Profiting From Android Forks

Sep. 6.11 | About: Alphabet Inc. (GOOG)

The market is ignoring the rise of new Android products based on forks of the Linux developed by Google's (NASDAQ:GOOG) Open Handset Alliance. That could mean the market is ignoring some potential profits.

The ability to fork code is inherent in open source. A development group takes the original code base, adds its own tweaks, then releases its own version of the code base into the market with a promise to support it.

Android itself is a fork of Linux, the Unix-like operating system first released by Linus Torvalds 20 years ago. Torvalds himself is untroubled by this and predicts that, over time, the two code bases will come back together.

Android began forking almost as soon as it was released. Android became an official fork of Linux last year. There are already some important forks of Android in the market, like IcedRobot, which sought to avoid the Google-Oracle patent fight, and Cyanogenmod, which increases a phone maker's firmware options.

The two forks now drawing interest are Amazon's (NASDAQ:AMZN) fork for its upcoming Kindle tablet and Baidu's (NASDAQ:BIDU) fork, supported by Dell (NASDAQ:DELL), for a new range of tablets and phones aimed at the Chinese market.

In the near term, this threatens Google's control over the environment, and it's one reason why Google bought Motorola Mobility (NYSE:MMI). But over the long run, as Bradley Kuhn noted over a year ago when the Android fork launched, this grows both Linux and open source.

Here is the point. So long as the forks are open source, competitors all can benefit from them. App makers may feel “under pressure to choose” from between, say, supporting the Amazon or Google Android markets, but that's only in the first instance. Apps don't have to be completely rewritten between those platforms, as they must be for Apple's (NASDAQ:AAPL) iOS.

What happened to Apple in the 1980s was that the market was willing to wait years for Microsoft (NASDAQ:MSFT) to produce a Graphical User Interface (GUI) that worked. What is happening to Apple now is that a lot of competitors have something that works, something they can each control, but something that, over the long run, angles back toward compatibility.

That, in the end, is what open source is all about. It's not about everyone being the same. It's about everyone competing from a higher platform. This benefits everyone on that higher platform, and in time innovation overtakes any proprietary competitor, death by 1,000 cuts.

So don't dump on any of the Android forks, or assume Apple can take them down one-by-one. They may squabble, but they're all in the same family.

Disclosure: I am long GOOG.