Prediction: Google will sell Android to Samsung

Android is a failure. It does not matter if you like the OS, it does not matter if, for example, you hate Apple. Android is a failure. Yes, I know it’s the most popular – used – smartphone OS on the market right now. Does not matter. It’s a loser because, ultimately, Android is a business. Or at the very least, a business strategy. In both cases, it has failed.

Google has already dropped billions of dollars on Android. They refuse to say how many billions, exactly, though I would not be surprised if it’s close to $20 billion. The original purchase, the $12.5 billion acquisition of money-losing Motorola, the ongoing development, marketing and promotions, revenue sharing with carriers, the cost of Google Play and the licensing efforts for digital media, the cost of building apps specifically for the platform.

Add it up and that’s lots of billions of dollars. To say nothing of other costs, such as the cost of pissing off Apple to the point where Apple boots out Google Maps. Google made a strategic bet on Android and that bet has cost them dearly.

But wait! Didn’t Google just mention something about an $8 billion mobile run rate?

Yes. Made up numbers.

I’m not saying that when co-founder and CEO, Larry Page, recently said the “mobile run rate” is now “$8 billion” that he was lying. Rather, that until the numbers make their way into the signed earnings statement, they are of little value.

In the recent earnings call, Page said that mobile revenues “run rate” had grown from $2.5 billion a year ago to $8 billion. Seems like a big deal, only we simply do not know. Perhaps the run rate of $8 billion is starting…now. So, from 1 October 2012, let’s say, till 30 September 2013, mobile revenues for Google will be $8 billion.

You’ll note that Apple earned more in **profits** this past quarter!

Worse, that “revenue” number is (deliberately) murky. How much of that $8 billion goes directly back to publishers – of books, music, movies – whose work is on Google Play? We don’t know. How much of those revenues are sent to carriers, whom Google cuts deals with? What amount of those revenues comes from iPhone, iPad, Blackberry et al?

It is possible to speculate. For example, earlier this month, Opera, which offers a popular mobile browser, and runs a mobile ad network that serves some 10,000 mobile sites and which delivers a sizable 40 billion mobile ad impressions **per month**, gave us some rather surprising news: iOS dominates, yes, but Android isn’t even in second place for generating ad revenues. That crown goes to “Other”.

It’s worse. While Android generates the second highest percentage of traffic by OS, it beats only lowly Symbian for earnings per impression.

Because Google went and copied the iPhone look, feel, app approach, app market and touchscreen UI, no one can be surprised that Apple has done everything they can to limit Google’s reach on their platform. Google Maps is no longer embedded. Nor is YouTube. Apple, never an advertising company, launched iAd, and they’ve cut deals with Facebook and Twitter – not Google+ — to integrate those social media services more deeply into iOS.

Imagine, though, how much Google could benefit – and at such a lesser cost – if they were friends with Apple, not enemies? Apple is closing in on 500 million iOS devices sold. That is a massive massive audience that Google badly wants to align themselves with.

Don’t forget, as well, that revenues and profits are not the only damage Android has done to Google. Because they are the dominant search company in the world and now own the dominant smartphone platform, they are almost certainly likely to generate more government scrutiny over monopoly practices and privacy acts. Plus, we now think less of Google. Google used to stand for open. Now? They cut exclusive deals with (closed) carriers. They pick and choose which selected few company will be first to market their latest OS. They sign exclusive content deals with media houses. They, alone, decide who gets to be part of their handset alliance and they, alone, decide when to release Android, or not. Their massive Motorola purchase only exacerbates the closed nature of today’s Google. After all, you can’t run your own hardware maker and be open, can you? Hell, it seems like Google Motorola has spent the past year trying to rework FRAND patent rules.

Android has become an expensive noose around Google’s neck. They need to off-load it as soon as possible. I predict Samsung will acquire it.

Samsung is now the dominant smartphone handset maker in the world. In Q3 they sold, er, shipped, 57 million smartphones! That wasn’t simply about double what Apple shipped, er, sold. Samsung accounted for an astounding 35% of all smartphones shipped this past quarter! Plus, they are growing!

