory intervention is likely to take longer and be less effective than simply allowing market forces to take their course. It’s hard to avoid the sense that the EU case is an outgrowth of European antipathy towards big American tech companies rather than a measured response to real abuses of dominance.

The irony of AOSP

One last quick point before I close. The great irony in all this is that Google is being hammered in part because it has always open sourced Android. The existence of AOSP is the crux of the Commission’s second objection to Google’s behavior with regard to Android. Google’s claim to openness is being used as a stick to beat it with. In this sense, being less open would have exposed Google to less criticism from the EU for being anticompetitive. That irony can’t be lost on Google, which could potentially resolve this concern by simply discontinuing the licensing of AOSP. That certainly isn’t the outcome the Commission wants (indeed, it seems to smile on the AOSP project in some of its comments today), but it’s an example of the kind of unintended consequences such action can have.

Links to relevant documents

The Commission has this morning published three separate documents in relation to this proceeding – here are links if you want to read the source material:

Press release
Factsheet
Statement from Competition Commissioner Margrethe Vestager.

Adoption, Android, Apple, Google, iOS, iOS 8, iOS 9, Microsoft, Mixpanel, Operating Systems, Windows

Operating system user bases

October 7, 2015 Jan Dawson 4 Comments

Related: two previous posts on the patterns in Android adoption rates (December 2013, March 2014), a post contrasting iOS and Android adoption patterns, and a post from last month on iOS 9 adoption.

Both Apple and Google have just updated their mobile OS user stats, while Microsoft shared a new number for Windows 10 adoption at its event this week, giving us a rare opportunity to make some comparisons between these major operating systems at a single point in time. We now have the following stats straight from the sources:

The stats provided by both Apple and Google on their developer sites with regard to the user distribution across their mobile operating systems (Android and iOS)
The 110 million Windows 10 number provided by Microsoft this week
The 1.4 billion total active Android user base number provided by Google at its event last week
Total Windows users of around 1.5 billion, as reported by Microsoft several times at recent events.

In addition, there are various third party sources for additional data, including NetMarketShare and its estimate of the usage of other versions of Windows. Lastly, I have estimated that there are roughly 500 million iPhones in use now, and around 775 million iOS devices in use in total (including iPads and iPod Touches).

If we take all these data sets together, it’s possible to arrive at a reasonably good estimate for the actual global user bases of major operating system versions at the present time. The chart below shows the result of this analysis:There are several things worth noting here:

Each company has one entry in the top three, with Microsoft first, Google second, and Apple third.
However, only one of these entrants is the latest version of that company’s operating system (iOS 9), while the other two are the third most recent versions (Windows 7 and Android KitKat).
Google has three of the top six operating systems, none of which is its latest operating system (Marshmallow, released this past week). Even its second most recent version (Lollipop), now available for a year, is only the third most adopted version after KitKat and Jelly Bean.
Both iOS 9 and iOS 8 and the three most used versions of Android beat out every version of Windows but Windows 7.
The most recent versions of the three companies’ major operating systems are used by a little over 400 million (iOS 9), 110 million (Windows 10), and a negligible number (Android Marshmallow) respectively.
The second most recent versions are used by around 330 million (Android Lollipop), around 250 million (iOS 8), and around 200 million (Windows 8) respectively.

There are lots more data points to tease out here, but to my mind it’s a striking illustration of the differences in the size and adoption rates of these three major operating systems.

Two additional thoughts

Just for interest, I’m including a couple of additional thoughts below.

First off, here’s the same chart, but with iOS reduced to just the iPhone base. The order changes a fair amount, but iOS 8 and iOS 9 still make a good showing:

Lastly, I wanted to revisit my post from a couple of weeks ago about the initial adoption of iOS 9, especially as it relates to Mixpanel’s data. In that post, I showed how Mixpanel’s iOS adoption data tends to be pretty close to Apple’s own data except for the month or so after a new version of iOS ships, when it tends to skew way lower than Apple’s own data. Now that we’re a few weeks on from the initial launch, and Apple has released the second set of iOS adoption data since the launch, I wanted to revisit that pattern. Interestingly, the very same pattern is playing out again – despite the initial significant discrepancy, Mixpanel’s data is now once again very close to Apple’s own:

Android, Earnings, Lenovo, Motorola, Q2 2015, Smartphones

Lenovo’s tough quarter

August 13, 2015 Jan Dawson

Lenovo reported this week that it had just concluded a tough quarter, and was going to be taking actions to streamline its business and operations, including laying off a significant number of employees and cutting costs in the mobile business in particular. This post runs through some of the components of Lenovo’s tough quarter and examines where the business is likely to go from here.

