How Google failed with Android

James Allworth writes for The Harvard Business Review, “Google was surely celebrating recently when Gartner reported that Android handsets outshipped Apple’s iPhone by close to a 2:1 margin.”

MacDailyNews Take: For clarification, the report to which Allworth refers was an estimate from Canalys of the U.S. market only in Q3 2010: 9.1 million Android handsets vs. 5.5 million iPhones. This may well be the high water mark for Android as convincing reports of iPhone coming to Verizon have likely frozen the iPhone wannabe market significantly for this quarter and, when and if Verizon gets the iPhone, buyers won’t have to settle for fake iPhones any longer.

Allworth continues, “But Google may regret the strategic choices that have led to this victory over Apple. To achieve the “win,” Google may have unwittingly created and trained a mercenary army of hardware manufacturers, willing to sell themselves to the highest bidder—whether that be Google, Baidu or Bing.”

“There is no doubt that Google understands the importance of the mobile web,” Allworth writes. “A large part of Google’s future will rely on advertising revenue driven by mobile devices, which is likely a key reason why Google decided to go into competition with its one-time ally, Apple… But Google might soon find the many third parties it has relied on to battle Apple have instead become a much greater threat than Apple ever was.”

“Baidu, the internet search engine that has successfully challenged Google for ownership of the Chinese market, has taken an even bolder approach. It’s reportedly in negotiations with a number of smartphone manufacturers to remove all references to Google, and replace them with Baidu,” Allworth reports. “Microsoft recently negotiated with Verizon that some of the Android phones that ship to Verizon customers will have Microsoft’s Bing, not Google, as the default search engine. And the manufacturers are getting in on the act too: Motorola recently released a new phone, the Citrus, based on Android, but shipping with Bing.”

Allworth writes, “Google is losing this fight. It’s a poorly kept secret that Google now has to pay Apple — and pay Apple a lot — to keep Google as the default search engine on the iPhone. It won’t be long before Google’s ‘allies’ in the Open Handset Alliance — the manufacturers making Android phones — realize that Google need them a lot more than they need Google.”

Read more in the full article here.

MacDailyNews Take: One is left wondering if Eric T. Mole thought this Android thing all the way through or if he did it the “Google way” – think it just about a quarter of the way through, quickly chuck it out there, and see what happens, perpetual-beta-style? The latter seems much more likely. Enjoy those U.S. Android sales figures next quarter when the fake iPhones are sitting next to real iPhones, Eric, you creepy bastage.

41 Comments

  1. “A large part of Google’s future will rely on advertising revenue driven by mobile devices,”

    I don’t want advertising on my phone, and find nothing compelling about the “openness” of android. Since I can’t get an iPhone here yet, I’ll just stick with my dump flip phone for now.

  2. Google’s biggest problem is that it’s only real revenue stream is advertising from searches. All the free apps, etc. only exist to push people to Google.

    Once people start using other search engines, they will realize that Google’s not the only game in town. And really, most people don’t care which search engine they use, so long as they find what they’re looking for.

  3. Oh, Google my rue the day that they have to depend on Apple. On that day Steve may just mention that he understand’s Google position in the decreasing use in the smart phone market. Truly understands.

    Then, “Oh Eric, one more thing. We have a search engine ready and I think people will enjoy it.”

    “Boom” was heard around Google world!

  4. ’34 percent of those surveyed who aren’t on AT&T said they would have bought an iPhone…’

    http://www.investorplace.com/23576/new-smart-phones-iphone-vs-motorola-vs-blackberry-vs-samsung-vs-htc/

    9.1 million Android vs 5.5 iPhones from MDN’s note…

    9.1 x 34% = 3.1 (majority Android, some RIM)

    So add to iPhone 5.5 + 3.1 = 8.6 Million

    As far as Android 9.1 – 3.1 = 6.0 Million

    Hmmm. ” width=”19″ height=”19″ alt=”gulp” style=”border:0;” />

  5. If you go to Verizon, it’s either Android or Blackberry. I refused to join my kids “family” plan until I can do it on an iPhone. Doesn’t stop most people though.

  6. This situation is incredibly fascinating. Let’s check out some of the convolutions:

    1) Google give away Android. They may no money on it. They get money after the fact via their services.

    2) The Android phone makers customize the hell out of their phones and cut Google services out of the picture.

    3) Google no longer gives a rat’s about Android and lets it languish. No one else gives a rat’s about Android either and lets it languish.

    4) Android phones stagnate and grow ever more legacy as the rest of the smartphone market moves along into the future. Each successive iDevice ripoff using Android become more blatantly pathetic compared to the contemporary alternatives.

    5) Android phone makers are embarrassed out of the market, making way for more recent innovations.

    6) Android drops dead. Rest In Hell.

    The Google trolls are going to be sooo upset!
    (;_;)

  7. On the investment sites the stories are all about what a great success Android is over Apple. They seem not to notice Google gives away the OS and many of the phones are cheap 2-foer-1 junk that lose money for the makers, or that people actually want the iPhone. It is refreshing to see a story with a little depth and insight.

  8. the “commodization” of OSs, OEM’s, and web services, and the global fragmentation of telcos and browsers and all the rest would have happened with or without Android. it just would have been MS and Nokia starting it instead of Google, and so a few years slower in happening. from that perspective, Google and its ad business will still wind up better off having the initial advantage of Android than if it had totally relied on partnering with the others.

    From the start, Apple has purposefully approached it all much differently with its “walled garden” iOS to stay out of this inevitable cutthroat commodization/fragmentation game. that always meant Apple could never single-handedly dominant the global market. and it never wnated to. it meant instead Apple would instead dominate the high-profit premium sector. which it does.

  9. And when Apple release their own search engine, which will be default for all web browsing on macs and ipads/iphones/ipods then google are fscked.

    Just a matter of time when Apple does this, as they were shafted by google.

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