A year ago, I wrote “Is Android bad for Google”? The signs were everywhere:
Turning Android into a free, ad-supported version of iOS was to Google the equivalent of Microsoft’s “Netscape” moment. It galvanized the company, it helped slay competition, and it re-affirmed Microsoft’s, er, Google’s place at the top of the food chain.
Only, look at Microsoft now. Stuck in the 90s.
Does a similar fate await Google?
What is the financial drain of Android on Google? We know that Android has helped HTC and Motorola make money. And Samsung. Several thousand developers. Not Google. What are they hiding?
Also, what is the strategic cost? Forget for a moment my confidence that smartphones are the future, that PCs are dinosuars. Google’s many many billions comes directly from the PC. Is Android diverting time and talent away from Google innovations on the PC? We will never know. Did focus on Android prevent Google from creating a superior alternative to Groupon, say? Or, becoming even more like Microsoft, will the rise of Android awaken even more pesky European regulators, all ready to go after Google + Android?
I could not know then how right I was.
In recent months, I’ve significantly scaled back on my reviews of Android devices. I’ve spent more time on Samsung and Windows Phone than on Android. I’ve focused less on the smartphone “wars”. The reasons for this were clear:
Android is broken.
No one is making any money from Android. Samsung makes a bit, that’s it. Google has drained billions on Android. Most mobile searches to Google come via iPhone. The Android tablet market is absolute shite. Android developers continue to struggle, independently and as a group.
The “free” model that Google preaches requires a trade off of giving up your location at all times *and* and damn-near dead battery.
There remain a slew of patent issues.
It’s kept Google from being fulliy focused on limiting the threat from Twitter and Facebook. And even Bing. For real.
There is no Android phone in iPhone’s league.
The only viable Android “ecosystem” to date has been the non-Google one by Amazon.
At best, it’s a battle not between iOS and Android but between Apple and Samsung:
I’ve written previously that there is no iPhone vs Android battle. If there was, Android would have long ago waved the white flag. Apple is sucking up all the profits, has the most popular phone, the biggest, most developed ecosystem. Android makers, on the other hand, keep going back to Google for bigger and bigger handouts.
As I’ve written many times, the big iPhone – Android battle is really an epic Apple vs Samsung clash.
I could not know then how right I was.
I cover the smartphone wars. This means I cover Google. Google has spent, with the acquisition of Motorola, close to $15 – $20 billion on Android.
I have repeatedly asked Google to break out its revenue numbers for Android.
They have repeatedly refused.
Worse, CEO Larry Page has embarrassingly done nothing here except throw out — non reported — “run rate” numbers.
“Mobile” has a “run rate” of X.
This means nothing. Indeed, this is why I have publicly stated my belief that a large part of the rationale for Google’s purchase of Motorola is to *bury* all the costs associated with Android.
We still don’t know the costs but we are getting closer to learning of the revenues. And they are awful.
In a widely circulated article, Charles Arthur takes a stab by examining how much Google is willing to part with in its ongoing, potentially massive patent battle with Oracle:
Google’s Android has generated just $550m since 2008, figures suggest
Android generated less than $550m in revenues for Google between 2008 and the end of 2011, if figures provided by the search giant as part of a settlement offer with Oracle ahead of an expected patent and copyright infringement trial are an accurate guide.
The figures also suggest that Apple devices such as the iPhone, which use products such as its Maps as well as Google Search in its Safari browser, generated more than four times as much revenue for Google as its own handsets in the same period.
In a pre-trial settlement offer, Google proposed that it would pay Oracle a percentage of revenues from Android, suggesting it would pay $2.8m in damages on the two remaining patents that Oracle is asserting for the period to 2011, and then 0.5% of ongoing Android revenue on one patent which expires this December, and 0.015% on another which expires in April 2018. The court documents (PDF) do not explain how the Android revenue is calculated, but the key source would be advertising revenue. Google also gets a 30% cut from app sales to Android devices.
The $2.8m offer, at a combined rate of 0.515%, suggests that Android’s total revenue since the launch of the first handsets at the end of 2008 through to the end of 2011 was $543m. Patent payments relating to phones are generally made on a per-handset basis at a fixed licence fee for any phones that would be judged to infringe the relevant patents.
The figures also suggest that Android could generate more than $1bn in advertising revenues this year. To achieve Android “certification” handset manufacturers have to include services such as Google search, maps, YouTube and other functions. Some companies, including Amazon, have declined to do this.