Other big Android companies, including HTC, Motorola, LG and Sony can’t seem to even generate a profit with Android!

Now picture Samsung controlling Android. In one fell swoop they knock out their Android rivals. As they scramble, Samsung takes even more market share. Plus, with full control of Android, Samsung is not dependent upon Google or carriers for updates – and fragmentation remains a chronic problem for the ecosystem.

With control of Android, Samsung can do what it’s long dreamt: control an ecosystem and all its parts. Notice how Samsung does not really show off its products in their ads, nor do they show them side by side against Android competitors. Rather, they mock Apple customers. Do not be fooled. Samsung wants Apple customers. They want those folks who spend a great deal of money and who are loyal to the platform, who use the Apple ecosystem, Apple’s iTunes, Apple’s payments. Samsung wants to be just like Apple. As long as Google controls Android that can never happen.

Google wants to own the search-maps-mobile-location ecosphere across all computers. Smartphones are computers. If they ditch Android, they can. They can focus on maps and search and other mobile-local services across platforms while not posing a threat. Win win.

Author: Brian S Hall

Brian S Hall writes about technology, immortality and food for ReadWrite, Techpinions, Unwired View and other publications. His thoughts on the 'smartphone wars' and how these are rapidly de-constructing markets, industries, business models and relationships around the world can be found on his personal site at www.brianshall.com.

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  • jammer

    Uhhh…. Hehe. Why do I read this tripe? *rolls eyes*

  • steve

    Google makes a ton on android and now the play store. you are an idiot.

  • http://www.facebook.com/people/Michael-Helsing/100003495754247 Michael Helsing

    Go away, fanboy! Find an iPhone and dribble over it.

  • mick

    Going through this article and pointing out every blatant lie and unfounded nonsense would be a waste of time so I will just point out a few of the flaws.

    You use unchecked stats from a garbage 3rd party browser that is probably the 5th most popular on android behind default, chrome, firefox and dolphin. This isn’t iOS, Android has options. Mobile browsing has grown at an exponential rate since google acquired Android in 2005 and Google needs the ad revenue and needs the search queries to bolster their other products. I point out 2005 because the iphone was introduced in 2007, but somehow you state Google ripped off apple? Dubious indeed. Apple took the LG Prada and PalmOS and Applefied it and confused poor twits like yourself into buying it! For the past 4 years it has been Android, not iOS that has set the tone as far as innovation is concerned. If not for Android the iphone would still not be able to handle simple tasks like changing the wallpaper (HAHAHA) or more complex processes like cloud syncing or wireless tethering. Next being “friends” with apple doesn’t work out well for the “friends”. Android was a pre-emptive strike. As a shareholder, I would be really worried if Google relied totally on Apple for search queries in the mobile space. At any point apple could pull the plug and render Google neutered as far as mobile revenue and information is concerned.

    HTC and LG both turn profits in their smart phone division, a little research would go a long way! Next, since Android was open sourced by google they no longer “own” it and couldn’t sell it even if they wanted to. Android is an absolute success and Google is in it for the long haul.

  • Dennis McDonald

    I agree – it would be fantastic were Google and Apple friends!

  • ted

    Bizarre

  • dobvlr

    Predict : Samsung will NEVER buy andorid.
    Android is already open source. it is free to everyone.
    there is no need to buy it.
    They can forking android also.
    In fact, Android is headache.
    So many lawsuits belong to this OS. (oracle, Apple, MS, etc)

  • jwjvh

    Samsung already developing their open source project Tizen.
    They can put forked android into Tizen project.
    Nobody need to buy “free” open source OS.

  • ckelliott

    I guess anyone can right an article based on their own facts. Nice work

  • Prasad Bhojak

    Worst Article in a long long time i have read.

  • Johan Eriksson

    just because you use many word doesn’t make the content more true. I am sorry for you that you had that much bad luck when thinking, better luck next time

  • Josh

    I want my two minutes back (read comments too).

  • http://twitter.com/dalydose Jeff Daly

    I’m not sure how this “writer” keeps his job. It seems as if his only purpose is to predict doomsday for anything not associated with Apple.

