Simple hiding/obfuscation of strings in APK?

tl;dr If you know how to decompile APK, you can easily get the password, no matter how obfuscated the code was. Don't store passwords in APK, it's not secure.

I know ProGuard has some obfuscation capabilities, but I'm curious about what the above "obfuscation" technique does when it's compiled, and how hard it would be for someone to figure it out by looking in the APK and/or using other more sophisticated techniques?

I will show you how easy it is. Here is an Android SSCCE which we will decompile:

MyActivity.java:

public class MyActivity extends Activity {    @Override    public void onCreate(Bundle savedInstanceState) {        super.onCreate(savedInstanceState);        setContentView(R.layout.main);        TextView text = (TextView) findViewById(R.id.text);        text.setText(getPassword());    }    private String getPassword() {        String pool = "%&/@$()7?=!656sd8KJ%&HDI!!!G98y/&%=?=*^%&ft4%(";        return pool.substring(4, 7) + pool.substring(20, 24) + pool.substring(8, 11);    }}

main.xml:

<?xml version="1.0" encoding="utf-8"?><TextView xmlns:android="http://schemas.android.com/apk/res/android"          android:id="@+id/text"          android:layout_width="fill_parent"          android:layout_height="wrap_content"/>

After compiling it and running we can see $()&HDI?=! on a TextView.

Let's decompile an APK:

1. unzip myapp.apk or right-click on the APK and Unzip here.classes.dex file appears.
2. Convert classes.dex to JAR file with dex2jar. After executing dex2jar.sh classes.dex, classes_dex2jar.jar fileappears.

3. Using some Java decompiler on classes_dex2jar.jar, for example JD-GUI, we retrieve such Java code from MyActivity.class:

   public class MyActivity extends Activity{    private String getPassword()    {        return "%&/@$()7?=!656sd8KJ%&HDI!!!G98y/&%=?=*^%&ft4%(".substring(4, 7) + "%&/@$()7?=!656sd8KJ%&HDI!!!G98y/&%=?=*^%&ft4%(".substring(20, 24) + "%&/@$()7?=!656sd8KJ%&HDI!!!G98y/&%=?=*^%&ft4%(".substring(8, 11);    }    public void onCreate(Bundle paramBundle)    {        super.onCreate(paramBundle);        setContentView(2130903040);        ((TextView)findViewById(2131034112)).setText(getPassword());    }}

ProGuard can't help much, the code will be still easily readable.

Based on the above, I can already give you an answer for this question:

Would a password-generating function like the one below be reasonably secure?

No. As you can see, it increases difficulty of reading deobfuscated code by a tiny bit. We should not obfuscate the code in such way, because:

1. It gives an illusion of security.
2. It is a waste of developer's time.
3. It decreases readability of the code.

In the official Android documentation, in the Security and Design part, they're advising this to protect your Google Play public key:

To keep your public key safe from malicious users and hackers, do not embed it in any code as a literal string. Instead, construct the string at runtime from pieces or use bit manipulation (for example, XOR with some other string) to hide the actual key. The key itself is not secret information, but you do not want to make it easy for a hacker or malicious user to replace the public key with another key.

Ok, so let's try that:

@Overridepublic void onCreate(Bundle savedInstanceState) {    super.onCreate(savedInstanceState);    setContentView(R.layout.main);    TextView text = (TextView) findViewById(R.id.text);    text.setText(xor("A@NCyw&IHY", "ehge13ovux"));}private String xor(String a, String b) {    StringBuilder sb = new StringBuilder();    for (int i = 0; i < a.length() && i < b.length(); i++) {        sb.append((char) (a.charAt(i) ^ b.charAt(i)));    }    return sb.toString();}

Gives $()&HDI?=! on a TextView, good.

Decompiled version:

public void onCreate(Bundle paramBundle){    super.onCreate(paramBundle);    setContentView(2130903040);    ((TextView)findViewById(2131034112)).setText(xor("A@NCyw&IHY", "ehge13ovux"));}private String xor(String paramString1, String paramString2){    StringBuilder localStringBuilder = new StringBuilder();    for (int i = 0; (i < paramString1.length()) && (i < paramString2.length()); i++) {        localStringBuilder.append((char)(paramString1.charAt(i) ^ paramString2.charAt(i)));    }    return localStringBuilder.toString();}

Very similar situation like before.

Even if we had extremely complicated function soStrongObfuscationOneGetsBlind(), we can always run decompiled code and see what is it producing. Or debug it step-by-step.