Note: this is my second post on Lenovo – the first was on its Q4 2014 results, the first it reported after acquiring Motorola. Please note also that in this post as elsewhere on this blog I use calendar quarters for ease of comprehension and comparison, even when companies’ fiscal years are different.

Motorola has been a great defense against shrinking sales in China

I believe the Motorola acquisition was originally contemplated as a way for Lenovo to build scale and especially to break into some new markets. However, it’s turned out to be a phenomenal defensive strategy against some significantly worsening trends in Lenovo’s largest smartphone market, China. As part of Lenovo’s quarterly results presentation, it shared these numbers – sourced to SINO – on smartphone sales in China, and they provide a great context for Lenovo’s problems domestically (this is my chart, based on the same numbers):

There are two important trends to note here: firstly, total sales (shown in red) have declined in the past year; secondly, subsidized sales (shown in blue) have declined even more strongly, and are shrinking as a share of total sales. The fact that the Chinese smartphone market is shrinking is bad enough, but Lenovo is particularly exposed to that carrier-subsidized segment, which is rapidly going away as carriers discontinue subsidies under pressure from the government. The result is that Lenovo’s Chinese smartphone sales are shrinking rapidly:Lenovo’s smartphone shipments in China peaked at almost 14 million in Q3 2014, and have fallen steadily since, to just under 5 million in Q2 2015. Were it not for the addition of Motorola’s smartphone sales, Lenovo would have seen a serious dent put in its overall sales. As it is, things don’t look quite so bad overall from a shipment perspective, though sales have still declined over the past two quarters:Without the Motorola business, Lenovo’s smartphone shipments overall would have fallen from 15.8 million in Q2 2014 to just 10.3 million a year later.

But Motorola is also dragging down profits

The problem is that, while Motorola’s shipment numbers have been a great benefit to overall shipments, its financials continue to be a drag on the business. It’s hard to isolate Motorola’s performance within the overall numbers reported by Lenovo, but there are hints when you look at Lenovo’s operating margins by geography and by segment, where Motorola’s results disproportionately affect the Americas and Mobile respectively:Note: Lenovo changed its reporting segments in Q4 2014, and as such we’re missing operating income by segment for Q3 2014 until it reports them with Q3 2015 figures next quarter.

As you can see, both the Americas and the Mobile segment saw significant declines over the last few quarters as Motorola joined the company. Economic conditions in Brazil particularly impacted the Motorola business but also affected other parts of the business, so that’s part of the reason for the sudden drop in Americas margins. However, Motorola was unprofitable when it joined, and it continues to be so. In fact, Lenovo just subtly changed its profitability target from having the Motorola business be profitable in 4-6 quarters after acquisition to having the total Mobile segment of which Motorola is a part be profitable, a recognition that it’s going to take longer to turn the Motorola business around.

In PCs and tablets, growing share in shrinking markets

I’m not going to spend as much time on PCs and tablets as on smartphones, but I did want to note that in these two categories Lenovo’s challenge is a bit different. The markets themselves are shrinking, so even though Lenovo’s share of both markets is growing, that’s not delivering strong growth overall. In fact, PC shipments dropped several percentage points year on year, while tablet shipments only grew modestly. If growth trends in the PC market continue to worsen, even Lenovo’s significant outperformance of the market won’t help it, while its tablet sales are too small to help offset the challenging conditions in smartphones and PCs.

Lenovo’s proposed solution is familiar

We’ve heard it so many times over the last several years from different Android vendors that Lenovo’s proposed solution to what ails it in in the smartphone market is very familiar: streamlining and simplifying the product portfolio, while making the smaller number of models more compelling and better differentiated. Samsung, HTC, LG, Sony and others have all embraced this strategy over the last few years, and while it’s likely a good idea, none of those companies have seen significant turnarounds as a result, and all continue to struggle to a greater or lesser extent in selling smartphones.

However, Lenovo is also taking some other steps to turn its performance around, cutting its workforce, and moving to what sounds like single sales and product organizations. Interestingly, it’s largely focused on the Lenovo sales organization (though it’ll presumably keep some Motorola staff on in key markets like North America where Lenovo has never had a presence), and the Motorola product design, development, and manufacturing organization. Earlier, it was cautious about consolidating the two manufacturing organizations in particular, and it’s intriguing to see the company consolidating around the Motorola function rather than the Lenovo equivalent. It will be interesting to see to what extent the Lenovo and Motorola brands continue to be marketed distinctly if both sets of devices are coming from the same team.

