Google's China: Android on thin ice?

Thursday 20 September 2012 | 12:52 CET | Market Commentary

It was a lot for Acer to swallow in a short period. The company was ready to launch its first smartphone running the Aliyun OS before Google intervened. The press conference was just about to start when Acer called the whole event off. Google did not mince words: Acer, an Android partner and member of the Open Handset Alliance (OHA), would be well-minded to forget about Aliyun. If not, then Acer may lose any further support from the alliance set up in 2007. 

The incident did not show Google in the best light. Media stories quickly emerged over Google keeping a tight grip on Android partners and reportedly personally intervening to stop them from pursuing Android alternatives according to the worst accusations.

On the other hand, some could see it in a more positive light, as Google finally taking steps to reduce the progressive fragmentation of the Android ecosystem. While each Android partner is allowed to deploy its own user interface over the system, the creation of a new split in the Android world was a step too far. 

Google and Alibaba, the Chinese company that developed Aliyun, started a war of words over the incident, sparing no one. Alibaba was particularly combative, with its chief strategy officer declaring: "We want to be the Android of China".

Alibaba is no bit player. It claims to be the biggest internet company in China, selling more online this year than Amazon and eBay combined. Alibaba expects annual transactions on its online shops to grow to the equivalent of around EUR 375 billion in the coming years. And just as every other internet company, it is looking to expand to mobile. After the clash with Google, Alibaba swore it would continue its mobile strategy without any concessions. 

How scared should Google be? Given the market share of Android in China, not much. Recent research shows that Android has as much as 80 percent of the Chinese smartphone market. This comfortable position was made possible by Chinese manufacturers, such as Coolpad, Huawei and ZTE, which were quick to launch iPhone alternatives in the shape of low-cost Android phones. Other Asian partners in OHA that are active on the Chinese market include Asus, Haier, HTC, Lenovo, LG, NEC, Sharp and Toshiba.

This solid basis does pose a problem however. If Acer, under pressure from Alibaba or for other reasons, decides to go ahead with Aliyun devices, it runs the risk of being pushed out of the OHA. This could unsettle other Android partners that may also be getting tired with Google's interminable influence on Android.  

Google is keeping a close eye on what's happening in the Android world. Notably the biggest Android partner recently unveiled the first smartphone running on Windows Phone 8, while the premier really should have gone to Nokia. ZTE also announced this week plans to launch in the coming months a smartphone running the new Mozilla OS. Rumours have also surfaced of Huawei developing its own operating system, although these were denied by the company. 

These apparently innocent side projects, not to mention the worldwide patent suits, are reason for Google to look critically at the way it's currently profiling itself in the market for mobile operating systems, especially in China and neighbouring Asian countries. 

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