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Has Google Android’s Open Source Business Model Failed?

Android’s experience is the core dilemma of open source business models

Yesterday’s WSJ.com video “Tablet Wars: How Are People Using Tablets?” had a shocking statistic: 98% of the web traffic from tablets comes from Apple’s iPad.  Further, most of mobile commerce is from Apple’s iPhone:

Translation: No matter what the sales figures for Android, people just aren’t using them.  This is a far cry from the early days, when many thought that an army of Android mobile devices would slay Apple’s mighty iPhone:

Source: dailypicksandflicks.com

Most importantly, if this is true, then Google’s Android strategy has failed.

Google’s strategy with Android is very similar to those of mobile phone companies: Give away a free phone, sign you up for a contract.  In Google’s case, they gave the mobile operating system away in hopes of promoting traffic from mobile devices and then making money off that traffic through search and advertising.  They probably also wanted to make sure that that traffic isn’t “owned” by a competitor like Apple through its Safari browser on the iPhone.

Hence, if Android devices don’t generate web traffic, then Google has nothing to show for it, no matter how many phones or tablets Samsung sells.

Even worse is Amazon’s “forking” of Android by using it to create the Kindle Fire, which has been customized extensively to work with Amazon’s digital content businesses.  This is the worst of all possible scenarios for Google’s Android strategy.  From Google’s perspective, the Kindle Fire is as much as a competitor as the iPad, because all the digital content is offered through Amazon instead of Google Play, and all the web traffic is still owned by a competitor’s browser, even if it’s called Silk instead of Safari.  And it’s all made with Google’s own technology.

Android’s experience is the core dilemma of open source business models: The “Last Mile” reliance on third parties to deliver your product to end users.  In Android’s case, the manufacturers are the “Last Mile,” and by making low-quality products with Android or competing with Google, they’ve not lived up to Google’s expectations.

Google is now trying to fix it with its own mobile devices, starting with the Nexus tablets, so they can deliver the complete Android experience at their standards and steer the low end of the tablet market away from Amazon’s Kindle Fire.  Will it work?  That would depend first and foremost on how well the Google-made Android devices sell.

If the Google tablets and phones sell well, should Google still keep Android open source?   That would in turn depend on the relative strengths of Google and the other Android manufacturers.  If the Google devices raises the bar for the others, who start making better phones and tablets of their own and delivering web traffic to Google, then of course they should keep providing those other manufacturers with a free operating system.

But if Google’s Android devices are the only ones delivering the traffic, while the other manufacturers make money off the devices but deliver no traffic, or worse use Android to compete with Google, then it should become a full-fledged manufacturer like Apple.  It doesn’t mean that Google would “kill” Android, but it could make a “super-Android” which is not available to the other manufacturers.  A General Grievous vs C3-PO strategy…

P.S. Here’s something Android and iPhone users could all enjoy:

Source: ipodmin.com

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More Stories By Si Chen

Si Chen is the founder of Open Source Strategies, Inc. and Project Manager for opentaps Open Source ERP + CRM (www.opentaps.org).