What Google's Android 5.0 Lollipop Means For Mobile Enterprise

Google (GOOG 0.37%) (GOOGL 0.35%) recently unveiled Android "Lollipop" 5.0, the latest version of its mobile OS. The update is clearly aimed at making Android, which has a spotty reputation for security, a more respectable enterprise platform for bring your own device, or BYOD, practices at work.

Source: Google.

The core change is the integration of Samsung's (NASDAQOTH: SSNLF) Knox platform, a more secure version of Android featuring "containerization technology" that applies separate security policies to personal and work data. This means the user doesn't have to log into separate accounts to use different apps for work and personal purposes, since notifications from both can appear together in the launcher.

It also adds new layers of security and encrypts all data by default, which could address rising concerns about information requests from the FBI and NSA. Android 5.0 also allows information technology staff to manage businesses via a single platform, much like Google's recent "Chromebooks for Work" update. The devices can also be wiped remotely from the Android Device Manager.

Android 5.0 devices can also be paired via Bluetooth to Android Wear or Android Auto devices, which can unlock the phone wirelessly with the Android Smart Lock feature. Android 5.0 devices will also come with a "guest" mode, like Chromebooks and Windows devices, enabling second users to use the phone without accessing secure features. While many of Knox's features have been added to Lollipop, Samsung is withholding some higher-level security features, which it only features on a handful of its flagship devices.

That's certainly a huge leap forward that could help Google extend its reach across businesses. So should BlackBerry (BB 1.09%) be worried?

The business of enterprise platforms
Before Apple's (AAPL -0.57%) iPhone arrived, BlackBerry dominated the smartphone market for two reasons: smartphones weren't considered mainstream consumer devices, and the robust security of the company's devices made them ideal for storing sensitive documents. But that dominance also caused BlackBerry to underestimate its competitors.

When the iPhone arrived in 2007, BlackBerry wasn't worried that the consumer-facing device would disrupt its smartphone market. Yet it did, and BlackBerry's global market share plummeted from 50% in 2009 to less than 1% today. To make matters worse, Google responded to the iPhone by launching Android, an open-source OS that quickly became the operating system of choice for hardware makers hungry for a piece of Apple's smartphone market. Meanwhile, businesses relaxed their BYOD policies in response to the flood of consumer smartphones.

The problem is that BlackBerry believed that its enterprise customers would never leave, and that Apple's iOS and Google's Android would never offer comparable security to BlackBerry's OS. That haughty opinion hasn't changed much -- in July, CEO John Chen mocked Google's Knox announcement with this odd slide:

Source: BlackBerry.

Unfortunately, BlackBerry itself is having trouble "walking the walk." Even the U.S. Department of Defense, one of BlackBerry's most valuable customers, approved iOS and Samsung Knox devices for military use last year. In July, IBM (NYSE: IBM) agreed to develop exclusive mobile enterprise apps for Apple's iOS devices and to sell iPads to a wide array of enterprise customers.

Challenges ahead for Google
In the past, enterprise users did not take Google seriously due to the prevalence of Android malware and its fragmented software and hardware.

During the first quarter of 2014, security firm F-Secure reported that 275 of 277 new "malware families" targeted Android. iOS and Symbian were targeted by a single threat each, while none targeted Microsoft's (NASDAQ: MSFT) Windows Phone and BlackBerry. Android's security has improved with every OS update, but according to research firm OpenSignal, only 20.9% of all Android devices have been updated to 4.4 (KitKat). Samsung, the top Android manufacturer, has also repeatedly undermined Google's control of Android with its own Galaxy App Store and the launch of its own open-source OS, Tizen, for wearable devices and smartphones.

For Google to be taken seriously in enterprise, it needs a single software platform running on similar hardware to minimize security risks. Google still can't deliver a single device as homogeneous as the iPhone, but it is reducing fragmentation with Android One, enhancing Chromebooks with enterprise features, and working with partners to expand the enterprise possibilities of Google Glass. Google also recently added Android apps to Chrome OS, which suggests the two systems will eventually merge to counter Microsoft's "One Windows" strategy.

The Foolish takeaway
Lollipop won't instantly convince businesses -- especially larger ones -- to adopt Android devices. However, the rising use of Google's cloud-based services in small-to-midsized businesses, the possible convergence of the Chrome and Android operating systems, and improved security features for both systems indicate the tech giant has big plans for the enterprise market.