According to a new report from CCS Insight, the dramatic and continued growth of the Android smartphone operating system may not be the boon to Android developer Google (NASDAQ: GOOG) that some may have expected. According to the firm, fully one in four Android phones don't currently access Google services like Maps, Gmail and the Google Play app store--and that number will likely grow in the future.
"Android's dominance will increasingly fail to translate to Google dominance," the firm wrote in a wide-ranging report on the smartphone market. "The proliferation of forked variants of Android and the Chinese government's blocking of Google search in China is producing a growing proportion of Android devices that pose a challenge for Google's open-source Android model. Such devices provide Google with little or no revenue or data and provide a platform for services from Google's competitors. We estimate this could increase to over 30 percent in 2015. It also raises a question about how Google will control Android in the future as policing the platform through access to Google services will prove increasingly ineffective."
CCS Insight's findings come shortly before Google's I/O developer conference, which kicks off tomorrow. Google is widely expected to provide updates on its Android business and its plans for the future, including its Android Wear effort targeting smart watches and other wearables and how it will position Android for TVs and home automation services.
The progress of Android remains closely watched; CCS Insight forecasted that Android smartphone shipments will reach 1 billion in 2014. The platform remains the leader, by a wide margin, in the global smartphone market, and is backed by the likes of Samsung, LG, Huawei and others.
But, above Google's I/O proceedings, the future of Android will continue to be pulled in a variety of different directions, according to CCS Insight. The firm noted that innovation in smartphone design has reached a plateau--"single-button, monobloc designs have become the norm in all sizes ranging from four-inch to seven-inch screens at all price points," the firm wrote. "This is making it easier for low-cost manufacturers to expand their presence."
As a result, the firm said, smartphone players are increasingly look to innovate in software and services to set themselves apart. Among Android smartphone makers, this has resulted in some division: "Fragmentation is now proliferating further up the software stack as players such as Amazon, Alibaba, Baidu, Microsoft, Tencent, Xiaomi and others build their own ecosystems, many utilising Android as the building block," CCS Insight wrote.
The firm said that although the total handset market grew 6 percent in 2013, that was down from 9 percent in 2012 and 13 percent in 2011. "Although plenty of growth remains in the smartphone segment, growth as a whole is slowing," CCS Insight wrote.
But there is still plenty of opportunity for disruption in the market, the firm said. "The smartphone market is as dynamic as ever and is far from a permanent two-horse race between Apple and Samsung," CCS Insight wrote. "Although Android and iOS have created an operating system duopoly, fragmentation caused by Chinese government regulation and ecosystem growth on top of Android means the competitive significance of this duopoly is declining. Android's dominance does not translate directly into dominance for Google. The complexity of the smartphone market and its broader relationship with other technology areas and business models means change is likely to be abrupt and substantial."
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