Daniel Eran Dilger in San Francisco
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Google’s Android Market Guarantees Problems for Users

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Android Market
Daniel Eran Dilger
It’s great news that Google is planning to deliver a market for mobile software with its own centralized “Android Market.” It should give Apple’s iPhone Apps Store competitive pressure to continue to innovate, and provide a safety net for smartphone users if Apple fails to deliver progress fast enough. If Apple and Google both fail, users will be stuck with the failed third party software models related to Microsoft’s Windows Mobile and Nokia’s Symbian. Those high stakes make it all the more disappointing to find that the Android Market fails to answer the tough issues correctly.

iPhone App Store vs Android Market.

There’s no doubt that there will be apps that make it into Google’s Android store that aren’t currently available from Apple, likely including WiFi tethering (for using your mobile’s data plan to give your laptop Internet access on the road), a feature Apple forced NullRiver’s NetShare to remove from the iPhone store. That was apparently at the behest of AT&T, which staunchly refuses to support tethering without charging an expensive additional fee.

AT&T’s 3G network is already strained to carry relatively light-duty mobile traffic; unrestricted amounts of data being dumped on the network from far more demanding desktop apps by millions of users is currently just infeasible to accommodate. Other providers have 3G EVDO bandwidth to spare, but will cut you off just as quickly when you reach their finite definition of “unlimited” data access.

Finite bandwidth is not a problem Google’s ‘free and open’ software market can solve, because Google is not the only link in the chain in providing mobile apps. AT&T isn’t going to allow tethering from Android phones either, regardless of Google’s intended store policies. And Verizon Wireless likely isn’t going to allow WiFi on Android phones at all. So it’s a joke to say Android will transcend every problem in ways that Apple hasn’t. This isn’t a case of Google acting like Netflix to offer unlimited content to rival Blockbuster’s censorship; instead, Google is simply making great sounding campaign promises it won’t be able to deliver.

AppleInsider | Google reveals open Android Market to rival iPhone’s App Store
Will Google’s Android Play DOS to Apple’s iPhone?
Why Apple Plays God with the iPhone SDK

But Wait, There’s More (And Less).

The Android Market will also deliver lots of problems Apple isn’t, including a way to distribute malware that can’t be remotely killed, or untraceable spyware that professes to be on the up-and-up when you install it, but then works behind your back and phones home sensitive data to a rogue developer’s servers. Remember all the speculation last year about the possibility of developers being able to hack the iPhone open and install their own malicious tools to watch what you’re doing? Under the iPhone SDK, access to that dangerous path is simply forbidden. Under Android, there’s not so much as a handrail for users.

Apple has already reprimanded iPhone developers who provided inadequate protection of their users’ data, and then forced them to fix their problems immediately. With Google advertising its “see no evil, hear no evil” policy for its self-policing development community, Google won’t even know if there’s a problem. It will also lack any way to stop or reverse problems, and having renounced any accountability for protecting users with regulatory controls, Google will lack the leverage to push malicious or possibly just incompetent developers to take any action once it does discover problems.

Malware and junkware on the PC is a big problem, but on a smartphone it is orders of magnitude more serious of an issue. Having to run spyware cleanup on a PC is a nusance. Having your phone subverted into a tool for advertisers or identity thieves could easily result in issues on the level of life safety. If you thought it was embarrassing to have Outlook send out spam in your name in 2001, wait until Android starts drunk dialing all your contacts to tell them about special offers, attaching your GPS location and perhaps a recent photo from your album so they know they can trust you about it.

Google seems to think it can simply ignore security problems by asking developers not to take advantage of its users. This is absurdly ridiculous in our modern context. Google may as well be building unvented fireplaces in a tornado alley trailer park.

200804010234-1

Ten Myths of Leopard: 9 Apple is Spying on Users!
The Unavoidable Malware Myth: Why Apple Won’t Inherit Microsoft’s Malware Crown

Wired’s Grotesquely Rank Hypocrisy in Mobile Security.

Where did all of those mobile phone security experts from last fall run away to? They were abuzz about the imagined catastrophe that might befall the “can’t even run any software” iPhone, but none have stepped forward to posit an opinion on why Android’s exposed spinning blades in a dark room might result in the world’s next Windows XP.

Wired, which led the witch hunt against the iPhone last fall, published an article this summer titled “Google’s Open Source Android OS Will Free the Wireless Web,” which went on breathlessly for days about how Android would solve the industry’s problems with giddy can-do chutzpah. Nowhere did the article even suggest a criticism of its wide open, security-free business model.

Instead, the author announced, “Engineers who write for just about any mobile operating system today have to spend time and cash obtaining security keys and code-signing certificates. Android would allow any application to be installed and run, no questions asked.” If you’re waiting for the other shoe to drop, don’t bother. It ended right there on the “time and money savings” of not having any security model. Microsoft saved a lot of money by ignoring security, too, as long as you don’t count the $11 billion malware industry. Shame on Wired for continuing its descent into hopelessly unplugged irrelevance.

 Wp-Content Uploads 2007 11 200711191633-2

UnWired! Rick Farrow, Metasploit, and My iPhone Security Interview
Kim Zetter and the iPhone Root Security Myth

Continues on page 2 below.

