Why Google isn’t worried about Android revenue

http://gigaom.com/mobile/why-google-isnt-worried-about-androids-revenue/

by acro • 14 years ago

74 42 14 years ago

tomelders2• 14 years ago

My pet theory is that Google can afford to dedicate large amounts of resources to stuff like this, simply because there's no real competition to it's core product, which is a combination of search, profiling and advertising.

I do however believe that Duck Duck Go is the only viable contender who could realistically take on Google, not because their search is any better or worse (something which can always be tweaked), but because privacy is becoming a hot topic that non-techies are starting to wake up to.

I'm also reminded of when Google first started and the amount of developer good-will it received, which I believe had a huge contribution to it's success. I get the feeling Duck Duck Go has the same level of developer good will behind it.

As I see it, Google's business model is so wrapped up in profiling and tracking that it will be difficult for them respond to Duck Duck Go if it gains any traction. At that point, Google may see a serious decline in it's core revenue stream, and things like Android may not seem like such a good idea.

Anyway, that's just my theory.

coob3• 14 years ago

I would disagree that Google's core product is a combination. It's just advertising.

Everything else leads to that: search, profiling, Chrome, Android, everything.

tomelders2• 14 years ago

It's all much of a muchness, but at the very least, Google's tracking and profiling capabilities are definitely a USP.

bad_user2• 14 years ago

You're confusing "product" with "revenue model".

Google's core product is advertising in the same way Microsoft's core product is selling CDs.

marshallp• 14 years ago

The most likely competition to google is cheapening hard disks so that things like wikipedia, siri, and entire newspapers archives sit on your computer locally and so that you can do more complicated sql like queries on it.

icebraining• 14 years ago

A dump of the current revisions of all English Wikipedia pages is just 31GB - that's less than 5% of a 750GB, which are common nowadays.

But Wikipedia and newspapers don't really have structured data you can query; except for those small boxes and some tables, most Wiki articles are just a blob of text.

Besides, Wolfram|Alpha already gives you results based on structured data by answering more complex queries than simple substring matching, but I don't see anyone using them as a replacement for Google.

betterth• 14 years ago

I don't think DuckDuckGo is Google's biggest competitor (are they even into the ad game at all?) I think their biggest rival is Facebook, hence why they went so far out of their way to make a Facebook clone. As amusing as it is to watch Google Bing themselves (create a clone of a rival's product and throw cash at it until it succeeds), I wish they would stick to their strengths. I'm about to leave gmail for good, over all this trash that they've been opting me in for. Apparently I'm now a member of Play. Good to know I signed up for that, too.

bad_user2• 14 years ago

I don't see it in the same way you do.

Google does user profiling and this means not only that they can serve better ads, it also means that they are giving users what they want, with queries being at least location dependent. E.g. when I'm searching for "Ruby", it gives me the homepage of the programming language as the first result and most other results are about this language too. When my wife searches the same thing, it gives her the Wikipedia page on rubbies, some stuff about Ruby's Diner, 1 or 2 YouTube videos, etc...

Of course I've noticed that this user-profiling is pretty dumb currently, but it's getting better. And skipping over privacy issues and the death of the long-tail, this is in fact what most people want and I also think that normal users do not care about the loss of privacy, unless they've been bitten by the side effects.

Then Google's own crawler can hardly be matched. Consider how web interfaces these days are more and more reliable on JavaScript. It's easy to run a headless browser and render a JavaScript-enhanced page from a script, but it's hard to scale that to hundreds of millions of web pages and workaround all the idiotic things that people do with JavaScript. Also couple that with the need to serve fresh news to people that want it, so the crawler has to be smart enough / fast enough for near real-time consumption.

Then Google's other services are complementing their search, stuff like Google Places or Google Maps. Personally I hate when such results are cluttering my view, but when searching for places (e.g. restaurants, kindergartens), people are happy to get such results straight on the first page. And btw, I don't know how they do search by voice recognition on Android, but it's a no-brainer to improve the voice recognition based on global trends or even on the user's profile - the point being that there's a lot they can do with the data and infrastructure they have that's out of reach for small startups.

Personally I liked the old Google better, but it's going to take a lot more than improved privacy to eat their launch.

vibrunazo2• 14 years ago

> Google's business model is so wrapped up in profiling and tracking that it will be difficult for them respond to Duck Duck Go if it gains any traction

I disagree, Google could implement Duck Duck Go's unique competitive advantage in less than a week of coding if they ever feel it's really needed. Without any serious risks to its business model. Which isn't wrapped around profiling and tracking in any way. That's just a complement to what they do. They still can sell untargeted ads, which is already most of what they do. Have you ever used Ad Sense and Ad Words at all? That can still work fine without tracking a niche % of the population. And even then, there's other means they can get that information.

