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

    If you care, I did not mean it as a pejorative. Rather, that focusing on his Android wants, he was missing the motivations of the owners of the platform (and most of the devices).

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

    I promise you, if I did not believe it, I would not write it. While some of what I write may be speculative (and this is a “prediction”), there must be core truths, facts and data behind it.

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

    Google has done nothing but lose money on Android. Look at earnings if you doubt that. (Moto is part of the Android strategy, so yes, that counts.)
    Their only goal is to stem the flight from the desktop browser (where they can charge for your eyeballs) to mobile, where apps can shut them out.
    This really isn’t rocket science, and Brian is dead on. Sorry that the truth hurts.

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

    “Because consumers are waking up & deciding they want choices”
    Oh please stop… the coffee shooting out of my nose from laughter really hurts.

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

    So you steal Jon Stewart’s “psstt… over here on camera 3″ as ‘clever’, just as Samsung and Google have stolen everything they’ve done?
    Appropriate.

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

    It probably wouldn’t hurt if you hadn’t been gullible enough to follow the nose piercing thing too. Bahhh, bahhhhhh

  • mambenanje

    @brianshall:disqus come on you are a journalist… stop ridiculing your self like that… Kindle Fire is Android… ask Amazon but it doesnt support Google Play and Google Apps… the only thing Google decides is where their Apps get installed and these apps like Search and maps are so important that you wont want to mess with them… or that is what they use to ensure that their interest is protected and which to me is great because it depends on innovation and tell you the truth if Microsoft takes Android today and starts developing further upon and keep it open source, then Microsoft will decide when the next super cool version of Android gets distributed to OEMs… but then again Google knows this thats why they keep innovating upon and releasing

  • rg4w

    Jerry, do you honestly believe Jon Steward invented the aside?

  • rg4w

    I can understand that, but I’ve found it’s usually more engaging to use simply “fan”.

  • ross

    Acer
    cannot be part of the alliance and at the same time use a forked android OS on
    their devices…they realized it very last moment and backed off from the
    launch…

  • amatya bipul

    u ,my friend,r a total idiot,,,u should stop blogging,,,anrdroid in a strategic bet

  • ross

    they can’t use forked android…as long as they are with google..

  • http://www.facebook.com/OscarCernaPerez Oscar Cerna P

    I can’t say much about this article, since I’m no expert. But I remember when Google adquired Youtube and they were losing a lot a money Daily, and still it became a Success, I just don’t see Google getting rid of Android, they will make better, and if they can’t, I highly doubt they would sell it, it seems more likely for the OS just to disapear before that happening. Android is growing so fast, and calling it NOT a success just seems like an Apple Fan Boy opinion.

  • Raf

    You are incorrect, to use Google play and google servies you ahve to have Google approval. Remember the Kindle is a forked version of android not with Google apps or services.. Damn man get your facts straight

  • gregnx

    But he said “Full stop.” That means he’s right.

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

    Google refuses to break out costs/revenues for mobile. But, a good deal of circumstantial evidence suggests that they earn *far more* from iPhone and iPad than all of Android.

  • rg4w

    > Google refuses to break out costs/revenues for mobile.
    So it may be that Google isn’t on some crazy tear to shaft their shareholders at all, that maybe one of the largest and most successful companies in the world might have at least a bit of a clue as to what they’re doing.

  • Dudeman

    Obviously an Apple fanboy. I would ignore this load of bull

  • EntrepreNerd

    Thank you so much for saving me the time and effort needed to introduce this hack writer to reality. Well done sir.

    To add to your wonderful points let me say, everything Google is now and will be in the years to come, revolves around their mobile efforts. A person would have to be brain dead to think Google would just throw that all away.

    Hardware, aside, Google is all about information and the monetization of that information when and where people need it and would use it most. That is all mobile. Google Sheets, Docs, Slider, Gmail and Calendar, Books, and YouTube are all business and education applications that can be used anywhere and are tied to Android. Google Search, Google Now, Latitude, Google Maps, Etc. are all tools to feel hyper local information to Google for monetization and are tied to Android.