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34 comments

1 antiorario { 08.29.08 at 4:22 am }

Cool new design. And I like the random pictures – a trick I used in my own blog a few years back. Too bad Google still feeds you iPhone-knockoff ads…

2 Jon T { 08.29.08 at 5:15 am }

Google may have the motto of “do no evil”, but even they have to accept that they are in a minority – assuming they are achieving that aim.

I always find it curious that Apple always seems to attract the kind of attention that Wired gave the iPhone as above. What is is about Apple that makes it attract so much negative spin? Its secrecy? Its success? Its ultra-loyal users? What is it?

Like the new site design by the way.

3 Berend Schotanus { 08.29.08 at 6:08 am }

“It’s great news that Google is planning [...] Android Market. It should give Apple’s iPhone Apps Store competitive pressure [...], and provide a safety net for smartphone users…”

Well said! I’m really happy to hear this appreciation for competition as a driver for innovation, even when things are getting tough and reality of course is much more ugly than shiny theories.

Safety is a tough issue. The story reminds me of Alan Greenspan’s explanation how we expected in 1989 that free markets would conquer the world. Then, a few years later, it appeared free markets failed miserably in countries like Russia because they lacked a proper functioning courts system and didn’t have adequate and fair rules about basic economic ownership. In the West we had always taken our Courts of Justice and legislative systems for granted and failed to appreciate their real importance. Of course this lesson didn’t take away the power of free markets, it’s more that it is such a delicate – yet fascinating – equilibrium between freedom and regulation that really works.

Another association is the “Web of Trust” as described by Tim Berners Lee. He seems to have understood a long time ago that a free and decentralised Internet can only function when there is also something like Trust. I don’t have basic fundamental understanding (yet) of what he means but it is intriguing and I am convinced these thins do matter.

Talking about equilibrium between freedom and regulation I think we also have to recognise Apple is not just the typical centralized hierarchic moloch. I think Steve Jobs is aware of the need to find such an equilibrium and he is doing a sincere attempt to actually find it. He is talking about an ecosystem and offers space to third parties to deploy their own creativity and the third party market around Apple is thriving. Of course the App Store really is a market – and a great one. And, despite Apple’s much criticized secrecy, there is a community that can make itself heard and that can put pressure on Apple to solve issues like (just for instance) Copy and Paste.

So the challenge remains all open to Google, Nokia and all those others to reach the same quality as a Market Master that Apple already obtained.

4 lantinian { 08.29.08 at 6:51 am }

That insight into the possible danger of unrestricted apps on the GPhones really opened my eyes. If mailware, spyware and so on as easy to find for Andorid as they are for Windows and installing them is as easy as apps are on the iPhone, then Google risk loosing a lot.

5 lmasanti { 08.29.08 at 7:13 am }

quote:
“What is is about Apple that makes it attract so much negative spin? Its secrecy? Its success? Its ultra-loyal users? What is it?”

Success maybe? Envy?

6 davebarnes { 08.29.08 at 9:57 am }

Interesting new look.
Pale is obviously in. Must be the lack of sunshine in San Fran.

7 djspiewak { 08.29.08 at 12:20 pm }

Valid point that carriers are going to censor the apps fairly closely. Tethering is a big one, but I’m not sure that they’re going to go much beyond that. Remember, they signed on to this “Android Alliance” thingy without any voiced reservations. Since contracts are still considered legally binding, that has to count for something.

With regards to security: do you seriously thing that just because the android store doesn’t have cert-signing and a remote kill switch that it doesn’t have security? Despite what the gods at Apple tell us, there are numerous techniques for securing an operating system. The truth is that forcing single-authority signing is the *easiest* way to go about it. A better solution is just to build a secure platform. Don’t create a security system where you only trust signed apps; instead, don’t trust any at all! If the platform is secure, the malware will have to resort to social enginering to get what it wants, and no software solution in the world can plug the analog hole.

It’s ironic that you’ve chosen to compare the Android app store to Windows XP, considering that certificate-based security was *exactly* the solution Windows attempted in that operating system. It failed then, and I seriously doubt that it will succeed now with the iPhone. XP is laden will malware nowadays, despite its certificate-based security. By contrast, MacOS X has only been subjugated to a very few serious threats outside of social engineering, and it allows the easiest and least-restrictive installation process known to man. Considering the outcome, which one do we think is the model to follow?

8 NormM { 08.29.08 at 12:36 pm }

There are clearly costs associated with an open market, but it seems to me that an open market has historically worked better. Google is a trusted party that can provide reliable infrastructure for distributing software and associating it with particular merchants. Beyond this we have open software distribution, just as we have for third party software on the Mac or Linux.

You cite as a major disadvantage that without central control carriers can’t impose restrictions on what applications users run. I would argue that if, for example, carriers care about what bandwidth resources users consume, they can charge directly for those resources (or average them into everyone’s cost). The fact that carriers won’t be able to block specific applications, such as VOIP over their cell networks, means they will have to accept the status of dumb data pipe in order to run Android phones. This is a status they will eventually be forced to, but it may be a barrier to their acceptance of Android phones in the near term. On the other hand, maybe some carriers will quickly jump on the Android bandwagon, forcing others to do so as well.

As for malware and security, as you have often pointed out there is little malware for the Mac and Linux, which both have open access to third party applications. The marketplace invents mechanisms, like certificates and app signing, when there is a problem to be solved. Since PC’s already see most of a person’s sensitive data, including contacts and bank passwords, I would challenge the contention that having an open mobile market is significantly more dangerous than having an open market for software in general.

