What is Tizen?

Tizen is a new operating system for connected devices which is a direct competitor to Google's Android and Apple's iOS.

The project has existed for three years and is backed by a consortium of industry heavyweights including Intel, Samsung, LG, Huawei, Japan's DoCoMo and Britain's Vodafone, plus others. These players are positioning Tizen as an 'OS of Everything' - where 'everything' means mobile devices, wearables, automotive systems and TVs.

On Monday 2nd June Tizen made its first step into the hardware market when Samsung announced the first Tizen-based smartphone.

Tizen has arisen because mobile phone operators, device vendors and component suppliers are desperate to create a route to market that does not involve Google or Apple.

Is Tizen going anywhere?

In a word, no.

Here's what I think in a nutshell:

  • Tizen is at least 5 years too late and it seems to have been conceived with no understanding of what it will take to pose a serious challenge to Google's Android or Apple's iOS and no understanding of why similar initiatives have failed in the past.
     
  • Taking Android as an example, the market power of this ecosystem comes from six layers of value which are laid on top of each other in a kind of inverted pyramid: the OS itself sits at the very bottom and contributes the least value. Therefore, the Tizen OS  should be seen as a the first stage in a long process.
     
  • The announcement of the first Tizen smartphone on 2nd June 2014 shows that Tizen has now moved up a level - to the second least valuable layer. That's two boxes ticked, but the third box will be a lot harder to tick as it will mean attracting a critical mass of developers: at Apple's WWDC held on June 2nd 2014, Tim Cook stated that there were 9 million registered Apple developers.
     
  • Because most developers already write their apps for Android and iOS, a decision to  start developing for Tizen will mean allocating 30% of their development time to a platform that accounts for a vanishingly small percentage of the market. This does not sound like a very interesting business case. Therefore, the only markets where Tizen has a hope of attracting a critical mass of developers are those where Android and iOS have low market shares, and there are very few of those.
     
  • For as long as the present market cycle lasts, the dominance of Google's Android  and Apple's iOS is absolute - like it or not, Android and iOS are like two Tiger tanks on a WW1 battlefield.
     
  • In summary, watching Tizen's development is like watching a car crash in slow motion.

Market structure

The market for mobile device operating systems consists of a duopoly with Android (Google) and iOS (Apple) towering above the market landscape. There are around 1 billion Android devices in use around the world and 900 million iOS devices (100m iPod Touch, 200 million iPads and 500m iPhones, 80 million Macs and 20 million Apple TV devices).

The three other main operating systems are fighting over scraps of market share:

  • Blackberry is in terminal decline. The company is presently doing the best it can to maintain share in the few international markets where it remains popular.
     
  • Microsoft and its newly-acquired Nokia unit is trying to make an impression on the mobile operating system market but we think that the company is now so far behind that it will never catch up. I've a sense that when Microsoft finally arrives at the party, the company will find that everyone has left and gone somewhere else.
     
  • Nokia's Symbian is a dying platform which will slowly fade away.

So then we come to Tizen, which is being promoted as a rival to Android by a consortium including Intel, Samsung, LG, Huawei, Japan's DoCoMo and Britain's Vodafone, plus others.

The philosopher George Santayana said in the early 20th century that “those who fail to learn from history are doomed to repeat it.” We think that this statement is apt for Tizen which I am confident will be consigned to the graveyard of mobile operating systems in 10 years time.

Poor market timing, strong developer inertia which favours Android and iOS and the extremely complex manner in which a range of value-added services are deeply integrated into these operating systems (for example, maps, calendars, contacts, voice control, app stores etc.) will in our view present insurmountable barriers.

To underline this argument let's take a look at Android in more detail:

Title:Android Value Pyramid
Sub Title:Tizen
Products/Services:Tizen
Markets:Devices, Smartphones

The least commercial value comes from the operating system itself which sits at the bottom of the pyramid, whilst the highest commercial value comes from deep-level behavioral and other data that Google holds for the 1.5 billion individuals who use Google Search every day.

This does not just apply for how Android users interact with the mobile web, but for how they interact with the web in general: because Google is encouraging and, in some cases, forcing users to create Google+ accounts and stay logged in so they can better experience Google's services Google can keep track of users as they move around the web. 

Tizen has no chance of replicating this - because there are no associated services, at least not like Google Maps, Gmail, YouTube, Search, Docs etc.

This deep-level insight into web users means that Google can buy blind ad inventory from web publishers and then repackage and re-price that inventory into value-added ad products which the company then sells to digital advertisers - for a price premium.

To put some numbers to this, the commercial value of this pyramid could be quantified by looking at Google's mobile advertising revenues, which we estimate were about USD 4.8 billion in 2013 and will grow to more than USD 35 billion by 2018 as shown below:

Title:Google Mobile Advertising Revenues (Worldwide)
Companies:Google
Markets:Advertising, Mobile Advertising
Years:2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018
Regions:Worldwide

Can Tizen Threaten the Android Pyramid?

As one moves upwards from layer to layer, the harder things get: the rival needs more capital, more engineering resources and, most important of all, more time to learn: products like Search and Maps cannot be created quickly. And don't forget that Google is constantly working to improve its products, so rivals should not think of replicating what Google currently has - but what the company will have in 10 years time.

Tizen has been at the lowest, easiest and least-valuable layer in the pyramid for the last three years.

The announcement of the first Tizen smartphone on 2nd June 2014 shows that Tizen is has now moved up a level - to the second least valuable layer. That's two boxes ticked, but the third will be a lot harder:  attracting a critical mass of developers. To get a grip on the scale of this next challenge we can take a look at iOS: at Apple's WWDC, also on June 2nd 2014, Tim Cook stated that there were 9 million registered Apple developers. 

 As the Wall Street Journal reported, the Tizen developer conference earlier this week attracted around 600 people - not bad, but nothing compared to the 6,000 who attended the Apple developer conference the day before.

Because most developers already write their apps for Android and iOS, a decision to  start developing for Tizen will mean allocating 30% of their development time to a platform that accounts for a vanishingly small percentage of the market. This does not sound like a very interesting business case. Therefore, the only markets where Tizen has a hope of attracting a critical mass of developers are those where Android and iOS have low market shares, and there are very few of those.

For all the marquee names putting their considerable weight behind Tizen, there is no way that this consortium presents a serious threat to Google's Android value pyramid. 

Indeed, looking beyond Tizen's falling star, we do not think that any company or consortium has the scale and skills to take on a challenge this big.

For as long as the present market cycle lasts, the dominance of Google's Android  and Apple's iOS is absolute - like it or not, Android and iOS are like two Tiger tanks on a WW1 battlefield.

Andrew Sheehy
Chief Analyst

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Generator Research, Ltd.
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