At the same time, Lenovo is also embracing new channels domestically, mimicking Xiaomi in its pursuit of the online model with the launch of the ShenQi online store this past quarter and the ZUK Z1 phone in August through that channel. This makes tons of sense given the shift in purchasing from one channel to the other, but it’s not yet clear that Lenovo has the competencies required to pull this model off.

There are also hints in Lenovo’s press release that it might seek to acquire other PC businesses as a way to further grow scale while driving cost efficiencies. The key quote here is:

Accelerating the drive for 30 percent share in PCs by better taking advantage of consolidation, while becoming even more efficient and reducing costs to ensure sustainable, profitable growth.

That may mean something else, but it certainly sounds as if it could be referring to an acquisition strategy in the PC market.

Where does Lenovo go from here?

Given the tough domestic conditions, it’s going to be hard for Lenovo to turn its performance in China around dramatically, which makes its rest-of-world strategy all the more important. But though the addition of Motorola made for favorable year on year comparisons, the Motorola business itself actually shrank year on year in terms of shipments, from 7.7m in Q2 last year to 5.9m this quarter. Motorola has had real success with its low end devices, the Moto E and Moto G, but that success has come to a great extent in certain markets that are now facing challenging conditions too. Brazil is perhaps the best example – Lenovo sold just 167,000 smartphones there in Q2 last year, but the combined company sold around 2.5 million smartphones there in Q2 2015, and yet this turned out to be something of a liability this quarter as conditions worsened. Latin America as a whole accounted for 3.7 million shipments, and if the economies there continue to struggle, that likely doesn’t bode well for Lenovo.

With these headwinds in key markets like China and Latin America, Lenovo needs to do better in other regions, but those regions are relatively small for the company today, with just 1.4m shipments in North America and 2.8m in EMEA in Q2. Lenovo is heavily dependent on the BRIC countries, which account for over 60% of its smartphone shipments today. And yet the Motorola brand has been struggling in the US, its erstwhile stronghold, for several years now. What’s selling is the low-end smartphones, with an average selling price for Lenovo as a whole of a little over $100, and Motorola’s ASP around $200.

I’ve been quite bullish about Lenovo until now, but at the moment I’m less certain on its prospects for the short to medium term, especially if things don’t change domestically. But Lenovo isn’t alone in this – it’s been caught up in the perfect storm that’s affecting many of the major Android vendors, and that’s been causing a number of them to announce significant cuts in their businesses in recent weeks. The good news is that PC margins continue to be relatively healthy (at least in the context of the broader Windows PC market), and PCs represent the majority of Lenovo’s business today. But if Lenovo really wants to follow through on its strategy of becoming a major player across these device categories, it’s going to have to find a way to turn its smartphone performance around.

Android, Apple, Beats, iMessage, iTunes, Messaging, Music, Windows

Expanding Apple services on non-Apple devices

June 3, 2015 Jan Dawson 3 Comments

A few months back, I wrote this piece which talked among other things about why Apple doesn’t make most of its services available on third-party devices. The basic argument can be summed up in this quote from that piece:

When the whole rationale for Apple’s software is to add value to its hardware products, the idea of providing cross-platform software or services becomes inimical. To the extent that Apple software or services are available on non-Apple devices, they cease to provide meaningful differentiation for Apple products.

However, Apple has continued to make some services available on third party devices, and I see potential for more of this in future. I definitely don’t see Apple abandoning the strategy I outlined in that post, but I do see potential for them to broaden the range of what they provide on non-Apple devices, so in this piece I’m going to argue the other side of that earlier piece.

The iPhone and Mac installed bases

The key to all this is to understand the difference between the iPhone and Mac installed bases. The iPhone is now in every way Apple’s lead product – it accounts for half to two thirds of total revenue in any given quarter and the lion’s share of profits. And it’s also the Apple product with by far the largest installed base. Let’s look at the numbers quickly:

iPhone: around 450 million users
iPad: around 200 million users
Mac: around 80 million users.