The disadvantage of Apple’s approach is that being on the side of the carriers puts them in opposition to their customers and prevents them from giving their customers some things that they want and that Android can deliver. Apple may find itself contractually locked into enforcing constraints that prevent it from reacting quickly to competitive challenges.

9 Scott { 08.29.08 at 12:51 pm }

Love the new look.

Funny you say “Android starts drunk dialing all your contacts to tell them about special offers” because that is exactly what GMail did to me. Some fraudsters cracked my GMail account and stole all my contacts and sent junk mail to all of them. Emails to GMail people when all in vain. It is funny how Google wants to be Microsoft with all of its faults!

Security is the one thing I will never compromise on. It is the main thing that got me tired with PCs and is the reason I will never go back!

10 designguy { 08.29.08 at 1:13 pm }

I agree completely Daniel.

It seems, that those of biased hatred for Apple, yell the loudest from their lofty perches, editorial or otherwise. I am truly at a loss, as to how so many people (the majority in fact) assimilate lies without a filter.

Your analysis of internet dangers should be heeded, more so than speculative editorials on potential iPhone dangers, written by the many all informed plaguing our society. Unfortunately Apple does not run the information “marketplace,” so that we may shut out those who offer only commentary or “smoke and mirrors.” :)

Thank you for your continued efforts Daniel, as an intelligent “filterer,” I sincerely appreciate it.

Question Everything! That we may define the truth!

11 hermitcrab { 08.29.08 at 1:23 pm }

@Norm -

You said that Apple’s approach puts them in opposition to their customers, and suggest that Android would not be this way. I have two reflections on that.

First, it really depends on what the customers want, I guess. Here’s what I want, and have wanted for the past 8 years. I want a reasonably small cell phone that syncs perfectly and without headache to my contacts, calender and email from my computer. I’ve owned 8 different smartphones of every variety in the past 8 years trying to find one that would do this. They all promise to. They all have users that claim they do. But in my experience – multiple duplications, cobbled-together sync applications, phones overriding my PC contact book and over writing it, you name the disaster, I’ve had it – none of them have worked for me. Simple User Experience is the thing I am paying for. I don’t want to read a manual. I don’t want to spend hours researching forums and blogs trying to find the hack or work-around or downloadable that will solve my problem. I want a phone that works. Now, for me personally, the iPhone is the first cell I’ve had that has measured up. I know that other people have complaints, and some of those seem valid to me. But in my experience, this phone has been the best I’ve had. The App store has been fantastic for me, far superior to any of the solutions I used with my RIMM, Palm or PocketPC products. So in my case “what the customer wants” has been aptly served by Apple’s strategy.

Now, does that mean that there are other customers out there who want to be able to tinker to their hearts content, run their phone from the command line, write their own software or whatever? Sure! And the market will serve them. But Apple is serving s large customer population by giving them exactly what they want.

Second, isn’t the real issue here for Apple, Google, or any handset/software provider the bottleneck of the carriers? A good portion of the complaints about the iPhone really are complaints about AT&T’s hard-edged efforts to protect their various streams of income, and new Blackberry BOLD users on the AT&T network are discovering that the same problems the iPhone has exist for them as well. Isn’t the real issue here that we need a new mindset in the carrier market? Instead of seeing themselves as sellers of handsets and various tack-on services for charge, they need to re-envision themselves as mobile ISPs. That’s what they do. They provide bandwidth. All our phones and software makers would benefit from carriers developing a new business plan where they invest in providing the best ubiquitous bandwidth possible. I’m not a prophet, but I suggest that the first carrier (or more likely, start-up) who gets this and and builds this business will dominate the market.

Again, it’s not Apple that standing against the customer. In this case it’s the carriers who are opposed to anything but taking money out of our wallets.

12 nat { 08.29.08 at 2:18 pm }

Jon T said:

“I always find it curious that Apple always seems to attract the kind of attention that Wired gave the iPhone as above. What is is about Apple that makes it attract so much negative spin? Its secrecy? Its success? Its ultra-loyal users? What is it?”

I think it’s a couple things mainly. First, the uninformed tech media wants to ride Apple’s popularity and the best way to get attention is to post ghost stories with scary headlines. Organizations like Greenpeace have done it to, rating Macs the worst in terms of eco-friendliness because Apple doesn’t grandstand like Dell and HP do or stick in a “plant a tree” option at the end of their online ordering process. Greenpeace and places like Kotaku and Joystiq have done the same to Nintendo’s hugely successful Wii.

Second, I call it faux objectivity. They think there needs to be negative scrutiny for every piece of good news. Reminds me of the cable news channels that hounded every politician and delegate, incessantly asking “but what about Hillary!? Isn’t there major disunity or controversy here!!!?” at the DNC. Then the tech pundits turn around and give Microsoft a big pat on the back and a slap on the wrist. It’s as if they believe there has to be two opposing sides to every story, which just isn’t true.

13 taekk { 08.29.08 at 2:38 pm }

It seems hardly fair to make any assumptions based on the security failings and sloppy work of Microsoft in Windows to Google’s efforts here. By your argument, the ability to download and run any random program will be just as problematic for Macs as PCs. But as you yourself said, it’s the underlying technology and the security model that counts, not how popular a platform is. And just why is mobile security more important than desktop security? Because you can make phone calls? People use their credit cards, online banking, and have all their documents on desktop. I don’t think anything is more critical than protecting all your personal and financial information.

