On November 5, 2007, google unveiled Android to the world. Since then the Android platform has grown into this massive open source platform that google is fiercely pushing. A open source mobile operating system which has the linux kernel embedded in it and uses a java virtual machine to run application on it. Android is truly innovative idea if not from a only technological perspective, but a business one.
Why would a company like Google invest millions in the development and promotion of such a platform. A platform where the source code is out there in the open, and then turn around and help design a flag ship product like the Nexus One with a partner. Why is Google have a web store where you can buy mobile phones. The Nexus One will not be the only phone Google helps design, it is the first of many "superphone". What does that mean?
One can say to understand Google is to understand search. Search is where it's main bread and butter is. Over 90% of its income is coming through search. So why is a search company investing in operating systems and platforms. The answer might be as simple as driving up its search traffic. You see smartphones or "superphones" are the future of mobile cell phone growth. And if fact, mobile cell phone growth worldwide outpaces any other type of device growth out their. More people in the world have and use cell phone than a computer by a massive landslide. Worldwide computers are still not affordable for the majority of people.
Cell phone growth by itself, won't help Google. Google needs the smartphone share of the cell phone market to grow significantly. Smartphones in 2009 are about 16% percent of the market worldwide according to a report from Pyramid Research. In 2014 it is estimated to grow at 37%. If google take advantage and accelerates the smartphone market penetration of the overall growing cell phone market, it will increase its revenue significantly (through its ad programs).
So what is the best way to increase smartphone penetration. How about building a open source platform that any manufacturer can use. That might convince many manufacturer's who don't necessarily want to spend the time and money to develop there OS, to have one they can readily use and understand. Bill Gurly writes, "Android gives every Korean, Taiwanese, and Chinese manufacture whoever wanted to approach these markets a huge head-start." Secondly since it give more and more manufacturer's the ability to enter the smartphone market, the competition will increase. Driving down the price of the average smartphone, thus making it more accessible to more people worldwide. Due to a price reduction (think about the current state of PC computer prices), the smartphone penetration will significantly increase.
As Android share increases more and more people will have access to Google's services through the devices. Google's second strategy is to make the people focus on the smartphones instead of the carrier's. Now we have a platform that everyone can use, the smartphone manufacturer's will compete for customers through pricing and features. The google web store which currently has Nexus One will have more and more phones that are carrier agnostic. Now if phone is available to multiple carrier that carrier now have to compete based on their pricing plan, features and services more so. So has there data plan rate costs are driven down, more people will be able to afford the option to have data service with thir cell phone plan.
In the end, Google's Endeavor to conquer mobile search is a long term strategy that leverages a open source platform to its fullest potential. With more and more companies using android and thus using Google's services, googles future mobile search and services revenues is all but guaranteed. Just as Google said the Nexus One is just the beginning...
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