The Siege of Android: How Google Lost The OS War

In a narrative beginning in 2016 and ending today, Forbes India recalls how the once irrepressible Google lost the mobile OS war

Published: Aug 17, 2011 06:48:21 AM IST
Updated: Aug 18, 2011 03:37:00 PM IST
The Siege of Android: How Google Lost The OS War
Image: Vidyanand kamat

Black Forest
August 12, 2016: In spite of glowing reviews, it may be too late for ‘Black Forest’, version 9.0 of Google’s Android operating system (OS), to turn Google’s ship around. In the last 12 months, Android’s market share among smart devices has fallen from 35.4 percent to a shade below 20 percent globally. It is now just a few percentage points ahead of BlackBerry’s BBX OS, while Microsoft Windows Phone and Apple iOS are both significantly ahead.

But as Andy Rubin, the man in charge of Android at Google, got off the phone in his office at Mountain View, California, even those percentage points seemed ephemeral. He had been talking to the head of Samsung’s mobile devices division in Suwon, South Korea. “I hate to say this to you, Andy, but it is now becoming untenable for us to support both Android and Windows at the same time,” he had said.

In less than two months, Samsung would announce that all of its smart devices would run exclusively on Windows. Though Android’s relative share vis-à-vis Microsoft Windows had been falling steadily since 2012, it still accounted for nearly 30 percent of all Samsung smart devices.

Win-kia
September 21, 2015: Research firm Gartner today announced that Microsoft Windows Phone had become the largest smart device OS globally. “Aided in large part by Nokia’s volumes in Asia and Africa, and by increasing adoption by device makers, Windows has surpassed our own expectations,” said the firm in a report.

The Microsoft-Nokia alliance, dubbed ‘Win-kia’, has surprised most analysts since its launch in late 2011. Though nowhere comparable in power to the Microsoft-Intel (‘Win-tel’) collaboration, Win-kia has been credited with upending the mobile OS playing field in just a few years.

While Nokia’s wide range of phones and deep distribution and retail experience in emerging markets allowed Windows Phone to capture a large part of the entry and mid-level smartphone market, Microsoft’s carrot-and-stick approach had done the trick with other device makers.

Each Android-run smart device meant royalties of $7-9 to Microsoft, insisted its suited, hard-nosed lawyer army. The only way to bring that down, they would say, is if the manufacturers committed to using Windows on a certain percentage of devices. The more the commitment, the less the royalty.

Already burdened under royalty payments ranging from $11-15 per device to Apple, Oracle and a bunch of other big and small companies, most manufacturers quietly acceded.

The Tipping Point
June 13, 2014: The Independent Mobile App Developers Association (I-MADA) is miffed at Google. “Google has quite clearly failed to step up and shield small developers from frivolous lawsuits, as a result of which much of our money and efforts is being spent on court cases instead of developing better apps,” said the body in a press release today. According to the statistics attached, Android developers attracted nearly 60 percent of all patent infringement lawsuits.

As the app economy has grown in value to nearly $32 billion worldwide, companies and patent trolls have increasingly gone after independent developers instead of the device or operating system makers.

But while Apple, Microsoft and BlackBerry were quick to defend their respective app developers in most cases, Google has been slow. Faced with a combined patent onslaught in areas like video encoding, touchscreens, wireless communication and email synchronisation, Google’s response has been strangely sluggish.

In March, it chose to remove significant features like mobile video and real-time email out of Android, choosing instead to let independent developers write apps for those. This strategy was similar to what many Linux distros chose. By having consumers download potentially infringing features directly from third party developers, the targets for lawsuits could be spread across millions of users. Unfortunately for Google, the lawyers went after the most successful app developers.  

Google’s other strategy of forming a defensive Android patents pool with companies like HTC, Samsung and Motorola has had patchy success because the pool has, by some estimates, only between 5-12 percent of ‘essential’ patents around mobile technology. That is hardly enough ammunition to fight the likes of Apple, Nokia and Microsoft. In spite of this, Android continues to be the dominant mobile OS.

The Ghost of ‘Pi’
February 18, 2013: Android royalties bring in nearly $2.7 billion annually for Microsoft, said its worldwide head of intellectual property. In comparison, Google, after years of developing Android and building a worldwide ecosystem, earns just $4.4 billion from running ads on the platform.

This presents a serious challenge to Google CEO Larry Page who took over from Eric Schmidt in April 2011.

[Fact: In one of the most important events for Google after Page’s appointment — the June 2011 auction of over 6,000 patents and patent applications held by Nortel — Page fumbled in style.

In a hard-fought battle, Google bid confusing amounts like $1,902,160,540, $2,614,972,128 and $3.14159 billion — all mathematical constants (Brun’s constant, Meissel-Mertens constant and Pi respectively).

While Google may have retained its geek cred, it lost the patents to a consortium made up of arch-competitors Apple, Microsoft and RIM among others who bid $4.5 billion. All while it had nearly $40 billion in cash on its balance sheet.