DDG's target audience are mostly confused users who are not really sure how privacy works and are freaking out over the wrong problems. It is in no way getting "developer good will behind it", most developers understand it's not a problem and most non developers, by and large, won't care. DDG will be stuck with the small niche audience that they can convince to switch out of FUD. Without any other value proposition (hopefully they do find one) they'll never have a significant share. Which is still ok, search is huge and they can still make a lot of money out of their niche.

demallien2• 14 years ago

If you think that, you haven't understood exactly what DDG's competitive advantages are. I for example am using DDG because I got fed up with Google collecting data on me to sell to advertisers. If Google copies that one they lose a bucket load of money...

Now maybe you want to make the argument that I'm a "confused user who isn't really sure how privacy works" - I would disagree, but it really doesn't matter as long as I have the perception that my private data is being sold off to the highest bidder and I choose to do something about it.

NameNickHN• 14 years ago

I fail to see what Duck Duck Go has to do with Android or Google's strategy in other parts of its business.

Also. Non tech people are less concerned with privacy than you might think. As long as websites like Facebook thrive, people evidently do not care about their personal data. I myself are very privacy conscious. Probably comes with using computers and internet day in and day out. So far Google hasn't let me down regarding privacy. Sure, they're data mining the hell out of the things I do with their products but so far they didn't use it for any shady business - quite unlike others.

BTW. I really don't get the fondness for Duck Duck Go around here. It uses Bing for search and adds a layer privacy. So what. There is a reason why people prefer Google over Bing. It's because Bing mostly sucks. Privacy features don't make Bing suck less.

diwup• 14 years ago

In case any of you find this article too long to read, here's the abstract, Google isn’t worried about Android revenue, because the market of Android is growing.

This article reminds me of writing papers when I was in grad school. It really was a highly complicated (and demanded) skill to write so long an article without making much sense.

rbarooah• 14 years ago

The quote from Vuc Gundotra in that article explains why they aren't worried. Android isn't about direct revenue for Google. Its purpose is to damage competitors who make money out of hardware or software by commoditizing the mobile platform.

zyb09• 14 years ago

I think the answer is simple: Revenue isn't the most important thing right now. There are many things that make a successful company and revenue is only one of them. Google makes enough money to pay their employees well, to make investments and in generell more then enough to run its business, so making more money isn't a priority. Apple has loads of cash and don't even know what to do with it.

So instead they are pushing other goals, like increasing market share, binding the users more to their services and essentially cement their position in the mobile/web space.

technoslut2• 14 years ago

This article is seriously flawed.

>All Google ever hoped to do was provide a shell-shocked smartphone industry with the tools to build a credible alternative to the iPhone that didn’t come with Apple’s tight-fisted control.

This is wrong. The initial reason of why Android was even purchased was to prevent Microsoft from becoming dominant in mobile. Whatever argument that is made afterwards was historical revisionism.

>but its success has ensured that the world will have access to a modern mobile operating system governed by different principles than Apple’s.

How can Krazit possibly know this? Android seemed to be a bigger reason why WebOS and WP7 wasn't successful and, for a two year stretch, Android was primarily capitalizing off declining marketshare numbers from competitors and not Apple . It may have even killed off development of MeeGo.

>...and when Apple started making noise about barring AdMob from the iPhone, the federal government raised an eyebrow.

Apple doesn't have to completely remove Google search completely from iOS to hurt Google. All they have to do is remove them as the default option.

It's a bit absurd to imply that the only reason Google is in this to make sure that one company won't control the future when this what Apple, Google and MS all want. Google wouldn't have spent $12.5 billion on MMI if they weren't expecting to make that money back and then some.

ge0rg• 14 years ago

The initial reason of why Android was even purchased was to prevent Microsoft from becoming dominant in mobile.

This is very interesting. Can you provide a source on it?

I think the thesis should be seen more broadly than stated in the article: Android was meant to make smartphones a commodity, giving millions of people access the mobile web.

saturdaysaint• 14 years ago

Android was purchased well over a year before the iPhone was unveiled. And remember that the iPhone was seen more as an expensive iPod, not necessarily a challenger for the most prevalent software platform in the world, for a very long time after its release. So it really is a stretch to portray Android's early history in terms of competition with the iPhone.

