Did a presentation on Google Android yesterday for our International Business class.
Key points to share:
- Google is in the advertising industry, just as Apple is in computer hardware industry and Microsoft is in software industry. It doesn’t mean they don’t have side businesses which cross the boundaries, but it should be defined by where they get the bulk of their revenue. It is also not how they generate such revenue, indisputably all three companies have thousands of software engineers writing codes, but only Microsoft makes money directly from selling software. Google is a smart advertising company which specialized in the use of digital media, their search engine is their most successful product to attract users to their advertising platform. Most of their new products are aimed at attracting more traffic to them for selling more advertising. They also sell their search appliances, some cloud hosted services (Google Apps) to businesses, etc, which total to less than 3 percent of their revenue. It is important to be clear about this because it helps to know which game you are in to better your chance to win the game.
- Open Source is part of the IP framework. It is the IP framework which encourages innovations, not open source itself as it is just one pricing model of such intellectual property. Greed is good and it drives innovation. Or simply, look at other open source or open-source-like projects, some with the concept of write one runs everywhere to create a truly open and widely used platform, you will struggle to name the many commercially successful ones. Linux didn’t take over the OS space and Chrome OS is unlikely to even beat Linux for third place.
- Google competing with its Android licensees with Nexus One handset was just a weird move. Maybe it was only a publicity stun, oh, again, Google is an advertising company.
- To handset manufacturers, Android is just a cheaper alternative to Symbian, but it is riskier as they are putting so much weight into the Android brand. They are losing or diluting their own identity and competitive edge. Outgoing Nokia EVP compares using Android to “peeing in pants for warmth” (a short-term solution). We might be looking at the further commoditization of the mobile handsets just like what happened in the PC market, where every manufacturer essentially build the same device, just with a different badge. Other services can take profit from it, like advertising and software. Or you just stay out of it, like what Nokia, RIM and Apple are doing.
- Innovate to win, imitate to draw. Arguably there has been no real innovations from Android phones up to this point. They are simply playing catch-up with iPhone. But they need to take the lead if they are serious about winning.