I disagree. Case in point -- Linux on Desktop. Despite being open source and privacy respecting, Linux never managed to make significant innards into the desktop market. And for good reason. Nobody, except for hardcore hackers, wants to play the sysadmin all the time -- and that is what it takes to keep Linux running -- I am speaking from years of experience here. It is successful on servers because there are battalions of engineers employed by the companies deploying and/or supporting them. Even the most user friendly distros don't hold a candle to Windows when it comes to UX -- let alone macOS.

If the situation is so dire on desktop/laptop, which is a fairly impersonal device, I don't even want to think about running the equivalent of Linux on Mobile (I am not talking about Android). Imagine troubleshooting WiFi/Bluetooth -- or worse Cellular Radio -- issues after every update -- sometimes without any updates -- on your phone.

> Truth be told, the software development cost of these systems (Android and iOS) is not that huge.

What makes you think so? Android/iOS have been developed over years -- the cost of developers itself will run into hundreds of millions of dollars. And then you have designers, project managers, testers etc. to pay -- not to mention the infrastructure costs. Or do you expect everyone to work out of their basements on their personal machines?

> a reasonably good open source alternative could probably be created for less than a billion dollars, knowing how financially efficient are open source projects compared to commercial companies.

Again, what is the basis of this statement?

> That's a few cents per smartphone user per year, for the next decade, negligible compared to hardware costs.

That is assuming you convince everyone to use the shiny new OS.

> If this order of magnitude funding could be secured for a well organized open source project, we could have the best of both worlds, a truly open ecosystem with privacy at it's center.

And there is the crus of the matter! Who is going to pay for the project? Projects like Linux are funded by large companies like IBM, RedHat, Microsoft, Google etc. who use them to make billions. Who is going to fund a mobile OS that is actively going to hinder the money making?

The problem with Open Source projects is that they are driven by developers volunteering their time. There is little incentive for them to see the project to a point where the UX is polished enough for a non-technical user to be happy. It takes a lot of work. It is easy to build an OS that will run on a cellphone, but the real challenge is building the UX and the ecosystem around it. It is not going to be built by developers working in their spare time with no real incentive -- like a five/six figure paycheck. No, engineers tend to work on open source projects till it is either good enough for them, or till they get bored and move on to other things.

Just to be clear, I am not suggesting that open source software is in any way inferior technically. If anything, it is the other way round. Bound by deadlines and other constraints -- or simply because of unreasonable expectations, proprietary software may not be as good technically as the open source counterparts. I am merely pointing out that open source community doesn't typically spend time polishing the software to the point where it becomes palatable to general populace.

Update

And let's not forget, we did have free and open source mobile operating systems -- Ubuntu Touch/FirefoxOS anyone? These operating systems were backed by giants in the open source arena -- yet they failed to gain any traction.