If they come up with some truly outstanding hardware designs, they might do well. And if I were running Android, my preference would be for a vanilla Google install (though I haven’t used any of the vendor UIs much).
The problem is, absent some really compelling hardware designs, they’re competing in a commodified market with razor-thin margins, and if they want to compete in markets where they’ll have to pay for patent licensing, they’ll have to squeeze profits from somewhere else.
The real problem in the Android market is differentiation. With those razor-thin margins, and having to pay legally required SEP licensing, there isn't much room to differentiate in hardware design or software. In the Android market, where customers are wiling to accept "just good enough" producing a "superior quality" phone is not going to be the differentiator. They have to come up with a gimmick. Xiaomi's was making phones that mimicked Apple's phones in looks and screens. . . if not operations. Their idea was they could sell their phones to people who wanted to look like iPhone owners but who could not afford iPhones.