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  • Posted: 13 September 2010 05:12 PM

    No matter the press-hyped hoopla over Android, it doesn’t seem to have benefitted the stock. Here’s GOOG’s one year chart.

    If Android has such a bright future in smartphones and other ultra-mobile devices, why hasn’t the share price moved higher?

         
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    Posted: 13 September 2010 05:42 PM #1

    DawnTreader - 13 September 2010 08:12 PM

    No matter the press-hyped hoopla over Android, it doesn’t seem to have benefitted the stock. Here’s GOOG’s one year chart.

    If Android has such a bright future in smartphones and other ultra-mobile devices, why hasn’t the share price moved higher?

    Spending from a few hundred million to a billion dollars, on a technology, only to GIVE IT AWAY FOR FREE, isn’t exactly what we have come to know as savvy business smarts.

    But is it EVIL?

    Only if you do it to hurt your former friends…....

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    Posted: 13 September 2010 05:42 PM #2

    How is Android’s growth helping Google’s bottom line? I’m not sure that it is. And further it may ultimately hurt.

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  • Posted: 13 September 2010 06:44 PM #3

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

         
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    Posted: 13 September 2010 07:25 PM #4

    FalKirk - 13 September 2010 09:44 PM

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

    Time to REVIEW AND APPRECIATE THIS article from three weeks ago….prescient!

    The DIRTY LITTLE SECRET About GOOGLE’s ANDROID -> http://www.zdnet.com/blog/btl/the-dirty-little-secret-about-google-android/38260

    [ Edited: 13 September 2010 07:28 PM by TanToday ]

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 13 September 2010 07:31 PM #5

    Android is “free,” but remember this, fandoids of the world:

    “If you are not paying for it, you’re not the customer; you’re the product being sold.

    Posted By Boso Zoku, San Francisco, CA

    [ Edited: 13 September 2010 07:33 PM by TanToday ]

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
  • Posted: 13 September 2010 07:37 PM #6

    TanToday - 13 September 2010 10:25 PM
    FalKirk - 13 September 2010 09:44 PM

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

    Time to REVIEW AND APPRECIATE THIS article from three weeks ago….prescient!

    The DIRTY LITTLE SECRET About GOOGLE’s ANDROID -> http://www.zdnet.com/blog/btl/the-dirty-little-secret-about-google-android/38260

    Actually, I read that article (again) only seconds before I made my post. The article that removed the scales from my eyes was this one: Android Is As Open As The Clenched Fist I?d Like To Punch The Carriers With.

    http://techcrunch.com/2010/09/09/android-open/

         
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    Posted: 14 September 2010 12:06 AM #7

    FalKirk - 13 September 2010 10:37 PM
    TanToday - 13 September 2010 10:25 PM
    FalKirk - 13 September 2010 09:44 PM

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

    Time to REVIEW AND APPRECIATE THIS article from three weeks ago….prescient!

    The DIRTY LITTLE SECRET About GOOGLE’s ANDROID -> http://www.zdnet.com/blog/btl/the-dirty-little-secret-about-google-android/38260

    Actually, I read that article (again) only seconds before I made my post. The article that removed the scales from my eyes was this one: Android Is As Open As The Clenched Fist I?d Like To Punch The Carriers With.

    http://techcrunch.com/2010/09/09/android-open/

    The only way I see Android making sense financially for Google is if it is being subsidized in some way by the carriers. Android is not a free lunch, its a free feast for the carriers. And it comes at considerable expense to Google. Not just development cost. They have patent liability, loss of working partnership with Apple, and, most important, loss of brand value. Say what you will about “evil”, most products by Google are best in class- Google Search, Google Earth, YouTube,G-Mail. Further, other than Android, Google is totally in control of their own platform. With carriers putting out multiple versions with crapware, etc. the brand name will suffer. Why would they give up control and image?

    Either Google made a big mistake, or there is a payoff somewhere we don’t see. Maybe they were promised the express lane on the mobile highway with the breaking of internet neutrality.

    Regardless of any missteps with Android, I wouldn’t underestimate Google. They are the best and most popular search engine for the foreseeable future and the leader in point of purchase advertising. Nothing about i-ad will change that. There’s plenty of room for both platforms to grow on the mobile frontier.
    They are continually innovating and trying new things. Some may be turkeys but some are very practical and engaging- internet telephoning and instasearch are two I learned about in the past week.

    I think Apple has nothing to fear from Google, Android will turn out not to have been Google’s finest moment, and Google will thrive anyhow.

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    Posted: 14 September 2010 03:43 AM #8

    FalKirk - 13 September 2010 09:44 PM

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

    Not only can they gut Android, but everyone in the value chain is deeply motivated to do so.

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  • Posted: 14 September 2010 03:58 AM #9

    asymco - 14 September 2010 06:43 AM
    FalKirk - 13 September 2010 09:44 PM

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

    Not only can they gut Android, but everyone in the value chain is deeply motivated to do so.

