With an 81% Android global market share of smartphone shipments in Q3 2013, it could easily be argued that any change in Android development strategy must be defensive as there’s so much to defend. So the question is: what threats might Google have identified that compelled it to focus on “the next billion users”?
Strategy Analytics’ data shows the Asia Pacific region now consistently accounts for the majority of global smartphone unit shipments. Furthermore, year-on-year smartphone shipment growth in Asia Pacific has consistently been ahead of the global average and Android’s share of Asia Pacific smartphone shipments has steadily grown, so it’s fair to say that Asia Pacific Android shipments are currently the major global smartphone growth driver. In fact, the proportion of global smartphone shipments that are accounted for by Android in the Asia Pacific region (and at a relatively low average selling price) has doubled in the past two years.
For these reasons alone it is entirely reasonable for Google to focus on this key segment, where the immediate threat may well be fragmentation of Android itself at the lower-end, with older versions and piecemeal UI tweaks leading to a compromised user experience. By making it easier for lower-price-tier smartphones to be launched with the latest version of Android, Google will be hoping to reduce this fragmentation, which in turn will strengthen its position versus Windows Phone in the mid-tier (which topped 10 million global shipments for the first time in Q3 2013) and smart feature phones running proprietary platforms (such as Nokia’s Asha family) in the lower-price tiers. Another potential threat is local players such as Xiaomi in China, who are looking to aggressively differentiate their Android smartphone offerings.
The other smartphone region that has consistently out-grown the global average is Central & Latin America, where Android’s share of total smartphone shipments has also increased dramatically in the past two years. This region is the focus for the first new smartphone OS launch for some time - Firefox OS - which is aimed specifically at the lower smartphone price-tiers. While we don’t forecast Firefox OS to steal significant market share in the mid-term, it is entirely sensible for Google to address this competitive threat immediately.
So, in summary, a significant and growing proportion of global smartphone unit shipment growth is accounted for by mid- and lower-price-tier Android devices in the Asia Pacific and Central & Latin America regions. In these segments Android faces a number of competitive threats, including the steady growth of Windows Phone, the launch of Firefox OS, smart feature phones and, perhaps most significantly, the fragmentation of its own platform. By making Android 4.4 (KitKat) more compatible with lower-end devices, Google is acting to defend Android from these threats.