    Google Plus, even though it is very new and growing my leaps and bounds is a massive (when compared to everyone but Facebook) social information funnel that includes everything listed above in a single user interface. It also includes a SMS replacement, which I use nonstop, a Phone Call replacement, in the form of Mobile Hangouts, which rings you phone like any other call, which I use nonstop, and automatic uploading of photos and images. More data tied to Android and mobile that Google can use to monetize. Google Plus also has another interesting this happening. It has become a massive haven for Google Fans to hangout and tough Google and their services and products. That is very important for Google and something more people tend to over look. If you want to sell a Google Product, there is no better place online to pitch it than the echo chamber that is Google+.

    We have not even touched Google Wallet of Google Offers, which tightly integrate into Android and the entire Google ecosystem. In fact, Google Wallet is a prime example of why Google will never get rid of Android. Do some research on how many carriers have been blocking it from being on phones subsidized by them, and all because they are working on, and now released, ISIS.

    The Mobile ecosystem that is the Google of today demands a Google controlled OS and you can expect to see them double down and Android every year for the foreseeable future. Or until the merges with Chrome and becomes a single, truly universal, OS that is capable of running on any hardware on the planet, no matter how small or large the need.

  • JDSoCal

    Google makes its money from desktop search. Desktops are drying, and Google has yet to prove it can monetize mobile. You do the math.

  • JDSoCal

    Success for whom? Maybe Samsung. Google hasn’t made shit on it.

  • EntrepreNerd

    @brianshall:disqus How can you be so wrong, so often and still have a job writing? I am not try in to be mean. It’s just that you are flat out wrong, and saying you’re right over and over and over again will not make it true. You have no understanding of the OHA, how it works, who is part of it, who can join it freely (hint, everyone) and yet insist on saying otherwise. Am I in the Twilight Zone? This is just getting weird.

  • http://twitter.com/SMSrulz CF L

    Seriously, this “writer” needs to have some basic lesson in journalism. Even op-eds are actually filled with SOME facts, not fictions of what might happen, and plain misrepresentations of what did happen.

  • JDSoCal

    Brian, Google will likely dump Android (and MMI) eventually, but I think we are some ways away from them capitulating, as it would be a massive embarrassment. The question is, why would Samsung buy Android, when their own OS, Tizen, runs Android apps?

    http://bgr.com/2012/05/14/tizen-os-android-apps/

    So Samsung could dump the IP-challenged Android, but still enjoy its app base.

  • JDSoCal

    If Hall isn’t “writing,” what are you Android fanboys so mad at, his cave paintings?

  • EntrepreNerd

    Details? How about Android being the most used mobile OS on the planet? This means that Google is already controlling the mobile space. Have you seen Google’s % of mobile search? And yes, your stats are trash from a browser that is one of the least used on Android. You want details? Google.com is overflowing with them… even on your mobile device.

  • JDSoCal

    “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.”

    Uh, wrong, Google made/makes more money on iPhones than any Android phone. iPhone users use way more data/surf more Web/buy more apps than Android users. The truth is, Apple wanted Google as a partner (which is why Schmidt sat on Apple’s board), but Google is the one who stabbed Apple in the back. So if/when Google search gets “kicked out” of iOS, it will be Google’s fault, not Apple’s.

    Besides, what’s to stop Android phones like Samsung from dumping Android and using Tizen or Windows? Amazon and B&N already use a forked version that Google gets nothing from. The irony is, Google’s Android partners are Google’s real competitors.

    “How is it that people still believe that the only type of “success” in the world is that which is profitable?”

    LOL, this statement is so dumb, and so encapsulates the Android fanboy religion, it is laughable. Google is a publicly-held corporation with a legal duty to shareholders to make profits. That’s why Google exists.

  • JDSoCal

    Why does every single Fandroid fail to mention the concept of profits when calling Android a success?

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

    How much has Google spent on Android? How much does Google earn on Android. Google *refuses* to tell us these basic investor concerns. How many ad clicks come via Android vs iOS? Google refuses to tell us. “Most used” only matters if you’re making money!

  • SeattleTech

    Conjecture and supposition do not an article make. At best this is a FLIMSY opinion piece with absolutely no investigative reporting anywhere within the article. Time to find a new day job buster.

  • brendan soliwoda

    I’m pretty sure a 5 year old who knows nothing about smartphones would write an article that made a hell of a left more sense then this guy did when he wrote this “article” (and I use that term loosely).