“I have worked in the tech sector for over two decades. Microsoft and Apple have always been at each other’s throats, so when they get into bed together you have to start wondering what’s going on,” said David Drummond, Google’s legal head in a blog post after losing the auction. Already the company with the fewest patents with which to defend itself against attacks, Google was forced to scramble after the loss. To compensate, it acquired 1,000 patents from IBM the very next month.]

 Google acquired many more patents over the last two years but all of them are considered less critical, and hence less valuable, for mobile communication.


WHERE THEY STAND
“In areas like mobile communication, patents can mean several layers of fiction and nonsense. But somebody in the chain has to assume that risk.”

 – Sunil Abraham, Executive Director, Center for Internet and Society

“Whenever new technologies come up where the stakes are high, people will use patents to gain a competitive advantage. Patents are not meant to be put on the shelves, but are strategic weapons in a competitive fight. When it comes to Android, I think there will be an arrangement in place between various players and peace, but that will take a few years.”
– Ruud Peters, Global Head of IP and Standards, Royal Philips

“In developing countries like India, every Rs.1,000 ($23) changes the dynamics. And because most Indian operators don’t subsidise smartphones, any increase in patent royalties will come directly from consumer pockets. Today, an entry level Android phone is around Rs.5,500, but if that becomes Rs.7,500, that can affect the overall smartphone and Internet ecosystem.”
– Rahul Sharma, co-founder and Executive Director, Micromax


UPDATE: Our writer adds -

A lot of our readers have been upset and confused by this article. A few additional points might make things clearer:
  • This article was part of our “What If” series, a section that analyses hypothetical scenarios around developing business scenarios. These articles mostly concentrate on the impact of a hypothetical event, not the likelihood of it.
  • That said, the article amplifies real life events(Gartner predicting Windows Phone 7’s rise to a number 2 position; Google fumbling its bid for Nortel’s patents; Android makers like HTC settling with Microsoft on royalties estimated at $5 per phone; multiple patent lawsuits against Android device makers) and quotes from individuals to manufacture a doomsday scenario.
  • One could argue that such a doomsday scenario has now come to pass, thanks to Motorola’s 17,000 patents in Google’s hands. But there’s now a new set of problems that will face larger Android partners like HTC and Samsung – how will Google go from being their most critical partner to being a major competitor too? Analysts and experts are already suggesting that such companies might try to hedge their risk therefore by adopting Windows Phone 7 more aggressively in their portfolio.
  • Because we’re a fortnightly magazine, articles can sometimes miss a major event around an issue after it has been written and published. That was true in this case because the article was written on 5th of August and appeared in the magazine which hit stands on 12th August. Google acquired Motorola on 15th August. Clearly, we (and most of the world) didn’t see Google making this rather significant and drastic move to protect Android coming.
  • None of this means we were right, because we weren’t aiming to be right. Instead this article was about constructing and presenting a scenario by connecting together various events affecting the Android ecosystem, in order to challenge our readers minds.


(This story appears in the 26 August, 2011 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

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  • Vaibhav

    You know forbes, there is a word. The word is - bull.

    on Sep 9, 2012
  • Ashok Pai

    Laughable. Stupid in the garb of thought provoking! ex-microsoftie/ apple much ? BBX has miles to climb, developers are not flocking there. customers dumping them and the recent fiasco leaving RIM like a BBQ! WP7 has very less traction, even after months of it's new OS being available. there's hardly any buzz around it. Nokia with its deep delivery channels can rescue it. Nokia however is in the dumps, they have their brightest minds leaving them, their most loyal customers have dumped other platforms for android - because its open. geeks influence lots of common folks. Apple is steadying and slowly going into that corner that mac finds itself in history. They have moutains of money generated by the phone division, but their guiding light , steve jobs is no more, apple's future is not as rosy, as they have someone who was much feared and respected by opponents for his daring bets that were exceptionally good. apple's amazing run too has pleatueaed What the author is missing is that all google out innovates any other platforms and they they do it FAST. no one else has the pace of development. everyone else has fragmentation issues like android. The litigation card will have the best chance of slowing down, but I assume even samsung and others will be mired in the same cross litigation and come to a stalemate. Microsoft is currently on an extortion path, they are only one step away from the EU flagging them for anti-trust enquiry if they persist with patent disputes. perhaps they invested in Nokia for the very same reason. This is also perhaps the reason google went ahead with motorola acquisition with a local company currying favour with congressmen closer home.

    on Oct 19, 2011
  • Amit

    Interesting and thought provoking. A bit extreme but what's the point of imagining if we can't go all the way? The dynamics of the trade would definitely change with Google acquiring Motorola. Though, I tend to think Google's success in the future is how it can keep android independent while still growing the hardware brand. What people tend to ignore is there will come a point when consumers will become tired of all owing the same phone even if it is the greatest phone on the market. iPhone might still survive as a great competitor but as the competing operating systems get better and more advanced and more apps become available for both windows and Google's android, consumers would again start picking up phones which appeal to their individualistic identity and taste

    on Sep 4, 2011
  • Rohit Agarwal

    Even without the announcement of Google buying Motorola, it was a one dimensional article without exploring the other areas in the OS market. Secondly most of the growth is expected to come from BRICS and Africa where the patent regime is not so strong. So MS doesn't have much levers in this market. As per my understanding, MS isn't ready to bring down the rates of it OS (read make it free) making itself and Nokia a lowly competitor in the high growth markets. This can be seen from the fact that Nokia is bringing low cost smartphones on its symbian platform. Finally, Gogole even with its Android platform isn't sitting idle and is in the process of creating new patents for smartphones which is going to put MS in the spot in next 2-3 years.