We’ve leave the iPad to one side and focus on the iPhone and Mac. What this leaves us with is a world where there’s only very partial overlap between iPhone users and Mac users, with the vast majority of iPhone users likely owning or using Windows PCs rather than Macs, if they use a PC at all:

Apple has done a great deal over the past couple of years to better serve Mac + iPhone users (including those who also have iPads), including various iCloud features, and the Handoff and Continuity concepts and their associated feature sets announced at last year’s WWDC. All this makes owning more than one Apple device better than owning just one, because the devices you have work better together. The Apple Watch extends this even further, and deepens the attractiveness of an all-Apple ecosystem.

300 million Windows + iPhone users

However, there are still several hundred million iPhone users who don’t own or use Macs on a daily basis, many of whom do use Windows PCs, either by choice or because work, cost constraints, or other reasons require them to. This Windows + iPhone group is actually substantially bigger than the Mac + iPhone group Apple has spent so much time serving, probably around three hundred million or more:
In an ideal world, Apple would have these Windows + iPhone users become Mac + iPhone users over time, but that isn’t a realistic scenario for a variety of reasons, especially in the short term. So, how does Apple serve these users?

iTunes on Windows and beyond

Well, the answer began with the launch of iTunes on Windows in 2003, two years after the original launch on the Mac, in an attempt to create a market for the iPod larger than the base of Mac users. With the launch of the iPhone, Apple piggybacked off this iTunes installed base as a way to make that product, too, Windows compatible. Since that time, Apple has introduced a few other pieces of installable software for Windows PCs, but much of its effort in supporting Windows users recently has been in the form of web apps rather than native software:iCloud Drive is the only new product Apple has introduced for Windows recently, and it builds on earlier versions of the iCloud product for Windows, which enables some of the extensions and add-ons shown in the middle column in the table above too. But Apple has now made a fairly wide range of products and services available on the web, at iCloud.com, as shown in that third column. These serve the Windows+iPhone reasonably well for some use cases, though I can’t imagine as a Windows user wanting to use the web versions of the iWork suite as my main productivity apps.

What’s missing?

At this point, it’s worth asking what else Apple needs to do to make its products available on third party devices, and whether it’s likely to do so. Here’s a short list of potential next steps:

A web version of Maps
iTunes on Android devices
The Apple music subscription service on Android
Messages on Windows and/or Android
The iLife apps on Windows and/or Android
iBooks on Windows and Android.

There may be one or two other gaps, but I think that about covers it. Which of these seem most likely at this point? The diagram below shows my estimate of the likelihood of each of these things happening:If Apple hadn’t acquired Beats in order to build a subscription music service, I would have put the likelihood of Apple’s music service landing on Android much lower than I have, but since Tim Cook has already signaled that Beats will remain on Android, it seems a fairly sure bet that the successor will be there too. I don’t quite understand the strategic rationale here – almost anything on Android seems to fly in the face of Steve Jobs’ quote in the Walter Isaacson book:

We put iTunes on Windows in order to sell more iPods. But I don’t see an advantage of putting our music app on Android, except to make Android users happy. And I don’t want to make Android users happy.

The only real explanation I can see (beyond maintaining the status quo ante with Beats) is that Apple is competing head-on here against existing subscription music services, all of which are available cross-platform, so this is a concession to reality. But it still feels odd.

Maps on the web seem very likely to me – Google’s web maps were a fantastic hook for Android when it arrived, because it allowed people to make a seamless transition from the product they used on the web for planning, figuring out a route and so on to the one they used on their smartphone for actually navigating from A to B. The fact that Apple doesn’t have a Maps option for anyone using a Windows PC means that those users are far more likely to use other mapping services both on the web and on their phones, or to have disconnected experiences on those two devices. Apple has posted job listings several times (including one that was noticed today) indicating that it might be looking to bring its Maps app to the web, and this seems eminently believable. I’m only putting this slightly lower than the subscription service on Android because that seems largely a foregone conclusion, whereas Apple seems to have been toying with the idea of a web maps app for some time without pulling the trigger.

Essentially everything else I listed seems significantly less likely to happen, although if the music subscription service lands on Android it might make sense to make the full iTunes experience available on Android too. iBooks makes little sense as a cross-platform product – people don’t read many books on their PCs in comparison to tablets and smartphones, while porting iLife would be a huge effort and significantly undercut one of the differentiators of the Mac. Messages was actually the specific focus of the earlier post I referred to at the outset of this one, and I outlined there the reasons I can’t see that happening. It feels like the archetypical example of Apple’s own-devices-only strategy, and it’s also uniquely mobile-first among all these products.