    I think that was much of FalKirk’s point, only you said it more succinctly.  grin

    Already Android’s future is in doubt. GOOG’s future is tied to Chrome. That puts Android in a precarious economic position. Android only has economic value to CSPs provided it remains a fragment hardware market in which they can force price capitulation. Absent hardware fragmentation there’s no market for Android handsets because economics does not otherwise justify its existence.

         
  • Posted: 14 September 2010 10:49 AM #10

    asymco - 14 September 2010 06:43 AM
    FalKirk - 13 September 2010 09:44 PM

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

    Not only can they gut Android, but everyone in the value chain is deeply motivated to do so.

    I’d like to hear more on why you think that everyone in the value chain is deeply motivated to gut Android. I think I understand your reasoning - but I suspect you may have a deeper understanding than I do.

         
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    Posted: 14 September 2010 11:08 AM #11

    @FalKirk

    Almost everyone in the value chain (device vendors, operators, app developers, etc.) understands that the software platform is a critical control point. Whoever “owns” this layer has the ability to charge rents on that property since most everything of value sits on top of this. The ownership of something that is free is not transparent however. How can you own open source? In this context you need to take ownership to mean the ability to orchestrate or coordinate further evolution of the software. Google has nominal control over Android through their updates and release cycle. However, if the code were forked or remain un-updated by a vendor then they essentially gain control over it. They can also layer additional software and APIs on top and thus, again gain control. They can remove Google services and plug-in competing services. The real question is why would someone not do this? Control is within reach and so is revenue. All vendors want to skin the UI so that they can differentiate. All operators want to embed their nickel-and-dime services and even developers (e.g. Adobe) want to layer their APIs on top to control the evolution of apps. All these paths lead to additional income.

    Android is theirs for the taking.

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    Posted: 14 September 2010 11:48 AM #12

    TanToday - 13 September 2010 10:25 PM
    FalKirk - 13 September 2010 09:44 PM

    Google has talked of making $10 on 10 million Android devices. But if China, Verizon and any manufacturer, any carrier, anybody at all can legally strip out any and all of Google’s services from Android, how can Google possibly profit from the continued development and maintenance of the OS?

    Time to REVIEW AND APPRECIATE THIS article from three weeks ago….prescient!

    The DIRTY LITTLE SECRET About GOOGLE’s ANDROID -> http://www.zdnet.com/blog/btl/the-dirty-little-secret-about-google-android/38260

     


    First, the article is wrong from the outset

    Google Android began with the greatest of intentions ? freedom, openness, and quality software for all.

    and builds its case on the seeming openness intention. Openness was never Google’s intention, only the rhetoric which sprung up on the net by those who dislike Apple and how it manages its products to optimise mass market usability in exchange for ultimate user custimisation and the media who love Apple + anything contentious in their headlines. The simple fact is that Eric Schmidt & co knew in a general way about the iPhone, and because of their huge respect for Apple and how it’s products disrupt markets sensed its impending power to disrupt the entire smartphone market, sensed that with a large enough user base Apple could close Google out of wireless search but more importantly mobile display ads and with that they understood that they needed to have a way of slowing down Apple and putting an alternative in place. And thus the Apple + Google lovefest ended. Nothing to do with Openness, everything to do with advertising.

    Google which is under constant pressure to continue its amazing growth of past years knew they had to move beyond search/ads on the desktop, a market which is now more or less stable. Android was never a project in and of itself, it was a project to guarantee an alternative avenue to smartphone ad revenue should iOS dominate the mobile market. Thus they totally redesigned Android from Feature phone to Smartphone, purchased AdMob out from under Apple’s nose. Apple then bought Quattro and then in the SDK closed their system to AdMob thus bizarrely creating the very conditions of which Google was most afraid. For yet unexplained reasons Apple rescinded that decision recently to keep AdMob off of iOS devicess.

    So Google really has 2 plays in trying to control advertising and its revenue for the wireless/smartphone market; Android to parry iOS hegemony and potentially a closed ad system and AdMob to actually sell ads and bring in revenue. I’ve argued for a long time that Android may well be dropped by Google and open sourced if one of 2 things happen:
    1) If Android doesn’t achieve smartphone market domination AND if the other players close their OS’s to competing ads using the rationale that Apple used then Google would jettison Android to get access to advertising options on all OS smartphone players.
    2) If Google’s AdMob has open access to all smartphone OS ad markets then Android is redundant, costs too much and brings no value and can be turned over to the open source community who will do their usual job of destroying it through fragmentation and arguments over roadmaps.

    I had originally thought that option 1 was the likely scenario but it now seems like option 2 is how things will work out. Chrome remains a mystery to me. How can you get serious work done on a machine that relies on the cloud when the machine regularly looses contact with the cloud for various reasons ranging from deadspots to no coverage. Chrome was designed to be a tank in the war of netbooks. Android in smartphones. Obviously “pads” were not thought through at the time as neither Android nor Chrome are really suited for that battle place (google was caught flat footed here, witness Eric Schmidt’s early Balmeresque put down quotes on the iPad). Presumably Gingerbread will show how well Android is suited to iPad competition.

