Why Bugdroid Is Here To Stay.
Currently, the two largest player in the smartphone operating systems industry is Google’s Android (Danova, 2014). In particular, Android has vastly increased its market share over the past four years, whereas the other operating systems either remained approximately equal (iOS) or even declined in market share (Microsoft, BlackBerry, etc.) (Danova, 2014). Yet, what could explain the rapid growth of Android? The answer to this question may be found when looking at the business models of the operating system.
The business model Android can be described as a platform mediated network. This means that the operating systems is a mere platform, that consists of components, rules, and architecture (Li, 2014). The Android platform brings together software developers on one side, and users on the other side. When zooming in on what actually attracts these two types of users, it becomes evident that the presence of the supply-side (app developers), attracts a larger demand-side (users), and vice versa. Therefore, this dependency among the different types of users is called network effects (Li, 2014). There are two types of network effects: direct and indirect (Li, 2014). In this case, the direct network effects are based on the number of users of Android-supported phones. However, since Android phones can perfectly communicate with for example iOS or BlackBerry phones, there are no direct network effects present. Instead, Android experiences indirect network effects, as the value to both sides of users depends on complementary products, such as apps (Li, 2014). Thus, if we want an answer as to why Android currently has such a large market share, we must look into both sides of Android’s users. The app developers use Android to market their apps, as Android supports a wide variety of phones (see the fragmentation in figure 1), and therefore users (Asay, 2014). Similarly, since there are more phones that support Android, the customer base of Android will also be larger.
Another factor that may contribute to the large market share of Android, is the fact that it is part of Google. In particular, Google has taken over from Apple as the most valuable brand in 2014 (Li, 2014). Since there are high switching costs involved, i.e. consumers tend to stick with a brand that they are familiar with, users of Google in general (web browser software, productivity software, etc.) will also tend to use the Android operating system (Eisenmann, Parker, and van Alstyne, 2010). Furthermore, the increasing platform envelopment of Google, that is the expanding functions of the firm, will also attract more Android-users in the long term (Eisenmann et al., 2010; Li, 2014).
So, don’t be surprised when you will own an Android device in the future: Bugdroid, the Android robot is here to stay.
Asay, M. (2014). ‘It Really Pays To Be An iOS Developer, But There’s Still Hope For Android’. Business Insider. Available from: http://www.businessinsider.com/android-vs-ios-developers-2014-8
[Accessed on: 19 October 2014.]
Danova, T. (2014). ‘Here’s What The Global Smartphone Market Looks Like Ahead Of The iPhone 6 Launch’. Business Insider. Available from: http://www.businessinsider.com/the-state-of-the-smartphone-industry-2014-9 [Accessed on: 19 October 2014.]
Eisenmann, T., Parker, G., van Alstyne, M. (2010). ‘Platform Envelopment’. Harvard Business School. Available from: http://www.hbs.edu/faculty/Publication%20Files/07-104.pdf
[Accessed on: 19 October 2014.]
Li, T. (2014). ‘Slides Lecture 7: Platform Mediated Networks’.