The company’s acquisition of Android seven years ago, and its cultivation of the platform since, has provided the handset industry, mobile carriers and users with a powerful alternative to the Apple iOS steamroller.
The other handset makers, including all that don’t use either iOS or Android, are losing money.
In the tablet space, Amazon is the only company with significant market share. And their best tablet, the Amazon Kindle Fire, runs Android.
On the carrier side, the Android platform has provided wireless companies with a welcome, low-maintenance platform. The iPhone is generally profitable for carriers in the long run, but Apple is a tough partner, demanding to be paid a whopping $450 per phone on average by the carriers, which is much higher than Android devices cost them.
Google’s larger strategy for Android is to create a mobile and all-purpose platform that generally favors Google services, such as Search, Gmail, Play and Docs. The business benefit is advertising and content revenue. But is this strategy paying off?
While device makers, carriers and users get huge benefits from Android, Google is left paying most of the costs. And the downsides of Android keep piling up for Google.
Here’s what Android costs Google:
Patent hassles. As a mobile phone platform company, Google is inevitably dragged into court over patents. The company has been slugging it out with Oracle in recent weeks over the use of Java.
Google is rich. They’ll pay any eventual outcome of the case without serious damage to their pile of cash. But the trial is a distraction for key executives, and has forced into the public eye a variety of statements and details Google would rather keep to itself. (More on that below.)
The Oracle fiasco is just one more irritant in an endless line of patent wars that come with the mobile platform territory. Google or its Android partners have been sued by Microsoft and Apple, too. And there will be more lawsuits in the future.
Motorola distraction. Google’s big play to defend itself in the patent wars is the acquisition of Motorola Mobility for $12.5 billion. Google says it will run the company as a separate entity, but use its patents to defend itself in court.
Still, the acquisition alienates the company from its handset partners, because now powerful companies like Samsung get their OS software from the company that owns a direct competitor.
Also: Google itself is a lean, innovative company that offers radically scalable businesses. But now it’s saddled itself with a bloated, bureaucratic, money-losing hardware company. It’s a distraction, and not a small one.