A few weeks ago, I watched an interesting talk with an economist from Google who argued that Google is not making any money because of its Android-based mobile operating system. He argued that Google is making money because it is building its own Android-based smartphone operating system. This would explain why Google has taken a considerable amount of money for its Android operating system over the years when the iPhone came out—Google had to build its own OS at a huge expense.
When Apple released the iPhone in 2007, Google was not yet profitable, so it could not build its own operating system. Android has helped Google to build a business around Android, as has the iPhone.
I have written a number of articles about the economics of Google’s Android operating system since then (here and here.) Now, I’ll share three more insights from my talks.
Google is really good at finding people
Most operating system companies—notably Apple—find people to develop and ship products. This is generally a two-pronged approach. First, Google has great expertise in finding and hiring engineers to build applications, products, infrastructure, and applications. Second, Google takes a substantial amount of profit while building its own operating system, even if the results are not great.
What Google does well is find people. In order to find developers interested in helping it build its operating system, Google doesn’t just ask them which applications they want to use. Instead, it asks them to create applications. So rather than asking an application-centric company to build a single application, it asks developers or businesses to create their application and then build a separate application for each of its own use cases. (In other words, Google’s developers will come up with applications for everything from a social network to a search engine, but they will also have an app for a car control feature and an application for weather data.)
This is an amazingly detailed and well-executed process. Many years ago when I was developing Web sites, I had a business case from a customer saying that they wanted an Internet shopping shopping service. In order to get customer feedback on my site, I developed another application—a web page—which allowed the customer to browse my site. That application took several requests to send the customer. I could have sent the information in one request, then sent another request, then sent another request, and so forth. I knew how often requests for the information would come each day, but what was the value of keeping the data and
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