    It’s sad how the standards have fallen for journalism.

  • http://twitter.com/dalydose Jeff Daly

    You obviously haven’t read other articles from this “writer”. :)

  • jeffbricco

    I would say reading this was a waste of time but I did get some good laughs.

  • http://www.socialidentities.com/ Hugh Briss

    Where can I get some of what you’ve been smoking?

  • Guest

    I want some of what you’ve been smoking.

  • Guillermo Perez-Arguello

    This article sucks. It was written by an iFanatic

  • Guillermo Perez-Arguello

    Number 1. Google is the reason why Android is so succesful, and vice versa. They need each other and they are the ones that build these OSs.. Samsung is good at coding but I don’t see them taking over, having to make new OSs…. I would rather leave Google to that, which they do so well. Samsung will be able to take care of the hardware part, Google just needs to find ways to take advantage of these new hardware chips coming out.. The OS needs to be revamped to work on these faster chips Samsung has developed.. Faster NAND, DDR3 RAM, etc.

  • Hunter

    No comment can bring to terms just how bad this article is.

  • http://www.facebook.com/Trent8381 Trent Richards

    Worst article I have ever read about the Smartphone industry. Android is a huge success, and the writer clearly does not understand Google’s business model and where their profits come from.

  • ziggy

    You have an interesting opinion but I fear you have a very twisted mind. I don’t want to get lost in that warped head of yours but I do have a couple of things I’d like to point out to help you see the light.

    -1- I agree that until they (Google) sign to it, its not fact but its hardly made up. You just made that statement up yourself. So all we know is the same thing we knew before you wasted both our time with the first two paragraphs.

    -2- Percentage of traffic is a flawed measurement as it measures ONLY default browsers on a limited but perhaps reliable cloud of sites. Without knowing what type of statistical extrapolation a network of a relatively small number of 10,000 sites can be used to create, it can hardly be considered reliable. In fact, its equivalent to simply making it up – but I don’t want to join that head space.

    -3- Android, iOS, Windows has little to do with the failings of hardware manufacturers. If HTC slapped iOS on their devices it would hardly attract the clients they are missing out on today. Samsung is their problem and its simply because they are not only running away with the ball, they’re dominating the entire court – save that goal crease in Capertino.

    -4- Apple alone is a dominant player in the United States which is currently the largest market. I know this will be difficult for you to fathom but the United States is not the only country on this planet, its a tiny space with a fraction of the people. It is on track to represent only a fraction of mobile user within the next 5 years – albeit a large fraction :) Apple can survive on this alone, its lucrative but to dominate in what is currently a Samsung and RIM (yes they are huge in huge markets such as India) world, Apple will need to compete in a different way.

    I believe that behaviour is a better tell than what people say. And based upon behaviour, I see that Apple is very afraid of Android and Google is becoming less but still rightly afraid of Apple, and Samsung isn’t really worried about a whole lot.

  • coco

    apple is just a hardware company, if it can’t produce better and better hardware, it will fail. And now seems it is going to this way.

  • foo

    its a failure indeed just as search, maps, gmail, docs etc.
    or someone is just not able to comprehend long term strategies

  • j__h

    This, but there could be an argument for certain parts like the proprietary apps and market. But I will not make any argument as that is not going to happen.

    There is also the fact that Mobile is the future and the data Google get is a gold mine.

  • riceryder

    wow..author is clearly stupid beyond any reasoning. Unwired has been uncheck from my list.

  • http://www.facebook.com/s.jouvaras Stelios Tzouvaras

    Sorry but i dont agree with you. The stats you’re using are garbage and you totally missing the point of Google’s plan to control the mobile space

  • http://twitter.com/BIGELLOW Bob Bigellow

    Sad sad little boy. Google needed Android so that a phone like the iPhone didn’t gain the majority. If a phone like the iPhone gained the majority, and Apple decided to kick Google out as the default search, and mobile activity eventually surpassed non-mobile activity, Google’s bread and butter would vanish right before their eyes.