  • kangaruhs

    AOSP. http://source.android.com/

    You won’t get the stuff Android just released this morning, but you can download 4.1 Jellybean anytime you want, put it on any hardware you want, fork it however you want, do whatever you want with it.

    It’s yours! (It’s open source!)

  • JDSoCal

    By your logic, cockroaches are the most successful organism on earth.

  • kangaruhs

    The look my face would wear if Samsung somehow acquired Android (one of complete shock and horror with a dose of sadness) is the very look my face will wear when thinking about this article and this author until such a thing comes to pass.

    ??? ???

  • hteles

    holly cows, what are people smoking this days?

  • NOMster

    Everyone on the internet is a little bit dumber because of this article

  • Xavis

    “Dafaq” did I just read? This must be one of the worse unwired articles I have read in all the time I’ve been following the site. And yes, I am not going to waste my time pointing the issues.

  • Larizard

    “They, alone, decide who gets to be part of their handset alliance and they, alone, decide when to release Android, or not.”

    So you’re saying Google who owns Android should not be allowed to decide when to release THEIR product?

    POS article. Move along, folks.

  • John Lieske

    Again, you are incorrect. Full stop. You obviously have no clue how Android is managed or how the OHA is run. Google has the say over one thing: the Google Apps that run on Android. If Google wants, it can refuse to license GAps.apk to a manufacturer. In fact, Google refuses this to plenty of device-makers, such as the KiRF device makers over in China and South East Asia who are making knock-offs and using Android as the OS. Google can’t stop them from using the OS– there’s no license fee, and anyone can fork a new build of Android (ask Amazon)– so this insistence that Google has some kind of control is just showing everyone how little you actually understand the industry you’re trying to report on.

    But please, by all means keep displaying your ignorance. At this point it just helps make all the other points I made for me. You’re in way over your head talking about things you haven’t the slightest understanding of. Not the technology. Not the technology business. Not business finance. Nothing at all but hollow, worthless hyperbole.

  • John Lieske

    Acer can fork their own version if they want. They wouldn’t lose a seat at the OHA, but they would lose a seat at the table that steers the direction of Android. That’s not Google’s fault, though. That falls under a simple concept called “fiduciary responsibility” that board members of an organization must adhere to. http://legal-dictionary.thefreedictionary.com/fiduciary+duty

    This again is a concept that Mr. Hall seems to not understand.

  • zeth006

    Yeah…I’m a Samsung fan, and even *I* don’t want that happening.

    Sorry, but Samsung really sucks in software expertise. No way in hell am I supporting Samsung’s acquisition of Android!

  • zeth006

    The troll is you for accusing others of being fanboys without proof. There have been some VERY well-written counterarguments. Start reading and stop being a douche.

  • Mike

    The author obviously has absolutely no concept of the dynamics of the mobile market and the relationship between Google and its Android partners. Most worthless article I’ve read in a while.

  • Steve Rodrigue

    I wish I could fail like Android is failing… :roll:

  • http://www.facebook.com/kumarharsh Kumar Harsh Srivastava

    Dear Brain S Hall, I don’t know how you can write commit such bigotry in the name of journalism and still call yourself an author. As a journalist, you are a shame. Voicing your own opinions and calling that a review is shameful.

  • http://www.facebook.com/kumarharsh Kumar Harsh Srivastava

    Mr. Hall does not understand anything about anything. He just writes.

  • http://www.facebook.com/kumarharsh Kumar Harsh Srivastava

    Samsung is a very poor company at designing software, see their Kies, or their attempts at modifying Android as an OEM (their codebase is mired with a LOT of errors and issues, i came to know of it through a friend of mine working at samsung. In a word, Samsung Sucks At Software.) And you want to hand the second most used OS Platform to Samsung?

    Are you kidding me?

  • http://www.facebook.com/kumarharsh Kumar Harsh Srivastava

    Brian S Hall, you are the first TROLL BLOGGER I have witnessed.

  • Paz

    You base your mobile advertising argument on data from Opera and finish too many sentances with an exclamation market. Based on these findings, I’m out. Also, $20bn to have a controlling stake in the global mobile, advertising, PC and embedded devices markets let alone application development and mapping sectors represents pretty good value to me. I suspect Google views it this way too.

  • Eloren9922

    Will this affect the Samsung Sunburst?