We’ll know more next week

I’m writing this the week before WWDC, where I expect that at the very least we’ll see the music subscription service launch and know whether it will indeed land on Android in either its full or a watered down form. But we’ll likely also get more clues about how Apple sees the opportunity beyond its own devices, and whether the current set of products and services for the Windows + iPhone crowd represents the outer limits of how far Apple is willing to go to keep them happy.

Android, Developer events, Google, Google I/O

Evaluating Google’s I/O 2015 announcements

May 29, 2015 Jan Dawson

I wrote a piece a few days back for Techpinions about the challenges Google needed to address at I/O this year. Now that the I/O keynote is over (which I was fortunate enough to attend in person), I thought I’d revisit that list of challenges to see how Google did.

Retaking control of Android

There were a couple of things that Google did related to retaking control of Android at I/O: reinforcing the value proposition of its Android One initiative, and announcing Android Pay. The former is obvious: it’s Google’s attempt to get a close-to-stock version of Android as the default version in emerging markets. But the latter may be less obvious. However, by launching Android Pay, Google nixes its OEMs’ efforts to introduce their own payment systems, as this post outlines. Samsung is likely to be the hardest hit by this, since it’s the only Android OEM that had launched a payment service. But I wonder how much Google will spread this model of Google Services Mandatory classification for key Android features to other areas, squeezing out OEMs from offering competing services.

Defending the web against apps

This year’s I/O was a mixed bag in this respect, with a couple of initiatives clearly aimed at just this, but some others moving things in the opposite direction. On the one hand, Google announced Chrome Custom Tabs, an alternative to in-app browsers for displaying web content, which brings users back into the web, where Google can better track their activity and otherwise capture data. It also reiterated its app indexing and deep linking projects, which recently began to roll out on iOS too. These efforts are both aimed at making the web more relevant in a world where apps are becoming dominant. Google Now on Tap is an interesting mix in this respect – on the one hand, it allows users to stay in apps when they have Google Now queries, rather than having to exit out of them, which could be seen as favoring apps rather than the web. But on the other hand, this inserts a Google layer between users and apps, in some cases recommending other apps for users to open, but in others using the Google Knowledge Graph to disintermediate those apps. On balance, Google seems to be serving its own needs pretty well with these new announcements.

Convince developers Android users are worth targeting

There was remarkably little at I/O about why developers should target Android users exclusively or in addition to iOS users. There was no update on the total number of Android users, which remains at “over one billion”. And Google did very little to argue why these users might be attractive, rather emphasizing the fact that many of the new users on Android will come from emerging markets, where there are lower incomes and less propensity to spend. There was no mention of carrier billing at all, and the only mention of monetization was in relation to better ad products within apps rather than paid apps or in-app purchases. I don’t think Google has given up on the paid apps route, but it was hard to escape that impression from the keynote, which I find baffling. To be sure, Android will never have the same attractive demographics as iOS, but it can still do much better than it has in the past, especially in mature markets.

Take Android beyond personal computing devices

The big announcement here was the Brillo project, which takes Android and strips it down to a barebones version for use in Internet of Things devices (and for today at least home devices specifically), together with the Weave communication protocol, which will be baked into Android at the Google Play Services layer and therefore make compatible devices instantly discoverable from Android devices. This is exactly what I was getting at in my preview piece on this topic – a version of Android that’s optimized for these devices, which have no need for the full version of Android but have other specific needs Android in its current form doesn’t meet well. There’s a lot of work still to be done here – though Brillo will launch in Q3 (and Weave in Q4) I sensed many decisions about Brillo still haven’t been made (not least the final name for the OS itself). More broadly, I was disappointed that we didn’t hear more about operating systems for the car, another area I highlighted in my preview piece, and one in which Google has been reported to be making some interesting progress. I wonder if we’ll see more on this in the months building up to the Android M public release.

Demonstrate a clear value proposition in TV

This was the other big area where I was expecting much more from Google’s keynote at I/O than we got – it got barely a mention in the keynote, and the expected announcements were made either not at all or in press releases. Nvidia announced its Shield device built on Android TV, and bought up almost every outdoor advertising spot within a few blocks of the Moscone Center to advertise it, but there was nothing in the keynote to demonstrate meaningful progress in this area. The only other concession to this challenge was the announcement that HBO Now would be coming to Android and Chromecast shortly. Speaking of which, Chromecast has now sold 17 million units, putting it in the same ballpark with Apple TV and Roku. There continues to be an odd disconnect between Chromecast and Android TV in Google’s TV strategy which I hope it can resolve in time. Chromecast certainly seems to be the more successful model so far, though the total number of casts (1.5 billion) relative to the number of Chromecasts sold (17 million) implies relatively low usage of those devices.