And all the issues you’ve described with mobile providers can be addressed with technology. If Verizon only wants apps that they approve to be installed on their phones, it doesn’t seem like a difficult thing to do since Google will have all the control here. Also, the greediness of US telecom industry doesn’t extend to the rest of the world. People in China have enjoyed the ability to use whatever phone they want with any provider for the longest time.

Personally, the biggest problem with Google’s App Market place will be how well it’s integrated with the phone. If it’ll synch all your purchases and files like iTunes and is packaged to work seamlessly with the phone and provide ALL the needed functionality in one place, it will be a success. If you need to install other Verizon or T-mobile crap in addition, security is not going to be an issue because nobody is going to be using it anyway.

14 danieleran { 08.29.08 at 3:20 pm }

re: cert security and desktops:

Microsoft’s cert security in XP is quite limited; it does not require that all apps are signed like the iPhone and other modern mobile platforms. And frankly, the industry doesn’t trust Microsoft to exert its authority over the PC platform, so Microsoft can’t (that was one of the goals of Paladium).

Anyone could still run and install software from questionable sources on XP, without warnings and without even knowing that software was being installed and given nearly limitless privileges. There really is no app-based security in XP outside of drivers that want to be signed.

This is a difficult thing to pull off retroactively. Both Windows and the Mac desktop have a level of openness that will be hard to shove back into a Pandora Box of tight security. Those risks are fairly well known; users should know better than to install software they don’t trust, just as they should know better than to follow URLs in emails that direct them to Nigeria to sign up to receive millions because they are beloved Christians whose implicit trust is needed in order to spirit wealth out of the hands of criminals or however the story goes.

When desktop users do install software they shouldn’t have, they end up with the typical Windows adware popups, keyloggers, and spambot infections. Mac users can also be tricked into installing trojans that could delete their files or potentially throw up ads and even install email junk forwarders.

One big difference between the Mac & PC is that Mac users have more of a community online where users can report and find out about potential problems before they become serious. PC users trying to find information about malware are overwhelmed by junkware ads purporting to solve their problems for a fee, many of which are themselves malicious spyware.

On mobile platforms, the situation is completely different. Adware moves from an irritant to a dead battery or dysfunctional phone. Spyware moves from collecting aggregate marketing data about which sites you visit to becoming highly personalized identity theft that can pin your activities to your mobile account. Desktop spambotting turns into a paid SMS scam that can charge you thousands of dollars for being victimized to send out ads.

Also, both the iPhone and Android are all new platforms. Not setting up a best-effort security system from the start is negligence, not just poor planning. These are known issues. WiMo and Symbian are working to set up cert signing, which is not as easy to retrofit, but for Android to come out and say, “this is a difficult problem, so we’re just going to not deal with it” is as irresponsible as saying “there’s a lot about climate change we don’t understand, so we should just ignore the problem.”

Apple will no doubt have some learning experiences in strengthening its app security system, but it started out with a strong effort to do things right from the start. Google is just being ridiculous in this case.

15 Realtosh { 08.29.08 at 3:21 pm }

@danieleran

Great series. You’ve truly got me thinking about Android in a new way.

Google will need to address a new issues before Android can really take center stage.

I had thought that Android would take the place of Windows Mobile. Now I’m not so sure. No matter how much you rail against Google, it is still much more preferable to have non-iPhones running a standards-based Android than Microsoft’s proprietary technology.

Android’s browsing capabilities are still built upon WebKit, the same engine in Apple’s Safari; featured prominently on the iPhone. Linux is a technically much better kernel than WindowsCE, which is a joke technologically speaking.

There’s nothing preventing Google from building security into their platform, just as Apple is doing with iPhone’s OS X. Google has a long way to go before we can accuse them of being Microsoft.

The biggest problem with Android is not security. Google can fix that before they actually start shipping phones based on it, if they chose to do so.

The biggest problem with Android came up ironically in a comment of yours, instead of the long-winded articles on the same topic. Linux is open source, and requires all code added upon to be shared with the community, i.e. competitors.

It was enough for Steve Jobs to pass on it back in the NeXT days, and instead opt for BSD.

As you’ve pointed out, many commercial companies that were using embedded Linux dropped it for more focused solutions. You correctly point out that they didn’t drop Linux fnecessarily for a better solution, which was often the case; they dropped Linux because using Linux would make them release their proprietary code.

By building their solutions on Linux, they had to disclose their IP which could be used both by their competitors, and also by their own customers in ways that circumvented intended marketing positioning of their products. Both scenarios robbed the affected companies of revenues that would’ve otherwise been due from their investment in their own code.

Google has no problem with this feature/ draw back of Linux and therefore anything built upon Linux like Android. But the other big commercial players, whom I had imagined would’ve added much to Android, would have the most demonstrable problem with giving away their code and their competitive advantage against their smaller less able competitors.

There’s still a place for Android. But, as I see it now, it will be mostly with OEM manufacturers, such as HTC, who wouldn’t want to invest in software anyway. These OEMs will make carrier-branded phones for many/ most of the carriers that will have many of the major features of the iPhone at a greatly reduced cost.

Google will contribute the software, in exchange for ad revenue.

The OEMs will contribute the hardware manufacture, which combined with Google’s FREE Android will give them a product potentially more profitable than making other companies phones, including Apple’s iPhone.