Microsoft was the threat. Google was expanding into desktop software like Desktop Search, Google Earth, and Picasa by the mid-00's and MS was playing hardball. Google filed a lawsuit against them in 07' over being handicapped in desktop search performance. And Microsoft was already investing billions in web search, so the threat of deeper integration of search into the world's most popular OS was a major long-term threat.

ajross2• 14 years ago

It's a bit absurd to imply that the only reason Google is in this to make sure that one company won't control the future

Seems like your thesis is that it's exactly the reason Google is in this. They just got the company wrong.

I think this is a trap of trying to read moral content into factual data. Saying that Google wasn't trying to become a dominant platform isn't the same thing as saying they are saints for it. But I think it's broadly correct: Google has always viewed its future as being the central arbitrage point for online communication. Apple and MS mark success by unit shipments, and the strategies for protecting those kinds of positions differ.

bonzoesc• 14 years ago

> Apple and MS mark success by unit shipments, and the strategies for protecting those kinds of positions differ.

Apple and MS mark success by the benjamins on their balance sheets, just like HTC, Samsung, and RIM. If any of them could dip a Blackberry 6700 in Elmer's glue, roll it around in a bin of diamonds, and reliably sell it to some Saudi prince for $50 billion once per quarter, they would; but it turns out that selling normal phones to normal people stacks cheddar more reliably.

arebop• 14 years ago

"All Google ever hoped to do was provide a shell-shocked smartphone industry with the tools to build a credible alternative to the iPhone that didn’t come with Apple’s tight-fisted control." Every other commenter has tried to tldr this article and I think they've all got it wrong; this is the thesis statement.

pastaking• 14 years ago

… revenue Google has earned from Android since its launch in 2008: $550 million … [Google's] mobile revenue in general, which is on a $2.5 billion annual pace driven mostly by mobile searches on iOS devices and in-app advertising … Android was a defensive move on Google’s part, and one that wasn’t primarily motivated by desire for revenue or profit. … Android represents mobile competition

Quoted from the article, that pretty much sums it up.

tyree732• 14 years ago

Google having Android guarantees a large percent of mobile searches go through Google. It also means that Google has to pay Apple significantly less to be the default search provider for the iPhone. If these were the only accomplishments of Android, it would likely still be worth it for Google.

technoslut2• 14 years ago

The money that Google pays to Apple has to be all but meaningless. This is a company who has $100 billion in the bank. What does $100 million mean to them?

>Google having Android guarantees a large percent of mobile searches go through Google.

That may be true but what is it worth? From every survey I've seen, consumers are using apps more for search than using browser search. Browser usage is continually going down in the era of mobile apps.

loceng• 14 years ago

The most important part of being a big company when competing with other big companies is keeping mindshare. You need to stay relevant in people's minds. Google owning Android does this in a subtle but powerful way. This is why RIM is failing, or perhaps more so why there's a huge belief that RIM is failing - which will only then. RIM used to be mentioned all the time with people BBM'ing. They had a chance to continue to be relevant, though I am unsure if that time has passed; I've not had the time to determine if they still have a chance to recover and become dominant in people's minds again.

ConnorWGarvey2• 14 years ago

According to a comment from Eric Schmidt, Google makes enough money from Android to pay for its development and more. Apple takes 50% of revenue from ads shown on iOS devices. On Android, Google gets to keep 100%. Google can afford to give its revenue from the Play Store (terrible name) to the wireless carriers because it's making so much more money on ads than it does on iPhone and iPad. Apple has made iOS so inhospitable for Google that it is more financially advantageous for Google to maintain Android.

The idea that Google doesn't care about revenue is an interesting theory, but totally wrong.

rsynnott• 14 years ago

> Apple takes 50% of revenue from ads shown on iOS devices

Where are you getting that from? They take a 30% cut on iAd, but few apps use that; for other networks, like Google AdMob, they get nothing.

ConnorWGarvey2• 14 years ago

They don't pay for ads directly. They pay for Google products to be placed on the iPhone. The last estimate I saw was about 50% of total revenue. They pay 0% to place their products on an Android device.

eta_carinae• 14 years ago

When the Android effort started at Google, neither Apple nor Microsoft were remotely near to being a force in the mobile market (more like Nokia and RIM).

The target was much more obvious than that: the carriers.

Larry Page was tired of carriers dictating device models and data plans to users, so he decided to do something about it.

RandallBrown• 14 years ago

Google makes money when people are simply browsing the Internet. That is why Google invests in all things that will make people browse the Internet more.

It's the same reason they keep throwing money at Mozilla too.

funkah• 14 years ago

Wait, Android boosters always point out that it was around before the iPhone's release. Now we're saying it was created to keep Apple from controlling the mobile industry? Hmmmmmmm.

binarycheese• 14 years ago

The page keeps crashing in Chrome

Why Google isn’t worried about Android revenue

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