At Australian telco Telstra’s annual investment day, Microsoft CEO Steve Ballmer spent some time analyzing Google’s Android and the search company’s strategy in the mobile marketplace. Among other criticisms this ZDNet article reports, he said he was having a hard time understanding where Google would be making its profit on the open-source OS. How could Google sink all that money and development time into its flagship mobile OS and then just give it away?
Ballmer presented his criticisms this way:
“I don’t really understand their strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting and said, hey, we’ve just launched a new product that has no revenue model, … I’m not sure that my investors would take that very well. But that’s kind of what Google’s telling their investors about Android.”
He also questioned whether an open source OS could keep pace and improve over time. As the article puts it:
The lack of certainty concerning money means that improvement of the operating system will be neglected, according to Ballmer.
Just like other open source initiatives (Apache, Linux,etc.) have withered on the vine due to lack of developer support? IDG News reports that since Google opened up the OS, its received nearly 50 contributions from outside parties, including comments on code and drivers from chip companies.
But the main point is that with Android, as with all things Google, the idea is to get as many people as possible on the Internet–and now the mobile Internet–for free if necessary. That’s why Google offers free Internet-hosted Apps, why it works on initiatives like white spaces and free wireless hotspots, and yes, why it built Android. Google makes nearly 100% of its revenues from search advertising, and the more people on the Internet, the more they search, the more they click on ads. It’s just that simple. The real question is, why doesn’t Balllmer get?