    So, the fact that Android is profitable isn’t the point at all. All Android needed to succeed in doing is keeping iOS at bay. It has succeeded at doing this, so it is a success.

    How is it that people still believe that the only type of “success” in the world is that which is profitable? There are plenty of other successes, such as survival itself. Google Android to be able to survive. So far, it’s working.

  • http://twitter.com/BIGELLOW Bob Bigellow

    There is no journalism anymore. Journalism has fallen and it began with Brian.

  • Gorman

    I wish I new how this made my Google News Feed….garbage!

  • guest

    lol do you really believe what you write?

  • http://evildevnull.com/thinktank/index.php?action=collapse;c=14;sa=collapse;d227fb2388ec=9e8bb86861f0686e54bcbaae99929bbd#c14 George Leon

    Do you know what Opera & every app developer, media & content provider that bitches about Android profits have in common? Fear. That’s right, fear. Because consumers are waking up & deciding they want choices & choices breed competition & for the first time the scales are turned on a mobile platform where the advantage belongs to the consumer, not greedy companies like Apple & the publishers they colluded with to fix the price of books. Price fixing is what lack of competition breeds, proof: http://money.cnn.com/2012/04/11/technology/apple-doj-ebooks/index.htm

    The fact that developers keep making apps tells me they are making money. They are always going to want more, whether it is worth it, or just another one of hundreds of the look alike apps out there. Doesn’t matter. With Amazon, The Play Store & the numerous smaller app stores & repositories, consumers actually have a choice where to buy apps, books, movies & other content. The bottom line is that I wouldn’t clean my dogs business up with the junk printed in here. Android is not about making a billion dollars right now, it is a long term consumer driven strategy & will outlast apple as well as whatever next fad comes along.

  • Bill Walsh

    This man knows his constitution specifically his right to free speech. Now let’s get him an education so his articles are informative and worth reading.

    Android has its flaws but the last thing we want is to be limited to one hardware manufacturer. This is what keeps the iPhone in the stone age of hardware innovation.

  • Ajedi32

    lol no

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    A couple broad and bold statements with 0 details behind them.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    Put up or shut up, I say.
    How is Android a huge success? It has to date been a massive “cost center”. Where are these alleged profits coming from? I’ve read Google’s earnings statements, have you?

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    I am not predicting doomsday. I think Android will remain a cost center for Google. They need to be free of it. Samsung taking control of Android is a win for Google and a win for Samsung. There will be many companies that get screwed by this (e.g. HTC) but they’re already floundering.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    okay, that was funny

  • Lucas

    This is the third article from this guy I’ve read and I can tell you: all their articles seem like the worst article you will ever read.
    I can’t really tell you if he is a just troll trying to get some extra audience for this blog or if he’s really that bad. Because honestly, it’s hard to believe someone can write shits like this… and get paid for it!
    The first two articles, I even tried to be reasonable and argument, but this time… I was sure it was Brian again from the moment I saw the title on Google News. Bingo.
    I won’t waste my time again saying why this article sucks, because it tells by itself.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    You are absolutely wrong about what Google owns. They own Android. All of it. Yes, there are older versions of Android that are available — and due to fragmentation, most users are stuck with those versions! But, no one can call their device an Android without Google’s approval.

  • darthcheney666

    I’ve read some crazy ifanatic articles, but this one takes the BS cake. Mr. Hall, you are in need of a reality check and need to get off Mr. Jobs nuts!

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    I think you’re being a Android fanboy and missing the point. You say the last thing “we want” is Android going to just Samsung. That’s not how business operates. Samsung wants to control an entire ecosystem and become exactly like Apple. Google wants to reside (like Facebook) on every device. The current Android strategy (and ownership) prevents the two biggest players in the Android space from achieving their goals!

  • John Lieske

    You really have no idea what you’re talking about when it comes to the Open Handset Alliance (who owns Android). No devices is called an “Android”, they simply run the Android operating system. Google does have the final word on whether a device can run the GApps apk (the Google-branded apps), but that’s a licensing issue not required to run Android. So no, Brian, you’re essentially clueless as to who owns Android.