Ouch. Spending upwards of $20 billion to make $550 million are the sorts of things that can get even founder/CEOs tossed out on the street.
Of course, Arthur’s numbers are as tenuous as Page’s “run rate” assertions. What Google offers in a pre-trial settlement do not necessarily equate with the actual revenues. Moreoever, how lawyers calculate gains/lossses is absolutely not the same as how accountants do. Nor executives. Nor normal human beings.
The one thing we all agree on is that, to date, Android’s costs have been extraordinarily higher than Android’s gains.
Only, it’s worse. Part of the reason for my cutting back on coverage of Android was because Android — as owned and operated by Google — is becoming less relevant. iOS, Windows Phone and, yes, the tried and true Blackberry offer superior operating systems.
And better devices.
And better security.
The huge number of handset makers, developers and others could, in theory, create a larger, better more virtuous ecosystem. They have not. I suspect they never will. Google is playing Microsoft’s game here — and that game ended in the waning days of the 20th century.
Fragmentation is rampant. Carriers have little incentive to offer ongoing support for the OS once a sale is made. Apps are almost never as good on Android as they are on iPhone. Except for Samsung, almost no one connected to Android is making any money.
And yet, by pouring more and more resources into Android, Google may have limited itself. The best thing about Android, in my view, is the quality and depth of the mapping and GPS support.
Imagine how well these would be used if iPhone, say, had the same? After all, we know that iPhone, despite significantly lower market share numbers, accounts for over half of all Google mobile searches. Consider how entrenched Google’s mobile mapping services would be if similarly embedded on iPhone.
Instead, Bing and Nokia will offer a solid alternative. Apple is working on an alternative.
More and more Android appears to be a cost center — stretching out for years.
Only, it’s worse.
I believe the time, money, resources and focus on Android have not merely limited Google’s potential across *all* mobile devices and platforms. By focusing so much on Android — the operating sytem, the app market, the licensing arm, the carrier relationship, the media center — that Google has reduced itself.
Google is a search engine. Even as the definition of this changes, expands; this is Google. All their money comes from search.
Android is their (costly) method to ensure Google search (via Google, via Maps) is on as many smartphones as possible. Except, they have misled themselves. It’s no longer about getting their search engine on a smartphone.
The smartphone is the search engine.
Google, by focusing on properties within the smartphone has missed this larger evolution.
Since becoming a smartphone user, I almost never use Google on a PC — which is where virtually every penny Google makes is generate. Only rarely, in fact, do I use Google on my smartphone.
In almost all cases I instead go to Siri or an app. For flight information, for restaurant reviews. To check on what friends are doing. To discover new relationships. I go directly to the Wikipedia app or to the Amazon app or to WorldMate or Yelp, for example.
I go into the Twitter app to discover trends, find new people to follow.
But wait, there’s more. Or very soon will be. And by focusing so much on Android, I think Google will continue to miss out, continue to marginalize itself.
Forget the carrier dependencies. The suspicious relationships with handset makers. The patent battles looming. All the stuff you used to use Google for, or might have, is migrating quickly to the smartphone.
And in a superior form.
I no longer need to search Google to learn, say, what normal blood pressure or blood cholesterol numbers should be. I have an app for that. An app that, in a few years, I suspect, will actually be able to *tell* me my numbers. The smartphone will be a cholesterol test.
It will be a breathalyzer.
I don’t have to query Google (via mobile or PC) to learn the name of that song I just heard on that show I’m watching. The smartphone’s mic-speaker-app will figure it out then offer to buy the song for me.
This one act requires an incredible amount of work; work that probably no one in the world is better at achieving than Google. If they weren’t instead spending time on rejecting an app due to malware on their “open” platform.
My smartphone camera is a search engine. I take a picture of an item, learn more about it, find the best place to purchase it, at the best price. No ads necessary. And all bypaassing Google. I don’t even think of Google anymore in virtually any transaction.
Imagine what Google could do for *all* smartphone users if they put their knowledge of us and their computing scale and algorithms all to use for all smartphone users.
Android is preventing this from happening.
The smartphone is the search engine. The touch screen, the mic, the speaker, the camera, the app. These are now the equivalent of typing a query into the Google search box.
Only, Google is allowing this transformation to pass them by as they work on making Android a competing smartphone operating system.
Google should spin off Android, soon, and get back to what it does best.