5 reasons why Android has peaked

TheStreet.com has an article on 5 reasons why Android has peaked. While I agree with their conclusion, I don't really agree with the reasons. The reasons are not so much because Nokia, HP/Palm, Microsoft, RIM get their act together, but more because of Apple.

Here are the reasons why Android has peaked according to me:

- Android has thrived in an environment where iPhone is available only on 1 carrier in the US. As AT&T loses its exclusivity, and the iPhone is available on more carriers in the US, Android will have to start competing with the iPhone. That is not going to be an easy battle.

- The recent announcement that Google and Verizon came up with is likely to be legalized. I think it is clear no one expects Wireless to have the same rules as the wired internet because the structure of the two businesses is entirely different. If Net Neutrality ends on Mobile Networks, Android's biggest edge will be wiped out. Right now, literally anything goes on Android - tethering, WiFi Hotspots, Google Voice, literally anything is possible on Android. Once Net Neutrality ends however, the playing field will get levelled - the ability of a handset to access these features will purely be determined by how much the subscriber is willing to pay. And in that scenario, Apple is likely to have the edge, because Apple customers tend to be higher spenders. The only difference between iPhone and Android would be that there would be no porn, and no malicious apps on the AppStore.

- As iAd takes off, and as iOS spreads into more and more devices, developers will realize that there is a lot more money to be made in the AppStore than in the Android Marketplace. Whether it is because of piracy, or the unwillingness of Android users to pay for software, or the customer irritation from regular ads, Android's revenue potential will be a lot lower than for iPhone. To add to this, Oracle's law suit against Google and Apple's law suit against HTC will only add to the confusion around Android. To add to this confusion, ChromeOS will muddy the waters even more. ChromeOS is a clear indication Google wants to move away from native apps to web apps - while Apple provides the best Native environment, as well as a great environment for web apps.

- The hardware innovation cycle that Android is enjoying currently will be counter-productive in the long run. Handset makers have absolutely no choice but to keep releasing newer and better handsets to stand out amongst the crowd of Android handsets. However, the upgrade cycle for customers will still be the same as the iPhone - every 2 years. Because of this, soon we will see a situation where even the best handsets have lukewarm reception in the market. Plus margins will be curbed even more as handsets will have to discounted or given away. Apple's release cycle on the other hand, is designed to encourage hysteric reactions in the market place, plus Apple's margins increase over the year from the introduction of one handset till the next one. Motorola, HTC, Samsung, etc. will soon be fighting a race to the bottom and will be struggling with losses. The need to distinguish one handset from the other will also mean that handset makers will have to resort to extensive software and interface changes. This will make it difficult to upgrade phones to the next version of Android, whereas, iPhone customers will enjoy a seamless upgrade experience.

- Finally, Apple is going to seriously up the innovation pace. The A4 chip and its low power consumption already make it clear what direction Apple is going to take. Apple is also investing heavily in battery technology, materials technology, innovative manufacturing techniques, etc. Apple is also not shy about using its massive cash pile to source materials like displays, flash memory, etc. No one is anywhere near close to replicating Apple's ecosystem, but Apple is already busy extending its ecosystem to even more areas, like books, TV content, games, etc. Android managed to catch up to Apple because it got Apple's innovation for free - like mobile enhanced Webkit, Multi-Touch technology, etc. But this time around, Apple is using techniques that won't be so easy to copy.