How does Google benefit from Android?

This was the question my friend and office colleague was asking me when we were, in general, discussing about technology.

I explained to him that Android will speed up innovation on the mobile computing front thus ensuring that users have a better and more PC-like web browsing experience on their mobile devices. This ensures that more and more users will starting browsing the net from their phones and thus ensuring that more and more traffic is driven to one of Google's many services where they serve Ads and also not to forget that Google Ads are scattered all over the world wide web.

Basically, Google believes in increasing size of the pie rather than increasing size of the slice in the existing pie. Interesting quote isn't it :). Well, I read about this quote in this news article by Financial Post which questions Google's business model on going the open source way with OpenSocial and Android.

Though I told my friend about the above, I wanted to confirm again if this is how Google really was hoping to benefit out of Android platform. So I did a little bit of Google'ing and and came across this interview given by Eric Schmidt and Andy Rubin, Director of mobile platforms at Google (the brain behind Android)

This is what Eric Schmidt, CEO of Google, has to say in his interview at PBS.

SPENCER MICHELS: Now you say you're almost giving this away, why?

ERIC SCHMIDT: We're giving Android away because we benefit when the Web is better. We benefit when more people are using the internet, especially on mobile devices. And we benefit because when more people use Google, more people use Google search and every once in a while those people will use our ads. So eventually we think an Android mobile user is pretty likely to use Google advertising and our studies indicate that mobile ads are going to be worth a lot more than the traditional ads that we sell.

SPENCER MICHELS: Why?

ERIC SCHMIDT: The easiest example to think about is how personal your phone is. Everyone here, everyone in our audience has a mobile phone, very hard to get away from them. That phone is with them, it knows where they are. Imagine how we can use that information to provide a more targeted ad, if it were appropriate.

By the way, it is a very good interview and would recommend reading it if you want to know Google's plan for Android and mobile computing.

Google forming the Open Handset Alliance and defining a new mobile platform called Android once again proves my point that there is this race to establish a linux-based mobile operating system/platform (Oh yeah.. Android is based on Linux. On top of Linux, they have a Virtual Machine which offers APIs similar to Java VM but is supposed to be much more advanced than Java VM).

But with Google intelligently forming an alliance which includes telephone operators to handset manufacturers to chip manufacturers, they are better poised to take over the Mobile Operating System space much to the dislikes of giants like Symbian and Microsoft.

Google not just stops there. They even have a announced a $ 10 million prize money for users who develop useful and compelling applications using Android. This is to ensure that more and more developers get involved in this effort.

The advantage, I could perceive, from Android could be the following:

Handset Manufacturers: They would not have to pay hefty licensing fees to proprietary mobile operating systems like Symbian and Microsoft. So the cost of the handset goes down thus boosting the handset sales.

Developers: Because it is an open platform and almost everything is available for free, you can pretty much write any application you want. Imagination (of course the phone's capabilities) if your limit.

Consumers/End Users: Because handset prices go down, consumers can afford to easily buy them and they also get to install and use thousands of applications that were developed by the open source community.

Telephone Operators: They get to benefit because consumers start using these web-enabled/web-based applications on their Android phones and thus the data traffic is going to increase drastically. Operators are going to charge for this data traffic.

Of course, not to forget Google (and others).. they would be benefiting as well from Ads clicked by users on their mobile phones.

I am not sure how successful Android is going to be. But my gut feeling says that it will take off well. But, I believe, for the mobile web to pick up really well, the network speeds have to improve a lot. They sure will. Its just a matter of time.

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For those read this post till this point, scratching your heads, wondering as to what Android was all about, please read below.

Google, earlier this month (Nov 5th, 2007) announced that it was forming the Open Handset Alliance which is going to drive the development of Android. Android is an open platform for mobile phones which consist of an operating system, a set of software modules for performing some of the common tasks on the phone (middleware, as we call it in software terminology) and a user interface. You also can download the software development kit (SDK) for developing your own applications that run on the Android platform.

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