    Google desperately needs Android if iOS is closed to it, despite what Asymco explains above, but if iOS and its competitors are open to AdMob then Android becomes a pain in the neck. Just because Apple has re-opened iOS doesn’t mean they couldn’t close it sometime in the future. A dilemma for Google.

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    Posted: 14 September 2010 02:59 PM #13

    It’s funny to me that the short-term focus of companies is bemoaned by everyone, including investors, and yet, when a company has a long term focus and track record, with a product for which nobody can get their heads around its short term strategy, well, that product must be doomed.

    The best discussion I have seen of Google’s DNA on the free model is the EconTalk episode with Paul Buchheit. Buchheit is credited with the “do no evil” tenet of Google’s corporate creed. He’s also an original developer of gmail. I don’t see much discussion of Google acknowledge (even if the discussion disagrees with) the major points that Buchheit makes in this interview. That tells me that many who discuss Google haven’t made an attempt to understand it.

    But here’s the short story on free. It’s disruptive. By offering “free” to a small subset of the market, you can force the marketshare leaders to follow suit by creating a different expectation for the whole market. You can do this at great short-term expense to your competitors while taking away their core competency in raising revenue. Google’s focus will always be search. Android is a mobile OS with search infused in it. Search is not just an app feature. Google has some killer features that support its search (Voice Search, Gesture Search, Google Voice), so swapping the default search engine (for Bing, like Verizon has done on a couple phones) is self-defeating long-term for the handset makers and carriers. Google doesn’t have to be an ass about it because Android’s DNA just favors them.

         
  • Posted: 14 September 2010 03:18 PM #14

    Bosco (Brad Hutchings) - 14 September 2010 05:59 PM

    It’s funny to me that the short-term focus of companies is bemoaned by everyone, including investors, and yet, when a company has a long term focus and track record, with a product for which nobody can get their heads around its short term strategy, well, that product must be doomed.

    The best discussion I have seen of Google’s DNA on the free model is the EconTalk episode with Paul Buchheit. Buchheit is credited with the “do no evil” tenet of Google’s corporate creed. He’s also an original developer of gmail. I don’t see much discussion of Google acknowledge (even if the discussion disagrees with) the major points that Buchheit makes in this interview. That tells me that many who discuss Google haven’t made an attempt to understand it.

    But here’s the short story on free. It’s disruptive. By offering “free” to a small subset of the market, you can force the marketshare leaders to follow suit by creating a different expectation for the whole market. You can do this at great short-term expense to your competitors while taking away their core competency in raising revenue. Google’s focus will always be search. Android is a mobile OS with search infused in it. Search is not just an app feature. Google has some killer features that support its search (Voice Search, Gesture Search, Google Voice), so swapping the default search engine (for Bing, like Verizon has done on a couple phones) is self-defeating long-term for the handset makers and carriers. Google doesn’t have to be an ass about it because Android’s DNA just favors them.

    IMO, Google’s strategy is brilliant. It is a long term strategy. You are correct in that the comments littered on this thread are myopic in their short term view. I have previously illustrated my interpretation of Googles strategy in a prior thread. Additionally, many on this board are frustrated and upset by being outflanked by prior Apple board member Eric Schmidt. Schmidt was shrewd, and Apple was careless in regard to keeping Schmidt on their board for so long. That being said, I am very long Apple and currently have no position in Google. I expect that will change in some point in the future.

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    Posted: 14 September 2010 03:48 PM #15

    jeffi - 14 September 2010 06:18 PM

    IMO, Google’s strategy is brilliant. It is a long term strategy. You are correct in that the comments littered on this thread are myopic in their short term view. I have previously illustrated my interpretation of Googles strategy in a prior thread. Additionally, many on this board are frustrated and upset by being outflanked by prior Apple board member Eric Schmidt. Schmidt was shrewd, and Apple was careless in regard to keeping Schmidt on their board for so long. That being said, I am very long Apple and currently have no position in Google. I expect that will change in some point in the future.

    Oh, I don’t think Schmidt on the BOD made a difference one way or another. While his continued presence would never have worked for the short-term thinkers, it would have preserved a very crucial relationship for Apple. Apple’s long term business isn’t phones or music players or even tablets, nor is it computers or Mac OS. Just like Google’s isn’t phones. Apple’s business is now making a hit that peaks in about three years, lasts about six, and squeezes out very nice first mover profits over that time frame. Apple does its best work when it shows the industry what the possibilities are. It seems to have its problems when it tries to actively defend territory it carves out rather than continue to raise the bar in its niche.

    I think Google’s people know their mission, which is search. I don’t think Apple people see their mission or their core competency as “wonderful design”. I don’t think they see that that’s what they are monetizing. They get caught up in too many unimportant details. For example… Take iPhone 4 hardware, even with the whole antenna thing, stick Android on it, and package with best in class apps for things people do—> documents, presentations, face to face communication, etc. Make these apps exclusive to iPhone/Android, kill the carrier subsidies, kill the censorship. We’d all line up to buy it and give Apple their 40% margin happily.