Firefox OS Turning Up Heat On Apple And Google

The Boot to Gecko project (B2G) being developed by the Mozilla Foundation is now ready to challenge Apple and Google’s dominance of mobile devices.

Mozilla Foundation is a not-for-profit entity that is the producer of the popular Firefox browser.  Mozilla Foundation also has a tax-paying subsidiary called Mozilla Corporation.

B2G Firefox OS

B2G is a Linux based open source operating system (OS) for mobile devices.  It is slated to be released this summer under the name Firefox OS.  This is the culmination of the project announced by Dr. Andreas Gal on July 25, 2011 to make open Web technologies a foundation for future applications for mobile devices and desktop PCs alike.

When a B2G device is turned on, execution starts in the primary boot loader and then the process of loading the main operating system kernel happens in the traditional way, and finally the execution is handed off to the Linux kernel. Gecko refers to the application run time of B2G and consists of open standards for HTML, CSS, and JavaScript.

Similarities And Differences From AOL

If you remember the fall of once mighty AOL, it is worth following the B2G project.  It was the development of an open Internet that started AOL down the path of extinction. In the long-term, the B2G project has a similar potential against Apple’s iOS and Google’s Android, but there are major obstacles and differences.

At its peak, AOL had over 30 million members.  At the end of 2012, AOL had 2.8 million subscribers.  In its heyday, AOL was a walled garden similar to the Apple of today.   As the Internet evolved, consumers could log on directly through their cable provider or phone provider.  Consumers also had a number of choices when it came to browsers.  Consumers rebelled against the restrictive walled garden of AOL and left it in droves.

The Apple of today is far from an exact parallel of the AOL of yesterday, but there are similarities.  Apple is very restrictive, just like AOL.  The opportunities to customize are limited, not much different from AOL  It was not long ago that the general belief was that Apple users would not leave Apple.  There was a similar belief about AOL in 1990s.  The belief about AOL proved wrong.

There is no denying that the walled garden approach of Apple provides a better user experience to consumers who are not technically savvy. For the time being, most of these users are sticking with Apple, but there is a trend on the part of tech savvy consumers to go to Android as it allows more customization and flexibility.   As consumers become more educated and more comfortable with technology they tend to want more options, this is part of the history of technology. The introduction of Firefox OS is coming at the right time to feed consumer demands.

A major inflection point for Apple and Google similar to AOL in the late 1990s may occur if popular apps are able to run on Firefox OS based devices at performance levels that approach performance seen with native apps in iOS and Android.

When I was in graduate school, I was taught that if high performance was required in a software application, it had to be written in an assembly language.  An assembly language is a low level language and it is tedious to write applications in it compared to high-level languages.  Examples of assembly language software you may be familiar with are IBM PC DOS and the spreadsheet program Lotus 1-2-3. The advent of modern optimizing compilers and many fold enhancements in computing hardware performance have now eliminated the need to use an assembly language in most applications and most applications are now written in higher level languages.

A similar technology curve will duplicate itself regarding the power of computing hardware inside mobile devices and availability of better software development tools.  The result will be that not far out in the future, for all practical purposes, standards based apps may match the performance of native apps. When that day comes, standards based operating systems such as Firefox OS will become kings, consumers will find it easier to abandon ecosystems of today and gurus will write comparing the fall of AOL to today’s iOS and Android. iOS and Android will survive but only by stepping up their game.

In the immediate future, Firefox OS will be more of a challenge to Google Android. Technically Google Android is open source, but Google has managed to impose lots of restrictions.  Moreover, Firefox OS will provide an alternative to Android for those device manufacturers who want to reduce their reliance on Google.   Google is the owner of Motorola Mobility which competes with other Android based phone manufacturers.

HTML5 Issues

Firefox OS emphasizes HTML5, the fifth revision of the HTML standard created in 1990.  HTML5 allows apps to work uniformly across different platforms.

It was not long ago that Mark Zuckerberg of Facebook called the decision to use HTML5 for its app a big mistakes and Facebook stopped using HTML5 to develop its iPhone app last year.  In quite a contrast, Firefox OS is promoting HTML5 standard.

There is an advantage to using HTML5 simply because there are more HTML5 developers. HTML5 makes apps cheaper and easier to create.  Further, apps can run on various different platforms.  The problem has been that the HTML5 apps do not provide the same performance level as native apps.  In my view, this is a major obstacle to Firefox OS.

This obstacle has not deterred leading carriers ranging from Deutsche Telekom to Sprint from supporting Firefox OS.

Emphasis On Emerging Markets

The devices based on Firefox OS will be introduced first in emerging markets.  Even among the emerging markets, the strategy seems to be focuses on introducing Firefox OS devices in less penetrated markets such as Pakistan and Bangladesh, although first Firefox OS devices are expected to be launched in Brazil.

Firefox OS removes middleware layers and is optimized for entry level smartphones; this is a perfect combination to offer low priced smartphones.  Since Firefox OS imposes fewer restrictions than Android, it is attractive to phone carriers who can more easily build their own services on top of Firefox OS. The strategy to go after less penetrated markets makes sense as large emerging markets such as India and China are already saturated with Android at the low end.

In the short-term, Apple’s emerging market strategy is not likely to be focused on the low end; therefore Firefox OS is not much of a threat.  But in the long-run, Apple would be giving up a large number of subscribers who will grow up with Firefox OS and may never see any need to jump to Apple in the future.

Investment Perspective

In the short-term, introduction of Firefox OS has no investment implications.  However, in the long-term, Firefox OS may change the landscape by making it easier to leave an ecosystem.

The point for investors is that major technological changes are underway and long-term astute investors should not become wedded to Apple or Google based on fixed ideas developed based on traditional fundamental analysis such as P/E ratios and historical growth rates. Further, investors will want to be alert to new opportunities arising out of Firefox OS.  For example if Nokia were to adopt Firefox OS, the stock may start another leg up.

Firefox OS is also a positive development for the likes of ZTE and TCL Communication Technology.

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