The carriers will contribute the distribution. The carriers will prefer to subsidize one of their ow branded phones, which would cost them less, than someone else’s phone whether Apple’s iPhone or some other phone from RIM or Nokia. The carriers’ goal after all is to get customers using their networks. If they can do it for less, by not having to subsidize the profitability of the cell phone makers, even better.

Even carriers that have iPhones and BlackBerries displayed, may have a financial incentive to sell a cheaper knockoff made by a faceless manufacturer in the Far East, which is bundled with Google’s FREE Android. Their fixed distribution and marketing costs don’t change dramatically whether they sell Apple, BlackBerries or Nokias vs their own branded phones. The only difference is that with their own phones, not only can they have a greater say in what the phone and its’ feature set look like, the reduced cost and reduced subsidy can make a contribution toward their fixed costs and overhead, and result in greater profitability for their companies.

If millions of these Android phones do sell, and I’ve already shown why and how the carriers would want to push Android or Android-like phones, with their own branding and cost benefits; these millions of phones will create an immediate marketplace for software. Developers would want to write their apps for Android phones, if enough units are sold.

Nothing would prevent developers from porting their applications to Android. In fact, it would make sense for Google to create tools for easy porting of apps from other mobile Linux platforms and /or from Apple’s OS X. Porting from OS X might be the more challenging, but if all the projections are correct the larger marketplace. Making it a great place from which to poach third party apps, by making it easy for the developers to make some more money in another marketplace with a port of the same apps.

Google can even copy the App Store, unless Apple successfully patents critical parts of it. This may in fact be the real reason for the continued NDA on the iPhone SDK, even though the phone is already out, and even though the NDA makes it a bit harder for white hat developers to share their tricks of the trade for making developing for the iPhone easier.

So Google can give away the platform, and the security (even if it doesn’t exist yet) and the app store (even if it doesn’t exist yet), because they’ll get their ad revenue. There are many players that can make use of a FREE platform from a company that has a very strong financial reason for continuing to provide that FREE platform — profit and revenue from the ad revenue. OEMs and carriers would make greater profits, or reduce their costs (vs subsiding other manufacturer’s phones). So there would be a large number of industry players that would benefit from the solution that Android makes possible.

That huge benefit to these industry players alone won’t force success upon Android. Google will have to work hard to make sure Android fills the needs of these companies. Windows hasn’t fit the bill. You seems to think that Android won’t either. But if Android doesn’t, then Windows Mobile or someone else will provide a workable solution at some point.

The competitive advantage is that Google is willing to give away the software in order to gain the ad revenue. Microsoft, at best, has given away the teasers in order to establish market control and make it up later, by being able to charge whatever they want in a software monopoly. Microsoft may not yet be prepared to give away Windows, apart from trying to establish a new platform monopoly. Their corporate DNA is not yet capable of giving away the platform, in order to gain ad revenue. Their business model was not set up that way.

Plus, Android seems to be leap years better than anything mobile that Microsoft has concocted in 10 years of trying.

The part of this analysis that has changed for me is the contributions from the largest industry players. The Nokias of the cell phone world, that have the resources to build their own platforms, probably wouldn’t want to base their products on any easily available software, such as Android, that wouldn’t differentiate their product much from their competitors. However, after looking more closely at the code disclosure requirements of building upon Android (by being built upon Linux) will likely mean that none of the biggest cell phone makers will ever contribute anything to Android. By corollary, none of the biggest cell phone makers will ever make Android phones. That will cut into Android’s potential market.

It also means that Palm is screwed, since they’re building their next gen OS on Linux.

Service providers that get paid to service products, like Red Hat, IBM, and the cell phone carriers can make use of Linux, because they get paid to service their clients, so using FREE Linux doesn’t cut into their business model. Gadget makers, like Apple, Palm, RIM, router makers, etc, would be adversely affected by having Linux on their products because it takes away their ability to create proprietary code for their own exclusive benefit and takes away their ability to be able to differentiate their products from other makers of similar gadgets.

Phones will get increasingly more complex. As the costs of components come down, a larger share of mobile phone sales will be smart phones. Many players in the industry will be unable or unwilling to commit the resources in order to create an entire platform in order to ship smart phones. This will likely be true of all of the carriers and of many of the smaller makers of cell phones, the second tier. And it is especially true of OEM manufacturers, who will have more profitable products to sell by including Google’s FREE software.
So…

Linux is not good for Android (or Palm for that matter.)

Many industry players will need many cheap smart phones. These companies will have a monetary incentive for a class of cheap smart phone to come into existence.

Someone else will have to provide the software, because everyone’s not going to reinvent the wheel over and over. That someone can be Android, Windows Mobile, or some yet to be announced platform. But the market need will be there. Using FREE Android or some other FREE product would make cheap smart phone not only possible, but likely.

So where can we go with all of this.

There will likely be several large players: Apple, Nokia, RIM, maybe Palm, possibly Samsung, and who knows maybe even Motorola if they can get their act together. Most other players will not be able to keep up with the investment necessary to create and maintain a platform. The carriers and OEMs will continue to have incentives to use whatever tools, especially FREE ones, are at their disposal to create products that are mutually more profitable for them and carriers, than products from the major phone makers.

So I can see Apple easily being the leader of these major smart phone makers. Therefore I also see Apple as the leader of all cell phone manufacturers, as I see the entire cell phone industry transitioning over to smart phones over the next 5-10 years at the latest. Even if some of the phones are lite versions of smart phones, phone will mostly be much more advanced.

