There’s a good reason Google’s Android Market is screwed up in China. Google and China hate each other so much. And interestingly, we are seeing over 70 kinds of 3rd party Android markets in China.
At the Google’s Android Fever panel at TechCrunch’ Disrupt Beijing, TC’s Greg Kumparak sat down with three key figures to discuss if Android is doomed or destined for greatness in China. Who are the three key figures? Representing Google, there’s John Lagerling, plus DCM’s David Chao, and Innovation Works’ Wang Hua. These three great men could almost tell you everything you want to know about the status of Android in China.
The Status of Android in China
Here’s what we know so far. There are currently 40 million Android phones in China and that China is number three in terms of development kit downloads. Android phones shipped officially here in China have application stores from handset makers or third parties pre-installed instead of Google’s official Android market. Millions of Android smartphone users in the country are not using the official Android market, and most of them do not even know they are using third party Android markets. And according to one recent survey, panelists noted that Android is currently dominating China’s mid-range market for smartphones. Everything looks good, and here’s what David Chao, co-founder of venture capital firm DCM and a former Apple employee, said about Android’s status in China,
“The Android market in China is going through a chaotic phase,”
What does he mean? Well, according to him, there are as many as 70 third-party application stores for the Android Market in China Yeah, there’re lots of 3rd party Android markets in China, and perhaps the most successful one is AppChina (invested by Innovation Works), which crossed an aggregate of over 100 million downloads, and you would not believe this, all of the apps available on the store are FREE. Below are some more examples of 3rd party Android markets in the country.
Actually, repackaging happens when someone downloads an app from Google’s official Android Market. They can then inject their own code into the app and then upload it to an alternative Android Market. Sometimes they inject malware. Sometimes they inject their own ad code so that advertising dollars flow not to the original app maker but to the person repackaged the app. What’s more, the repackaged apps somehow request more permissions than the original app. (On Google Android phones, users are often prompted to give their permission for an app to access certain functions within the phone, such as accessing their contact lists). That’s ominous, considering malware often triggers permission requests.
No-one is making money on Android in China
It’s really sick to see a bunch of Android markets in China. But here’s one fact, no one is making money on Android in the country. The reason? Vast of Android apps are free to download and use. Almost 90% of the apps in the 3rd party Android markets are free, so how do these markets to count on free apps to bring in revenue? What’s more, these markets have to afford an array of costs ranging from bandwidth, servers and so on. And perhaps here’s the most important reason: Given the promising potential for mobile forefront, the aforementioned issues didn’t stop the emergence of new Android markets, which leads to mounting competition in the area. And since they’re all offering similar services, none of which is really standing out from the crowd. After all, every market is a pirate, each of them serves a legitimate need for localized Chinese language apps, and also host pirated and repackaged apps..
In response to the noisy chaotic Android market, David Chao mentioned his US$100 million fund for app development in China.
“Nobody is making money on Android software in China,” he said. “But over the next two or three years it’s going to be one of the most lucrative properties.”“I used to work for Apple and I understand the shortcomings of Apple,” Chao added. “I believe Android is the MS DOS/windows vs. Mac in the 80s and the 90s. Android surpasses the Apple iPhone and iOS and for the ecosystem to thrive it’s all about the numbers.”
“The Chinese market is much more chaotic, more open. It favors the Android ecosystem much more,” he said.
David also thinks that a few dominant app sources will emerge in China – though not necessarily Google’s, saying, “All those 70 competitors (3rd party Android markets) will narrow down.”
He’s right. One of the issues that has arisen with the variety of Android app markets in China is the difficulty in supporting app updates, which has caused some confusion among developers. Today, you’re looking at almost 70 independent marketplaces, but perhaps two to three years from now, there will be only 10 marketplaces in the country.
You may ask, is it true that no one is making money on Android in China? How about the ads? The ads could help with the revenue, right? Well, speakers on the Google’s Android panel at TechCrunch’ Disrupt Beijing agreed that there aren’t many people making money on Android in the world’s largest mobile market by number of subscribers, but that things may change as advertisements in applications are rolled out.
Android Market Could Move to the Next Level in China
Here’s what John Lagerling, the director of global Android partnerships, said when he was asked if the Android Market needs to launch in China,
“I can’t predict the future,” he said.“If we screw up the way we build Android, then OEMs and developers will start choosing something else,” he said.
“We need to be attentive to the needs of the Chinese market. We are trying to take the pulse of the needs of the Android market.”
According to John, Google is always working with its partners, and Android needs China to succeed. And here’s one thing we think Google has somehow made a right move — One of the goals of making Android open source was to encourage new entrants and that a number of Chinese OEMs who used to depend on custom OSes and stacks, to switch to Android. That clearly explains why we are seeing Chinese Android tablets in the country, especially those iPad knockoffs.
“If you go to the market to buy a phone, Android is your only choice,” said Wang Hua.“For the consumer side, Android is the only system that can enable $100 smartphones that can enable all consumers to enjoy smartphones,” Wang said.
“Android makes smartphones a commodity.”
Other than $100 Android smartphones, perhaps the Chinese OEMs can earn a profit from cheaper tablets (1,000 yuan or less) that will begin to sell in China in 2012.
2012: Year of Android Tablet in China
Steve Jobs once said that 2010 was “Year of the iPad,” and alluded to talk that suggests Apple will face competition from an avalanche of competitors, including Google’s Android 3.0 on the Motorola Xoom and Samsung Galaxy Tab, HP’s webOS tablet, and BlackBerry’s new QNX PlayBook, by rhetorically asking if 2011 would be the year of iPad copycats. From what we have seen so far this year, 2011 is the year of iPad 2, but according to David Chao, 2012 could be the year of Android tablet in China. Yea, David sees China as necessary for Android because it will become the largest mobile internet market. Plus, he is sure that Android will empower China‘s speedy hardware builders, and Android can release a lot of China’s fundamental strength in manufacturing. Here’s David’s “crazy” thoughts,
“We’re going to have 1000RMB ($157) and below tablets coming out. I think Android is going to be the game console of choice for China, because China doesn’t have a console of its own.”
Seriously, cheap Android tablets are now everywhere in China. Prices start at $78 and top out at $315, but none of them features Honeycomb. Meanwhile, gaming consoles are illegal in China, though the unofficial gray market for the systems such as PSP, NDS, Xbox, PS3 and Wii, has flourish there. Moreover, we always see Chinese kids and teenagers carrying a PSP, iPhone, or iPad on the streets to play games.
Wrap-up
Android has a lot of potential in the Chinese market. If the marketplace for apps can come together, then China could become a land of huge opportunities for app developers. As we know, not everyone in China could afford an iPhone. In the lower-price space, Android is quickly replacing feature phones in the entry-level segment of the Chinese phone market. So, if there’s an Android marketplace that is working flawlessly like Apple’s App Store in China, we bet Android is going to win the day in China, especially in the lower end of the market. Meanwhile, Google should figure out a way to stop Chinese carriers, phone makers, and independent companies to open their own versions of the Android Market in China. If the 3rd party Android markets continue to populate, the result is a lot of app choices for Chinese users, therefore there will be more security risks.
