The merits or demerits of Google's latest action regarding Android and Huawei will be debated for years. All of the analysis has been on one manufacturer and how they will react, but I would rather look at the consequences of this action on the future of Google's own creation, the Android operating system.
In fact, I believe this will end up being a watershed event and a strategic inflection point in the future evolution of cellphones. Has Google just awoken the Chinese execution engine and catalysed the creation of its largest future competitor to sow the seeds of its own demise?
These seem like strong words and making extreme leaps in assumptions, but in fact, both the history of the evolution of the smartphone and the recent past demonstrate the scenario painted below is highly reasonable.
It's firstly instructive to understand how operating systems emerged and why some succeeded and others failed. When phones were only used for making phone calls, the operating system was invisible and barely relevant. A utility, in fact, and invisible to most users.
The advent of Nokia with Symbian and RIM's development of the BlackBerry device and service changed that forever. They allowed for phones to be used for far more services, like diary and contacts, and the integration of the browser and TCP/IP allowed for Internet access.
Has Google just awoken the Chinese execution engine and catalysed the creation of its largest future competitor to sow the seeds of its own demise?
Operating systems had become strategic and these two manufacturers owned almost 90% of the market pre-2007. And BBM was almost the sole instant messaging service in the world, and designed and supported by BlackBerry itself and only working on its own devices. Everything was tightly coupled: device, OS, apps and app support.
The next big inflection point in 2007 was the advent of the Apple phone and its iOS operating system. For the first time, it was possible to separate out the services from the operating system and download and update them separately.
They also did not have to come from the same firm that made the device or the OS, which led to the explosion in the number of developers. So the environment became loosely coupled when the service and the OS were separated. Hence, apps. And, of course, we needed a place to find, download and update them and this was the App Store.
This radical change almost instantaneously killed the Nokia/BlackBerry duopoly due to the fact that hundreds of millions of phones are sold a year and new innovations are adopted very fast. A new Apple-based ecosystem was rising to ascendency.
With Apple fast rising, Google was hugely threatened and rushed to create a viable competitor. Using the Linux open source kernel, the Linux community and the association of handset manufacturers, Google launched the free Android operating system that loosened up the coupling even more, as now an OS was separated from the device.
Android could run on any device and a second ecosystem was formed to counter Apple's. Google effectively coalesced support for the Android ecosystem to compete with Apple's hegemony about 10 years ago.
It might now be setting itself up to get a taste of its own medicine.
There was never a reason to build a competing platform to Android or the Play Store since the fee to access Android was low and each device owner could customise it a bit. Also, the Play Store fees were lower than Apple's. This led to all devices being the same with little differentiation as they all had the same OS, app store and apps. But the cost to differentiate on OS was extremely high. Microsoft tried and gave up, illustrating it's not easy. But not impossible.
The first break was the launch of KAiOS in India on the Reliance JIO phone. The OS does not use apps but HTML5 rich browser services that simulate apps. So, phones are a tenth of the price. Africa is following fast with similar service combinations being launched here, with MTN being first.
The big apps like Facebook and Twitter immediately adapted to this and launched compatible "apps" and hundreds of millions of users migrated to a non-Android service in two years.
Now, Google halts updates to a single device manufacturer. And introduces a licensing model for export of US tech to foreign players. A licence that can be denied for political reasons. Licence or no licence, no player wants to have their strategy dictated by whoever is in the White House.
But this is no longer about Huawei. It's about China, which manufactures the bulk of phones in the world. The dominance of China in cellphone production is not well understood. Almost 90% of phones by volume are made there. The Chinese government is remarkably farsighted and strategic in its planning.
This kind of action would be a Red Flag moment. Pardon the pun, but there is no way this would not be treated as an existential threat to the entire industry. Actions have to be and will be taken.
It's not inconceivable that all Chinese manufacturers like Techno and ZTE also move from Google. And that this is instructed by the Chinese government. Investments of billions will be made, as was done for Red Flag Linux, which is the norm for PCs in China. This uses the same Linux community on a different branch.
That could be catastrophic for Google and would leave South Korean, Taiwanese and Japanese device players as the only users of Android. There will be a rapid decline in the economies of scale on Android.
Most of us don't care about the OS. We care about the store. And services. And the app developers will follow the users and the device players. So the apps will be adapted fast to the new OS and be adopted fast by users to whom this change will be invisible. And if the Chinese players change, well, we will follow them.
Remember, we are now selling billions of phones a year. So this change will happen fast. This would leave only American consumers on Android, which is not sustainable. This leaves the servicing and migration of existing users as the only issue. But given device replacement cycles, this too is not insurmountable.
A classic example of extreme strategic short sightedness and blowing up your own industry. There is no coming back from this. Welcome to a world of Chinese devices, with Chinese OS, Chinese app stores and global apps. The soon to be new normal.
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