New research from ABI research shows that Android shipments are falling for the first time, and Google's mobile operating system is under unprecedented threat.
That threat isn't from Apple. Despite its record-breaking financial success, the iPhone doesn't pose an existential threat to Google's Android. Apple isn't prepared to drop its prices enough to compete in the low-end and emerging markets that Google dominates.
There's a very real and growing threat to Google, however — and it comes from Android itself.
Android powers more than 80% of smartphones in the world. It is also open source, meaning that other companies are able to adapt and modify it for their own purposes. These can be cosmetic alterations — or "forks" that are direct competitors to Google.
Cyanogen is one of these forks. It has just raised $70 million from a number of investors including Microsoft to continue producing its own version of Android that it can position as a direct competitor to Google's. Cyanogen says that it is "going to take Android away from Google,"— and it has now got $100 million in the bank to try and make that vision a reality.
Forks aren't just some niche hobbyist project — they're a very real threat to Google. Figures published in 2014 show that at the time, forked versions of Android accounted for around 20% of the global Android ecosystem — and had a larger marketshare than Apple's iOS.
New data published by ABI show that in Q4 2014, 85 million forked Android shipments sold, compared to 205 million standard Android. That's 41% of all shipments. "Google's Android is being attacked by Apple's iOS at the high end and forked Android at the low end in high grow emerging markets," said ABI Senior Practice DIrector Nick Spencer.
In short, Android is now more vulnerable to the threat that forks pose than ever before.
High-end smartphone manufacturers running Android (notably Samsung) are seeing profits and market share hammered by the iPhone 6 and 6 Plus, risking relegating Google's OS to the lower end of the market. And in this mid-to-lower end, forked Android is proliferating. Cyanogen already ships with cheaper handsets like the popular OnePlus One, and with this injection of capital we can expect to see them expand aggressively.
There's also the Amazon Fire Phone, which runs its own fork. Initial sales have been extremely lackluster, but CEO Jeff Bezos says it's still "early" and is bullish about the project's longterm prospects. It took two failed iterations for the company to develop Amazon Marketplace, he pointed out to Business Insider, and it's now responsible for 40% of sales on the site.
Low-end Android phone manufacturer Huawei has previously looked into developing its own OS, although it's not presently actively pursuing the option. It told the Wall Street Journal in 2014 that "we have worries about Android being the only option, but we have no choice."
It's also worth noting that Samsung has been working on its own OS, Tizen, for years. (It's not an Android fork.) It still uses Android for the majority of its phones — but it shows that even one of Google's biggest partners is actively pursuing options other than Android.
And then there's Xiaomi. It's growing incredibly fast, and is one of the only non-Apple smartphone manufacturers that has its own incredibly passionate fanbase. (They call themselves Mi-Fans, hold special festivals and interact with the company on social media.) Xiaomi devices run MIUI, a version of Android with the default Google services stripped out. While users can chose to install them, there's no guarantee they will.
Android's open source core is one of its great flexibilities — but it could also be responsible for its own undoing.