Apple will is uniquely positioned to succeed in that changing marketplace. I’m very bullish on Apple. I don’t see myself ever having the need to buy a non-Apple phone ever again.

Still, I have identified a need in the marketplace that Apple will not want to meet, or will be unable to meet. The need arises as a contrast to Apple and the other major smart phone makers. If a good enough smart phone can be made cheaply enough, carriers all over the world have a powerful financial incentive to push these devices instead of more costly devices from the likes of Apple, RIM and Nokia.

No matter how cheaply, the major phone makers can make smart phones, the carriers and OEMs can create a market for cheaper, more profitable phones. By cutting out the cell phone makers and their profits, for some portion of the phones they sell, they can keep more for themselves to help pay for marketing and distribution.

Apple may have started the ball rolling, but it doesn’t end there. Many changes are coming ahead for the cell phone industry. It won’t be so easy to keep companies and products in neat little piles. New alliances and realignments of interests will create ever changing dynamics with new winners and losers.

It will only get more interesting. I find it hard to believe that it would get less interesting just because Apple has the best product. Just watch and see.

Apple will indeed have the best product. What else happens in the marketplace, in spite of Apple, or directly in response to Apple, will be interesting to see indeed.

16 Realtosh { 08.29.08 at 4:06 pm }

@ danieleran

I don’t mean to minimize the security threats of Android and other platforms. Apple has shown the world a great way to deal with it. Hopefully others will follow Apple’s lead.

My point is minimizing the security threat is not that it’s not important, but just that it is a known threat — that should be dealt with. My point is that it can be dealt with, if Google and others like them are smart enough to do so for their an dour good.

Other structural problems of the marketplace, can leave Google with no way to cure the problem.

For example, if no one who matters adds anything to Android because they can’t differentiate their products, then Google would have no fix short of changing out Linux. Having to essentially start all over again, would be more problematic than just having to create secure methods in the first place, like Apple is doing.

The possibility of of a need to abandon Linux, may mean that Google will do the least minimum coding necessary, apart from any Google software, like search, mapping, email, etc that would get ported to whatever Android would become.

Android just doesn’t smell so sweet anymore. Daniel, you’ve ruined Android for me.

I still think there a market opportunity for someone to exploit. someone like Google who is already in the business of giving away software, why not do so to create a platform.

Even if the current execution is lacking, does not negate the potential market that is existing and can be exploited. Both Google and Microsoft have thrown their hats in the ring. Symbian had also tried years ago before failing to failure by committee.

Google, Microsoft and Apple are best positioned to be able to create a solution for that marketplace. With the best chances at the greatest success, Apple has the least incentive to create competition for itself. The other two would love a crack at it.

Thanks daniel for your insightful writing.

17 nat { 08.30.08 at 1:37 am }

Whoa, oh ma gawd, multiple pages!

18 Scott { 08.30.08 at 2:49 am }

@ Realtosh

Nice business plan. The only problem with it is that it has failed, failed in the computer industry (what is Linux’s share again?), and has failed everywhere else.
Service Providers want to sell a lot of voice and data plans (there is very little money in hardware) and people who buy data do not buy cheap nasty look-alike phones and the poor who buy cheap nasty look-alike phones do not have money to pay for data plans. And people with money worry about little things like SECURITY, why, because they have a lot to lose.

19 obiwan { 08.30.08 at 4:55 am }

Although I am not an expert at all in this field, I am not so sure that malware/security issues will be a big problem for Android. According to this page: http://code.google.com/android/devel/security.html Android has some pretty fine grained peermission system.

When installing an application like for example Aurora Feint, the installer would probably have asked you to explicitly grant READ_CONTACTS permissions.

I cannot remember being asked for that when I installed Aurora Feint on my iPod …

20 John Muir { 08.30.08 at 9:46 am }

@Berend Schotanus

Very insightful.

It seems to me like Google are trying very purposely for the other side of the freedom / responsibility coin than Apple right now. They want to be the darling of open source advocates, hobbyists, tinkerers and yes: journalists.

That’s only of limited good though, of course. And doesn’t answer this article’s central point: security!!!!

Perhaps Google have decided that they don’t want to be seen as the second Apple of smartphones from the get-go, and that this “everything goes” approach is their best way to start for the moment. Then maybe they’ll tighten things up once it is demonstrated just what a potential mess anything like this attitude creates.

Or, maybe, they really just do believe too hard in the Linux ideal and are about to be stung big time.

I must admit that it doesn’t really make much sense! Rather like the events in Russia where Western interests attempted to found a radically free market economy while institutions crumbled and people starved. The same ideas that were in certain planners minds when they went into Iraq … but I’ll not bait a political flamewar any further!

(I’m only just at this article now so haven’t read the subsequent debate.)

21 obiwan { 08.30.08 at 12:10 pm }

The problem with this article is, that it predicts security issues with the Android market place, while ignoring any problems with Apples SDK/AppStore security model. Actually, sort of the predicted scenario already happend with an application in the App Store.

Apple temporarily pulled a game from the App Store, because it sent a list with all contacts found on the iPhone to some server, without informing the user about this (google Aurora Feint + privacy to find details). This, I would call the classical behavoiur of a trojan.

