Google’s mobile operating system, Android, is one of the most important assets the company has, and even if it never ever makes money, it’s a smart investment.We bring this up, because Android is getting a fresh beating over a report last week that it only generated $550 million in revenue between 2008-2011.
The report was based on analysing a legal filing between Oracle and Google. A source close to Google told us the analysis was flawed, but didn’t have any details on what Google’s Android revenue could be.
If Google wanted to clear the air, it would just come out and report Android-based revenue. But it hasn’t. It hasn’t ever reported YouTube revenue either, so we’re not holding our breath on Android revenue.
But, just like with YouTube, Android is a hugely successful strategic investment in the future of the internet. Other than generating big profits, Android has done just about everything Google could ask for.
- It has caused significant damage to its biggest rivals. Apple hasn’t been able to run away with the smartphone market because of Android’s success. Microsoft is completely demolished in smartphones, and it’s going have to play catch up in the tablet market.
- It gives Google access to hundreds of millions of users. The more people use Android, the more they use Google services. This is a good thing.
- Google gets thousands of developers building on its platform. The more developers get to know Google, the better it is for the ecosystem.
- It has protected Google from transition away from the traditional web to the mobile web. When the mobile web started growing, Google was at risk of losing users. Through a combination of its partnership with Apple on iOS and Android, it controls the mobile search market.
- It give Google an opportunity to build the next generation of computing devices. Android is already in a lot of smartphones. It’s also in tablets and TV boxes. Google is reportedly going to use it to power some special glasses.
Even with the numerous advantages Android presents, critics like Brian Hall think it’s idiotic that Google is blowing billions on Android. He makes a colourful argument about Android, but essentially it boils down to:
Is Silicon Valley so built atop bubbles that the very notion of actually *generating* money is some throw-away ideal?
Regarding Android as a defensive play: This statement is not justified and I think it’s bullshit. Google spent the better part of the 21st century doing all it could to effectively own the Internet. Or at least, be the sole gatekeeper to all the world’s information.
As the web went mobile, Google sought to erect new tollways.
Also, we are in the second decade of the 21st century. Can naive Silicon Valley bloggers finally dispense with the silly notion that people and businesses out there are “not motivated by desire for revenue or profit?”
Because that is the *sole* motivating factor out there. It’s the dream! Let’s not lie to ourselves nor one another, please.
Make no mistake about it, Google thinks it can make money on Android, eventually. When you control the biggest platform on the most important, fastest growing space in technology, eventually you figure out a way to make money.
Just because it’s not earning Apple-like profits today doesn’t mean it’s going to be screwed forever.
But even if those Apple-like profits never come, Android is a good investment. If Google had sat on the sidelines and let Apple and Microsoft completely dominate the next major Internet platform, the company would be screwed forever.