Apple’s iOS is a well controlled, closed system, while Google’s open source Android platform can be accessed for free by developers. Basically, Google makes money with the ad clicks on the web and through its apps. However, this may hit a roadblock and not necessarily generate the desired moolah for Google. Recent reports from Bloomberg say that companies like Amazon, and popular Chinese firms like Baidu and Tencent Holding are likely to hamper this Google strategy by using the Android platform, but sidelining Google apps.
Least Androidy...Google apps on the back bench
So, these firms have been using the open Android platform, but have been keeping aside preloaded applications. Apps such as Gmail, Google Maps and YouTube generate the revenue for Google. Amazon has been raving about its so called ‘iPad killer,’ the Kindle Fire. The device was a big hit at sales, owing to the low price and holiday season. This best-selling device runs on the Android platform, but minus these above mentioned Google apps. In fact, Amazon has added its own app store. Noah Elkin, research analyst from EMarketer states that the Fire may be the best Android tablet with least Androidy and the Google experience is very much in the background.
Flurry, a firm that tracks the use of apps, says that an average mobile user will click on a mobile app icon, instead of using the browser. This may sound small, but will gradually amount to good revenue. Amazon uses its own app store, instead of the Android market and also has a complete control over which apps will show up just like Apple. According to Michael Gartenberg, who is an analyst at Gartner, “Apple has taught everyone that people value an integrated ecosystem that just works. There’s a real possibility that Android could succeed, but not deliver what Google hopes it will.”
“We’re in the early stages of monetization” of Android, Google Chief Executive Officer Larry Page said on a Jan. 19 earnings conference call with analysts. “We see a lot of potential for us to make money on Android.” Google needs to expand its Android horizon, feel Google executives.
Google get its major revenue from advertising on its search engine and also gets 30 percent cut on sales of apps from the Android Market. According to Cowen & Co, out of estimated $44.6 billion sales this year, $5.8 billion will come from mobile. However, this is speculated to expand and in the next four years, the company could see a tremendous rise in this figure. However, even if 10 percent of all mobile app-related sales on Android devices came through Amazon’s Kindle Fire, then Google could see a major loss of about $300 million.
Futhermore, it isn’t just Amazon who has sidelined Android services, companies like Baidu and Tencent have their own software suites to run on top of Google’s operating system. Dell introduced its Streak Pro smartphone in China, which will run on Baidu Yi, with the latter’s programs for search, books, maps, music and local recommendations. Another key player is touted to be Facebook by Tim Bajarin, President of Creative Strategies who expects an Android-based phone that would come minus Google apps and stay based on the social network.
Google puts forth that its licensees will have to choose all or none of the Google apps. For instance, those who want Gmail , will have to include Google Maps, Google Talk, Contacts and so on. While Google says that its apps work well together, and obviously it is about money making, it is also believed that the company is simply pushing its mobile offerings onto others.
“Google has done an incredible job getting Android out there,” said Maha Ibrahim, a partner at Menlo Park, California-based investment firm Canaan Partners “They’d rather have Android be part of these devices than not.” Fire owners can still do Internet searches via Google or use YouTube or the Google Maps website.
Companies like Samsung and HTC leverage on Google services. Amazon does not have its own apps to manage with and of course make more money.