Narrative: Android is Hard

Written: January 9, 2017

Android is the dominant smartphone operating system globally, and if anything the market share of iOS is shrinking on a worldwide basis. It would be easy to say Google had won in smartphones, if not for the fact that Apple takes the vast majority of profits from the market, and Samsung takes almost all the rest, with almost every other Android vendor losing money on smartphones.

The single biggest challenge for Android vendors is that differentiation is really tough when your devices are based on the same operating system as most of your competitors’, and you’re not very good at services, which is true of essentially all the Android OEMs, including Samsung. Samsung’s marketing muscle and resulting scale have allowed it to assume a position as the default vendor for premium Android phones and therefore to reap the high margins available in that segment, but all other vendors have had to focus on the more commoditized mid-range and low-end segments, with predictable results.

Beyond smartphones, Android tablets have never really taken off, partly due to an apparent lack of commitment from Google to optimizing the OS for this form factor. Wearables, too, have been a challenge, with Android Wear fading into obscurity as Apple and Samsung carve up the smartwatch category, and Fitbit and others take much of the rest of the market.

Being an Android vendor is hard, and it will become even more so as Google takes a leaf out of Microsoft’s book and begins pursuing a first-party hardware strategy with the Pixel, Home, and other devices. Like Microsoft, it is targeting the attractive premium segment, and in the process will put pressure on its own OEMs more than Apple, whose customers have shown themselves to be the most loyal in the industry.