    on Aug 24, 2011
  • Ramesh

    No doubt a thought provoking piece... especially the bit about on Winkia. Thanks to the fact that most of us use Windows on a daily basis, if MS is able to put through a decent OS that cuts across mobile and tablet platforms while integrating MS Office into it, most users would find it useful..... else, it could be NoWin rather than WinKia ! As for Google, looks like they are now looking at hitting at Apple with the Motorola buy. Their Achilles heel would be the buggy nature of the Android OS. Probably most manufactureres have added their overlay on the OS and made it bloated. Its time Goog got the OS right with Mot !

    on Aug 21, 2011
  • Sanyog

    Quite an interesting analysis. Clearly the battle of Mobile OS is going to be won on hardware alliances and patent power more than anything else. By acquiring Motorola Google has been able to nullify the loss of Nortel patents.

    on Aug 19, 2011
  • Praveen

    U must be joking when u say Windows mobile overtaking Android. Atleast let it overtake Blackberry :)

    on Aug 19, 2011
  • Samir Trivedi

    A big Blunder to choose this kind of Article to be Publish in the Magazine like Forbes. Even if It was Written before Goog-MOTO news, its meaningless.

    on Aug 18, 2011
  • Meethal

    One of the worst articles I have ever read on Forbes, so much so that I decided to put my first comment on the site. Clearly the writer has no clue of mobile OS. Android and iOS are generations ahead of Win Mobile.

    on Aug 18, 2011
  • Dinesh Suna

    Ha..Ha.. its really funny... looks like this is a mega advert jointly issued by MS, RIM, Apple and the rest who can only envy Android....:-) so guys take it with a pinch of salt... but I agree that its a waste of time reading this... I don't know how come Forbes even thinks of publishing such an article... this article is prone to attract the very lawsuits it is talking about. Google...have u sent them one already?? :)

    on Aug 18, 2011
  • Satya

    Propaganda Article. Forbes, how come you have published it? Something against someone out there and helping microsoft / nokia or what???

    on Aug 17, 2011
  • Rohit Regonayak

    Not sure how to read this article. Clearly the fictional account that stems from flawed logic and a single patent cache should not be the basis of a 5 year prediction. Moreover even before this issue was in the stands, Google countered with the Motorola deal and put the issue to rest. Android is here to stay and will be the largest platform one way or another.

    on Aug 17, 2011
  • Nikhil

    What are you??? Nostradamus??? waste of time...

    on Aug 17, 2011
  • Xanth

    Oh dear Rohin, your efforts wasted. You missed the story of 2 days back about Google buying motorola, and its 17000 patents. That changes everything !!!

    on Aug 17, 2011
  • Manoj

    That was long & tiring. But does anything beat free? Will Microsoft give Windows Phone 7 for free? People are trying to be too smart here. Keep it simple. This acquisition was all about patents to protect the Android Ecosystem. Wait for 2016 and reflect back on your post.

    on Aug 17, 2011
  • Rohan Sachar

    This is one person opinion article. Based on no stats and fact whatsoever. Facts state that this would be the fate of iOS, not Android. I do agree however there is a good scope of growth of Windows Mobile due to collaboration with Nokia, but Android is VERY ahead in the game. The fact that it is cross-device compatible speaks alot in itself. The date should have had been is probably 2036 to make it a believable FICTIONAL article.

    on Aug 17, 2011
  • UA

    Haha is this some kind of a silly joke? The article clearly does not make logical sense, as no business module's future can be predicted based on current market events, the article has only been written to deface the growing popularity of android over patient wars, it does not take into considerations the shortfall of Nokia and windows mobile platform, or the apple short commings based on single hardware platform that limits choice of design and preference to the users.

    on Aug 17, 2011
  • Saumil

    Out of the sync with reality article.

    on Aug 17, 2011
  • Vi3k6i5

    This guy is Anti google and his predictions are insane.. The game has just begun and u think its in its conclusion phase. Google has Motorola on its side.. the company that literally created the mobile communication technology and its 17K patents. Do they account for nothing to you. simple silly report of future.

    on Aug 17, 2011
  • Mark Saine

    "The Independent Mobile App Developers Association (I-MADA) is miffed at Google. "Google has quite clearly failed to step up and shield small developers from frivolous lawsuits" At least software patents are much weaker in the European Union so if Google fails we can just fork the source and make it our system.

    on Aug 17, 2011
  • Al

    What is this? are you predicting the future? Nobody knows it, you may think you know but you are wrong. This article is false propaganda!!!!

    on Aug 17, 2011
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