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Wednesday April 23rd 2014

Why Google Isn’t Focused on Apple and Microsoft Eating Its Android Lunch





What is Google’s real incentive in seeding the Android mobile OS in the global market? Is it to make money from the sale of Android-based handsets and tablets? Certainly, that’s part of Google’s strategy. After all, through its Motorola Mobility acquisition, Google is a player in the smartphone and tablet markets.

Recently, there have been several reports about how Apple’s recent settlement with Taiwan’s HTC could mean that Apple and Microsoft make more from Android going forward than Google does. Apple and HTC have a cross-licensing deal that some are saying could mean Apple collects $6 to $8 per Android phone sold. The truth is, though, that Google’s real benefit from the spread of Android comes from bringing new users into its lucrative search/ad ecosystem.

VentureBeat has a good breakdown of some of the estimates floating around following the Apple/HTC deal:

"This past weekend Apple and HTC signed a patent cross-licensing deal that, according to one analyst, could see Apple collect between $6 and $8 for each and every Android smartphone HTC sells. And Microsoft, which has been working on licensing its patents to Android manufacturers for a number of years and has licensing deals with LG, Acer, Samsung, and many other companies, collects as much as $5 per device…Google, on the other hand, though it has not broken out Android revenue, has been calculated by Asymco as recently as April of this year — based on data Google was forced to reveal in court filings — as low as $1.70 per Android device, per year."

The speculation floating around about what this means to Apple is going too far. For one thing, as EETimes notes, we have yet to see if Apple will even pursue other cross-licensing deals with Android-focused companies.

Moreover, though, Google’s real interest in getting traction for Android around the world is in spilling new users into its cash cow: the Google search/ad ecosystem. As we noted in this post, Google’s Eric Schmidt has been very up front in the past about the fact that both Chrome OS and Android bring more users to Google search and accompanying ads, ultimately bringing Google rewards.

This is a tried and tested strategy. It’s part of why Google pays Mozilla millions of dollars a year to promote its search engine in the Firefox browser. It’s similar to how Microsoft leveraged its dominance in desktop operating systems to achieve dominance in the browser market.

Having users on your platform is a powerful thing. That’s why Google’s real interest in the Android phenomenon extends well beyond smartphone sales and associated licensing fees.

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