Google’s (NASDAQ: GOOG) Android mobile OS continued to gain market share in the U.S. during the second quarter. But that may not matter. The operating system is free because it is open source. Google has not shown any evidence that it makes a great deal of money on the software. Android’s adoption is spread among half a dozen smartphone manufacturers, some of them financially successful and some not. And, Android faces a number of IP challenges from companies large and small.
Research firm NPD reported that:
Google’s Android operating system (OS) continued to dominate U.S. smartphone market share, accounting for 52 percent of units sold in the second quarter (Q2) of 2011. Like Android, Apple’s iPhone OS (iOS) experienced slight quarterly gain rising to 29 percent in Q2; however, BlackBerry OS share fell to 11 percent, as Windows Phone 7, Windows Mobile, and webOS held steady at less than five percent of the market each.
Companies like Motorola Mobility (NYSE: MMI) have not done well with their Android-powered phones. That has shown up in earnings. HTC and Samsung have done well with Android though, and it is their platform of choice as they enter the rapidly expanding 4G smartphone business.
Android has become a legal target based on evidence that the intellectual property used in the operating system may “borrow” from patents filed by other companies. Oracle (NASDAQ: ORCL) has claimed infringement. An Apple (NASDAQ: AAPL) lawsuit against HTC appears to be based, at least in part, on IP violations by Google. HTC pays Microsoft (NASDAQ: MSFT) a license fee for its Android-powered phones. This Microsoft license could be imposed on other smartphone companies if the largest software company can bring and win patent suits against Google.
Android’s adoption is extremely impressive and is written about in the press and by analysts as a critical part of Google’s future success. That is only true if Google can run a gauntlet of IP challenges. Android, and the smartphone companies that adopted it, may face a beating unprecedented in patent law. Great success has a drawback: it makes the successful party a target.
Douglas A. McIntyre
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