Can This Nonprofit Destroy Apple’s iOS and Google’s Android?

By Sam Mattera | More Articles | Save For Later
October 14, 2013 | Comments (3)

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Mozilla, the nonprofit behind the popular Firefox browser, wants to disrupt the smartphone industry. It recently released the first update to Firefox OS, its open-source mobile-operating system.

As Mozilla freely admits, it isn't aiming to take on "FortressApple (NASDAQ: AAPL ) " or "Fortress Google (NASDAQ:GOOG ) ". Still, an alternative platform could eventually pressure the mobile endeavors of both companies, as well asMicrosoft (NASDAQ: MSFT ) . Should investors be concerned?

A platform for the massesFew consumers in the U.S. will be trading in their Apple iPhones or high-end handsets running Google's Android for a Firefox phone, at least not anytime soon. The first phone running Firefox OS, the ZTE Open, has been described as "crude" and "disappointing," though, as most reviewers are quick to point out, not a lot should be expected -- after all, the phone retails for just $80 off-contract.

But Mozilla hopes that by offering such a cheap device, it can appeal to the masses worldwide. It's an unfortunate truth that literally billions of people live on just a few dollars a day. Even in China, where the economy continues to grow, the average urban dweller has only $4,000 of annual disposable income. Among these consumers, Firefox OS could find a welcome home.

Certainly Apple doesn't care much about less-than-wealthy users in China. Before its release, the iPhone 5c was expected to be Apple's answer to the emerging market -- but at $549 off-contract, and over $700 in China, Apple's plastic iPhone is still too expensive.

Google's Android, meanwhile, is available on all sorts of handsets, including sub-$100 devices. But as Mozilla's co-CTO told The Verge, recent versions of Android don't run well on cheap hardware. Instead, older versions of Google's operating system continue to be used, including Gingerbread, originally released back in 2011.

Microsoft's Windows Phone is somewhere in the middle. There are cheaper phones running Microsoft's operating system, but they're still more expensive than the budget Android handsets popular in emerging markets like India. Yet the low end of the market could soon become much more important to Microsoft -- the company's management has said it will aggressively target the low end of the market in an attempt to increase Microsoft's market share.

The real threat lies in what Firefox OS representsWhile Firefox OS could rob Google and Microsoft of market share, the larger threat lies in what the operating system represents: the power of the open web. Instead of running proprietary apps written specifically for Firefox OS (like Apple's iOS, Google's Android and Microsoft's Windows Phone all do), Mozilla's operating system uses Web apps built on HTML 5. In effect, Firefox OS "apps" are really nothing more than glorified Web pages.

That might sound underwhelming, and to a large extent it is. But as Web apps become more powerful, the need to have dedicated, native apps could dissipate, even vanish entirely. That poses a significant challenge to the existing mobile players.

In an interview with Business Insider, Dr. Ronald Klingebiel -- a professor at Warwick Business School -- believes that Firefox OS, along with other Web-based mobile operating systems, could capture a significant portion of the mobile market.

Destroying the ecosystem
Certainly, developers would prefer it. In a world where the Web replaces native apps, developers wouldn't have to worry about coding for multiple operating systems: Porting existing Web apps to Firefox OS is a simple process that takes only a few minutes.

But developers' gain could be Google, Apple, and Microsoft's loss. If apps exist wholly on the web, there would be little difference between app stores, or more generally, the operating systems themselves. Why would a consumer choose Apple's iPhone, a high-end Samsung Galaxy running Google's Android, or a Microsoft Lumia, when they all act, essentially, as simple gateways to the Web?

A long-term trend in the makingI don't want to get carried away: This is a trend that's worth keeping in mind over the very long term. For now, native apps are still dominant. Analytics group Flurry reports that of the time people spend on mobile devices, 80% is spent with apps. That's up significantly from just a few years ago, when more time was spent in the mobile browser.

Nevertheless, investors in the space should be aware of the growing challenges posed by Web apps, and illustrated by Firefox OS. All three major mobile operating systems -- Apple's iOS, Google's Android, and Microsoft's Windows Phone -- could be rendered irrelevant.

Are you an Apple investor?
If someone asked you, "Why invest in Apple?", could you truly answer them? To be honest, few investors could. That's because most of the company's secrets -- the ones that make savvy market watchers rich -- often fly under the radar. If you want an edge on other Apple investors, be sure to check out "5 Secrets to Apple's Future" from The Motley Fool. This 100% FREE guide includes actionable advice that you can put to use right now! Just click here now for instant access!

"When it comes to making actual money - I like to focus on near mathematical certainties..."
My name is Jeff Fischer. And I’d like to share the remarkable true story of how I turned my stock portfolio into a virtual ATM -- capable of throwing off 10%, 15%, even 20% of its value each year in INCOME CHECKS...

While at the same time buying my stocks cheaper and selling them for higher prices than the rest of the market... PLUS, "guardrailing" my nest egg against a market shock... and much, much more!

Enter your email here - it's 100% FREE, no strings attached:

Privacy/Legal Information