The State Of Android [DECK]

Google logo giant Android

Photo: AP

This is a modified version of a presentation from Business Insider Intelligence. Subscribers can download a PowerPoint or PDF version of the presentation with many more charts, plus the Excel spreadsheets used to create the charts. Sign up for a free trial here.
Google’s Android platform has been on a tear since 2010. In that time, its global smartphone market share has risen from the single digits to just over 50 per cent.

However, clouds are gathering — platform fragmentation and lower spend by users are frustrating¬† developers, Google’s purchase of Motorola is making hardware partners nervous, and Apple is gaining market share in the U.S. Meanwhile, Microsoft is stepping up its tablet ambitions as well.

This presentation highlights Android’s market opportunity, its position in the market, and its weaknesses as a platform, and how Google’s mobile announcements at the recent I/O conference play into the landscape.

Last year, smartphone sales outstripped PC sales for the first time. Mobile will soon be the dominant mode of computing.

Smartphone sales are just starting to make a significant impact as a percentage of global mobile phone sales. So the upside is huge.

Android is winning the race globally, accounting for more than 50 per cent of the market as of Q1 2012.

But there are warning signs...

Android's market share has flattened in the U.S. and Apple has picked up momentum.

Android tablets haven't fared so well. Apple's iPad dominates the market.

Apple's market share is ~65 per cent. Android is stuck around 15 per cent.

But its 7-inch screen, low price (starting at $199), and focus on reading content make it more of a competitor to the Kindle Fire than the iPad.

Meanwhile, the market for tablets is evolving fast. Last week, Microsoft announced it would break with 30 years of tradition and ship its own tablet-PC hybrid called Surface.

It runs Windows 8 -- not a mobile operating system, but the full desktop version of Windows, redesigned to work better on touch screens.

Surface will come in two versions, and will go on sale later this year for a starting price around $500.

So here's Android as it stands today.

But weaknesses are starting to emerge.

App developers make less money on Android.

Evernote, with 34 million users, exemplifies the problem. Android delivers the least revenue per user of any platform.

The app economy for Apple is far bigger than it is for Android.

So Apple has been able to maintain its edge in total apps available.

Android also has a fragmentation problem. Its users are spread across 7 different versions of the software, with the majority concentrated on four.

A new update, Android 4.1 (Jelly Bean), which was unveiled this week at Google's I/O conference, won't help.

Android also has hardware fragmentation. It is slightly modified for every manufacturer, and then again for every device they produce.

This can make developing on Android a headache. It also makes it expensive for carriers and manufacturers to test new versions of Android on all these different devices.

iOS users, on the other hand, migrate to the latest software updates rapidly.

But Google has an ace in the hole: Motorola!

Motorola's smartphone sales haven't been growing much.

But Motorola users are relatively active on their phones. This gives Google a good chance to display new services and ads to these users, and to upsell them to new devices.

Plus, Motorola gives Google a test bed for hardware innovations. For instance, Motorola would have been a great way for Google to seed the market for NFC-enabled devices and its Google Wallet service.

The big question is whether Google can keep its current partners on board while it makes the transition.

Right now, their options aren't so great.

Windows Phone is in the middle of a platform transition and hasn't proven popular with users at all.

WebOS is on life support as an open source project.

Some handset makers and carriers are expressing interest in Mozilla's Boot to Gecko mobile platform (shown here), which is built on HTML5 and other web standards, but it's still in very early days.

So Android faces lots of challenges.

But it's important not to lose sight of the big picture. Over 100 million Americans, and billions of people around the world, do not own smartphones.

Whatever happens, the opportunity is huge. And right now Google is clearly ahead of every other player except Apple. It's Android's opportunity to blow.

Hungry for more data?

Business Insider Intelligence subscribers can also download a version of this presentation in PowerPoint or PDF format, as well as the Excel spreadsheets used to build the charts.
Sign up for a free trial here.

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