Continue to unify Android and Chrome OS

There was even less on this theme at I/O 2015 than there was last year, where Google at least talked about Android apps running on Chrome OS. Chrome OS was barely mentioned at all in the keynote, and there was no news about it at all. This continues to be an area where Google has to do a much better job telling its story and bringing the disparate threads together.

Differentiate against Amazon and Microsoft in the cloud

The whole enterprise space, and cloud in particular, got incredibly short shrift in the keynote too, after a lengthy session in last year’s keynote. There was nothing here to indicate that Google was going to make meaningful progress in this department in the coming year beyond its existing strategies.

Beyond the keynote, and beyond Android

Even though the pace of the keynote and the volume of individual announcements was somewhat overwhelming, as always, the substance of what was announced really wasn’t. The Android M release looks like a very modest, incremental, improvement on Lollipop. This was a little disappointing, but partly reflects the fact that Google is slowly extracting functionality from the operating system and putting it in more easily upgradable layers like Google Play Services instead. The new Photos app is a great example of this. This does mean, however, that the news around new Android version releases is going to become less interesting over time, while the announcements separate from Android will become more interesting in many ways. But this year’s I/O also looks like introducing much more news outside the keynote – I’m writing this on day two of the event, and several announcements around wearables, Google Loon, and other projects have been made separately. As an attendee, I’m grateful that the keynote was trimmed down to just two hours, but it does make it harder to follow all the news that’s coming out of I/O as Google starts to fragment the more notable announcements across sessions.

Adoption, Android, Android versions, Apple, Google, iOS, iOS 8, Smartphones

Contrasting iOS and Android adoption patterns

April 10, 2015 Jan Dawson 10 Comments

I’ve done two previous posts (here and here) on Google’s Android developer dashboard stats, and I was surprised to find it’s been just over a year since my last one. I may still do a deeper dive revisiting some of the points from those previous posts, but this time around I wanted to do something different – contrast Android and iOS adoption patterns. Google has published data on Android version adoption for quite some time now, but Apple’s only been doing it for the last couple of years, so we have less data. But we still have enough from both platforms that we can draw some interesting conclusions.

iOS adoption – huge initial ramp plus slow conversion

The pattern for iOS adoption is very clear – a massive initial ramp in adoption in the first few days and weeks, followed by a steady conversion over time. The chart below shows the share of the base on each version in the first 24 months from launch:

As you can see, by the time the first month is over, more than 50% of the base is already on the new version, and it ramps to around 90-95% by a year later, just before the next version launches. At that point, it immediately drops to 25-30% as the new version takes over, and slowly dwindles from there down to under 10% after two years. There are differences in adoption rates for the various versions shown – as has been reported, iOS 8 has seen a slower initial adoption rate than iOS 7, though it’s now over 75%. Correspondingly, the share of iOS 7 has fallen slightly more slowly than iOS 6 did, though the gap in both cases has closed a bit recently. Continue reading →

Android, Android Auto, Apple, CarPlay, Connected car

Updated Android Auto and CarPlay support

March 13, 2015 Jan Dawson

This week, Apple updated its website with regard to auto makers’ support for CarPlay, and I’ve taken the time to update my charts and tables on support for both CarPlay and Android Auto (my previous post was here, and has much more analysis than this post, which mostly updates details).

Here’s the new master list:

The big changes are mostly on the CarPlay side, with Renault and the Volkswagen group (including VW, Skoda and SEAT) coming on board. Android added Opel in the interim, but I couldn’t see any others. This backs up Tim Cook’s assertion from the Spring Forward event this past Monday that all the major groups are now onboard. Interestingly, the main brands missing are still some of the high-end luxury sub-brands and specialty makers, including Tesla (which was the subject of questions and remarks from Tim Cook at the shareholder event this week). Apple Insider points out that the major Chinese manufacturers are also missing.

Here’s the summary by group, which hasn’t changed much.Finally, we still don’t know exactly which models and cars will have CarPlay in the near future – Tim Cook mentioned 40 models by end of 2015, but that’s not a ton in the grand scheme of things. I’m going to be heading to the New York Auto Show later this month, and keeping a close eye out for signs that CarPlay and Android Auto are showing up in more cars – both were conspicuously absent at CES.