    As for your earnings numbers chasing, I find this hilarious. Both Apple and Google are two of the highest rated tech stocks out there. All this pedantic talk about which one is in decline and which is well above is ridiculous. Tech companies that make their business decisions based on last quarter’s numbers are doomed to fail, and “journalists” (scare quotes intentional) who base their assessments of a company’s business plan based on last quarter’s numbers are simply displaying to everyone why they write articles for a living instead of managing investments.

    When you claim to predict Google selling Android (it’s right there in the URL, so stop backpedaling) when Google is doing just fine with its game, you come across as just as petty and biased as the Android fans who would ignore that Apple makes fantastic devices and have done a lot for popularizing the mobile market. And frankly, petty and biased just comes across as willfully ignorant to reality. The fact that you’re now in the comments section backpedaling and trying to explain away your stupid remarks shows that you just wrote this to seem edgy.

  • rg4w

    Psssst. Brian. Over here. Come close. I want to talk with you quietly, hoping to avoid embarrassing you any further than your article just did.

    Okay, here’s the deal:

    We all know it’s important to engage the reader, so sure, we readers will from time to time expect to see an article or two that’s clearly link bait without any substance to it.

    But the key – and this is the important part – is to try not to be obvious about. I know, it’s hard to bring eyeballs into a publication and still make sense all the time, but ya’ gotta try. Ya’ just gotta.

    Because if you go too far out on a limb with something as completely backwards from every known fact about Android, Google, Samsung, or business in general, people will think you’re crazy. And no, not in the good way they sometimes ascribe to Steve Jobs. Just crazy, as in rambling street person crazy.

    If you’ve been having trouble coming up with good article ideas, and it seems you have, maybe we can help you out.

    For example, Ultrabooks are really stupid. I mean, from the get go, let alone the execution. That might be fun to write about.

    Or how HP went from being the origin of Silicon Valley to basically a clown, but not the kind that makes children laugh, just the kind we see at office parties wearing a lampshade after too many drinks.

    Or how most of the PC industry has been violating the cardinal rule of business with their complete refusal to differentiate by insisting on offering only the same-down-to-the pixel experience as every one of their competitors by choosing to ship only Microsoft Windows, and then feigning confusion because they can’t figure out why they have no profits.

    Or how about writing an article suggesting that Windows 8 makes sense from a usability perspective. That’ll surely be controversial.

    Or you could even nitpick the small stuff, like how we all went along with the jacked up hard drive prices ostensibly from last year’s floods in Thailand, but more than a few of us have noticed that the waters have long receded and the factories are fully operational but the prices haven’t yet gotten back to where one might expect by now. And there’s a fun “D’oh!” factor with that one too, since all it’s done is get builders to use SSDs instead, so the HD industry just screwed their own pooch.

    There are probably many others. May an article asking for article ideas? That might be helpful, but at least these will get you started.

  • rg4w

    -1 for referring to a reader using a pejorative.

    +1 for choosing a milder pejorative than “phandroid”

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    Google owns Android. Full stop. They alone decide who gets the latest version first. They alone decide if you can call your device “Android”. They alone develop the latest version. They alone decide who gets to be part of the OHA. They alone decide who may use Google Play. And, yes, they have punished companies — like Acer — who dare stray from that control.

  • topgun966

    What you said makes NO sense. HTC is not floundering. They still posted a 12% PROFIT. Just cause there not making 50% more year after year doesn’t mean they are struggling. Nothing you wrote here makes any sense. By putting up a chart of stats from OPERA mobile browser (one browser) saying that Apple is dominating…is retarded. Talk about a click troll.

  • rg4w

    One man’s “cost center” is another man’s “strategic investment”.

    Where does Google make their money?

    Hint: it’s not from selling free operating systems.

  • mgamerz

    Excellent troll post, almost fell for it.

  • http://www.facebook.com/profile.php?id=594289803 Jerry Ballard

    But not from Android/Smartphones. Brian is correct. They’re a disaster in that realm. Samsung has eaten their lunch and will go in for the kill if they’re smart… which they are.