Google Inc (GOOG) Has Lost Control of Android

The “Google of China” in more ways than one
In China, Android is quickly gobbling up over 90% of the market, but most of these are forked versions of the platform. Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is the “Google of China” in more ways than one, as its Yi platform is simply a forked Android, ditching all of Google’s built-in services in favor of its own as the local market leader. Dell Inc. (NASDAQ:DELL) was one of Baidu’s hardware partners for Yi, among many others, before it said last month that it was exiting the smartphone business altogether because it’s had little to no success with Android.

Google has had numerous confrontations with the Chinese government over censorship issues, which has resulted in difficulties effectively reaching Chinese consumers. Since Chinese consumers aren’t heavy app buyers, the lack of Google Play isn’t as painful as it would be in the U.S. market. Baidu is the default search engine on 80% of Android phones in China.

China is now the world’s largest smartphone market and it’s mostly powered by Android, but Google doesn’t have anything to show for it.

Bits and pieces
Fragmentation has always been one of Android’s biggest weaknesses. The newest versions always add new bells and whistles, but many existing users never get to enjoy them. Even now, 47.6% of Android devices run 2.3 Gingerbread, which was released over two years ago. Incredibly, 2.7% still use 2.1 Eclair, released in 2009. Those figures only include devices that access Google Play, and speak nothing for all the forked variants out there that don’t feature Google Play.

Since software updates typically must clear both OEMs and carriers, who have little incentive to prioritize pushing out the new version, older devices get neglected. OEMs only really care about the initial sale where they make their margin, and carriers just want you to use more data. Why should they care about upgrading your device from 4.0 Ice Cream Sandwich to 4.2 Jelly Bean? They don’t.

A slippery slope
The most disruptive thing about Android has always been that it’s free for OEMs to use, and they can avoid paying licensing fees for Windows Phone or other platforms. Android has absolutely benefited Google immensely overall in terms of capturing mobile search and ads, but the company is still losing its grip on the platform.

The article Google Has Lost Control of Android originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple and Baidu. The Motley Fool recommends Amazon.com, Apple, Baidu, and Google. The Motley Fool owns shares of Amazon.com, Apple, Baidu, Google, and Microsoft.

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