Android’s Openness May Impede Future Profits

This past holiday season it was quite evident that the Amazon Kindle Fire was incredibly successful, especially for Amazon. But what does that success mean for Google? It may not mean as much as you would think and you may know why if you own the Kindle Fire. Look though your Kindle Fires apps, what is missing that all Android phones have? That’s right, the Android Marketplace. Amazon essentially gutted out the Marketplace and put their own in its place. Which means one thing for Google, less profit.

This sort of thing isn’t unheard of as it is allowed to be done. Google allows their OS to be put on any platform and so far they have never instituted any sort of rule or agreement over their marketplace always being present. This was probably a big deciding factor for Amazon in choosing their OS over something else. The fact that Amazon has the power to push it’s users to their marketplace and only their marketplace is great for them… but not so much for Google. Why? Because if any other company looks to the Kindle Fire as a successful model it may not be a surprise to see more and more companies push their own marketplace and remove Google’s.

If this becomes a trend it will be even more likely that Google will require everyone to carry their marketplace as an option and never be able to remove it entirely. “The Fire may be the best Android tablet out there, even though it’s the least Android-y of all of them,” said Noah Elkin, an analyst at New York-based research firm EMarketer Inc. “The Google experience is very much in the background.”

Apps are important as more and more cellphone and tablet users use apps to find things more than they use the built in browsers. More people tend to use restaurant apps to find a place to eat over opening a browser and

Motorola's big Android powered tablet success, the Xoom

finding a website that way. I find myself using IMDB’s app, Wikipedia’s app and Google maps any time I need information on anything and rarely find myself opening the browser, sometimes for weeks at a time.  Google has an all or nothing approach for their OS, essentially if you are a company with your own marketplace and you want to do away with Google’s marketplace, you have to also do away with most of the other built in Google apps. Google does this to prevent each phone and tablet having such drastic differences in available apps, they either have everything, or nothing at all, only two choices.

Google apparently doesn’t care too much about the profits generated by their phone and tablet OS at the moment. “We’re in the early stages of monetization” of Android, Google Chief Executive Officer Larry Page said on a Jan. 19 earnings conference call with analysts. “We see a lot of potential for us to make money on Android.” They see the potential, but not enough to tighten their grip on what is included and what isn’t on every device, which is a smart move. Get so many companies dependent on their OS, then be more controlling, if need be, in the future. HTC, Samsung and LG owe their growth these past few years to Google’s Android OS, so they already have plenty of companies in their pockets at the moment.

But will more companies go by Amazon’s example? Will Google begin feeling the effects of the potential lost revenue and how will they react? It’s far too early to tell as Amazon’s success in the tablet market has only just begun. My guess is that we will see a major swing in Google powered tablets by 2015, as that seems to be the peek year for tablets according to most analysts.

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