The fact that this was possible at all, and that the app was pulled only
AFTER the fishy behavoiur was detected by end users, leads me to the following conclusions:
- Apple’s Quality control for AppStore applications is insufficient
- The SDK allows any application to access internal data (at least your contact list)

If this scenario is possible with Androids SDK remains to be seen. From what I have read so far, I doubt it.

22 John Muir { 08.30.08 at 1:24 pm }

@nat

Fake Objectivity indeed!

That’s how essentially every subject is covered, and not just in America. Over here in Britain we hear the same Hillary fixation as in America. Meanwhile our government’s doomed in the opinion polls but the media still try to paint the opposition as a bunch of corrupt and bitter losers, right as the public have switched over to them en masse and their victory is a certainty.

I don’t mention the tech media in Britain because they very nearly don’t exist. Look over to the Inquirer and the Register and that pillock on the BBC for what kind of Enderlean prattle passes as Apple commentary over here. Unless it’s a deep negative, you just don’t hear about it.

BBC:
“Oh: look! It’s Bill Gates! And he’s saying stuff! Let’s gather round!”

I’ll let the reader recognise the Simpsons quote.

23 John Muir { 08.30.08 at 1:34 pm }

Another good Fake Objectivity example came up recently. And this is on the BBC, who should really know better. They’re paid for by tax payers after all…

BBC reporter: So the high price of oil is a good thing in your view?
Environmentalist: Yes.
BBC reporter: But what about this disabled driver!

Environmentalist: Most drivers aren’t disabled. We could compensate drivers who really need to drive.
BBC reporter: But high fuel prices are a “good thing” in your view?
Environmentalist: Most journeys are pointless and should be by public transport, so yes. There are tens of millions of cars clogging up this island.
BBC reporter: And the disabled guy?
Environmentalist: He’s an exception.
BBC reporter: So in fact expensive oil is very, very bad!
Environmentalist: Look, there’s actually not all that many disabled drivers in the country. We can make an exception for them.
BBC reporter: Precisely why do you hate the disabled?

I’m not the biggest fan of the barking mad far left wing side to the British green movement in particular. But the interview which went essentially like what I’ve given above even made me concur that the journalist was being a tosser.

24 John Muir { 08.30.08 at 1:57 pm }

@obiwan

That game was a mistake. (And ideally should have triggered just such a warning.) But Apple resolved the matter pretty quickly. Don’t forget that they have a central kill switch if anything gets really nasty … while Google does not.

A lot of the conversation (besides Realtosh’s thesis!) seems to revolve around architectural security versus social attacks. Although Windows really suffers from both, I dare say the internet would be almost as spam filled and scammer laden if Microsoft’s finest had actually put the slightest effort into security. Why? Because social exploits can be just as potent. Otherwise what else would be Nigeria’s biggest industry!?

25 obiwan { 08.30.08 at 3:33 pm }

@John Muir

“That game was a mistake. (And ideally should have triggered just such a warning.)”

Agreed, a mistake. But on Apple’s side, for not building in some security measures into the SDK to prevent this. Android would not have allowed this action, if it was not granted by the user during installation.

“But Apple resolved the matter pretty quickly. Don’t forget that they have a central kill switch if anything gets really nasty … while Google does not.”

That kill switch obviously did/would not help in this situation. Once your contact list is transfered, your private data is compromised. Having Apple kill/remove this App several weeks later, does not change this.

Regarding, the potential of social exploits, I agree. But architectural security can help to at least make these exploits more obvious. IMHO, Aurora Feint is a good example of an “partially” social exploit. It is well done (from the gaming perspective), and therefore rated pretty well in the AppStore. In addition it is free of charge, so I downloaded it!
IF the iPhone installer would have prompted me to grant access permissions to my contact list during installation, I would have removed it right away.

26 Realtosh { 08.30.08 at 11:37 pm }

@ Scott

You nicely restated a couple of my main points. Thanks.
1) Linux is bad for hardware/ gadget makers.

2) Linux has worked for service providers: IBM, Red Hat. These companies make their money from servicing.

I made another very important point that you ignored.
3) Linux has a very small share because any commercial outfit that uses Linux as a software base and adds code to it for an innovative solution must turn around and share that code FREELY with all, including their competitors. So smart companies don’t use Linux because they can’t differentiate their products and must give away their code.

I made another extremely important point that you must’ve been sleeping for, because it was the whole point of the comment.
4) The carriers distribute most cell phones in the world. What does that mean. The carriers will do whatever is best for them, not for Google, nor for Apple nor any other cell phone maker. Phones are useful only to sell more cell phone plans.

All carriers, or at least most of them want to sell the iPhone because it is revolutionary and extremely unique. This unique product will bring them more customers, and yes premium customers.

5) If you have a product that sells for half, then you’ll sell twice as many. By cutting out the phone makers profits, the carriers can sell more phones for less and make more profit doing it.

All of the carriers, or at least most of them, would also love to have a very good looking phone that does most of what the iPhone does, but that costs less and sells more units and therefore more service plans. Not having to pay Apple $200-$300 or so in gross profits means the carriers have more money to offset fixed distribution and marketing costs, or to add to their profit column.

These knock-off phones don’t need to look like crap. Any one in the chain (carrier, OEM or Google) can hire frog design (or any other good design firm) to make a very good looking phone. The hard part is to put together the software layer: OS, interface, and apps. That’s the part that Google will contribute. Google makes the OS, interface and basic apps.

Linux may not be the right solution. But there will be a solution because the market desires a solution.

There are many, many carriers. They want to sell many, many phones.

If by selling the iPhone, they sell lots of phones and service plans; then they’ll have the iPhone. If by having the iPhone and other cheaper iPhone-like phone(s); then they’ll sell even more phones than just having the iPhone alone; then they’ll have the iPhone and other cheaper iPhone-like phone(s).

If they can sell enough units, then a very vibrant software development community will develop through natural market forces.

No one has been successful yet because no one has yet made a smart phone/platform that was worthy. Apple has made the first truly great smart phone — the iPhone. Apple has created the plan for everyone — it’s called the iPhone.

Everyone will copy the iPhone — everyone. RIM. Nokia. Samsung. LG. Ericsson, HTC, etc, etc, etc.

The carriers will also want a me too product. This is a market opportunity for someone like Google or Microsoft to step in and provide the software layer.

Microsoft would want to do it in hopes of creating a new platform to which to extend their monopolistic software empire. Google would want to do it to create a built-in market for their mobile ads to generate more ad revenue. Google is even willing to do it FREE. Google has a business model that is consistent with providing FREE software in order to get ad revenue. So this fits.

A FREE software layer done well would provide the industry the most difficult piece to creating an good iPhone competitor that the multitude of carriers would gladly carry.

I wouldn’t call these competitors iPhone killers. If the current path continues, Apple will be technology and innovation leader in the mobile phone space for the foreseeable future. My point is that there will be a space that many entrenched industry players -carriers- will want to exploit. These carriers also control one of the most important pieces of the industry, besides the networks; they control the distribution.

Besides having the best phone and the best platform; Apple also brings their brand and more importantly independent distribution. If Apple didn’t sell phones through their own stores and independent sales channels, then the carriers would have complete control over the distribution of Apple’s phone products. That why Apple it is great for Apple that they sell so many through their own stores. It’ also why Apple set up a distribution deal with Best Buy to sell the iPhone at its’ 986 locations. The more distribution Apple brings to the table, the more valuable its’ relationship to the carriers, and the greater leverage Apple will have in those relationships.

However, those carriers will not want to be beholden to anyone, even Apple. So, the carriers will want to distribute their own phones. This way they can have more of the control. The carriers have increasingly sold more and more private label feature phones. No one, with more than half a brain, would question the carriers’ intention to sell their own private label smart phones as well.

Security is important. That’s one of the many reasons we’ll stick with the iPhone. There are many people who don’t know any better. What else explains why so many PCs ship with blowhole Windows.

DOn’t let any of these other issues (reasons why Apple is better, yes Apple is better) distract you from the real question– Is ther a market for cheap iPhone-like phones. The answer likely is yes.

The reason Apple is running so fast (and making some uncharacteristically sloppy execution mistakes) is because Apple wants to establish such a dominance in the smart phone space that the network effect will work for the iPhone instead of against it. The network effect is working for the iPod and has worked for the DOS/Windows PCs before that.

The mobile phone industry is particularly tricky because the carriers already have so much control. More and more influence will continue to transfer to Apple. But these other players will continue to pull for their own interests, their own shareholders and their profits.

Apple is ahead of everyone else in smart phone technology. But in this mature industry there are so many companies already making money; that want to keep it that way — continuing to make money.

The industry is transitioning to smart phones. This transition is Apple’s chance to do what no one else has been able to do before, which is to exert dominance in the smart phone space, which is the future of the cell phone industry.

Apple’s gain could be a loss for many, who have a vested interest in keeping a piece of the industry for them. Even if Apple completely dominates smart phones, the carriers collectively would want to keep Apple at 50-70% instead of 70-90% of the smart phone market.

The point of my comment is if Apple stays under 50%, say 25-50%, then there’s a chance that other by combining forces can out number iPhones. If these iPhone-like competitors are on the same platform, then network forces will work to help create an industry-wide platform that would slowly drain developers away from Apple’s iPhone OS X. 5-10% here, 5-10% there. As long as they are all on the same platform an add up more than Apple’s iPhones, they wold create economies of scale for software developers foe their platform apps.

Maybe Apple can corner the market with the iPhone, just like they did with the iPod. If the biggest players work against each other, which they likely will; then that gives Apple the best chances. Each large player ( Nokia, Samsung, RIM, LG, PAlm, etc.) will want to control their own platform. They all want a competitive advantage that differentiates their product offerings from all their competitors. That fighting will give Apple more time to establish their products as they standard for the industry.

The Symbian effort was death by committee. Nokia inherits the remains of that mess. No one trusts Microsoft enough to want to turn over their industry to Redmond. They’ve all seen what’s happened to the clones; even IBM gave up their PC business.

Google can step in where Microsoft, and a consortium of some of the industry’s largest players have been unable to accomplish much.

Linux may be the wrong foundation for the eventual solution that solves this market need for a smart phone platform. Google, however, seems to be a good potential match for the provider of the FREE software that would make this platform possible.

On the other hand, you may prefer that Microsoft fill this need through trial and error. They haven’t been able to get it right in 10 years, but now they have Apple to show them what their products need to look like. The Zune convinces some that Microsoft has lost their way, but they have the resources to keep trying. Plus in the phone industry, Apple’s success might push everyone else into the hands of the waiting Microsoft, or as I have proposed Google.

27 steveballmer { 08.31.08 at 10:50 pm }

Just wait for the ZunePhone people!

fakesteveballmer.blogspot.com

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