0) Chrome is not in the cloud. ChromeOS is not in the cloud. Google Earth is not (yet) in the cloud... That entire argument is quite strange.
1) The customer for Android is not the "system builder, or integrator". Android is the "system", Android is the "integrator"; (Like stated,) Android is the (multi-sided) platform. That said, the mobile industry is different to the computer industry.
2.1) Sure, Apple
can turn off googles services in a whim (ignoring eventual, or likely, contracts, but i doubt they ever will (and if they did, authorities might have something to say about it). Replacing them is hardly worth the while.
2.2) MSFT does not really need googles services (or at least wish they didnt), given MSFT anti-trust history (e.g. the iexplorer debacle) shutting Google out seems highly unlikely. Second, MSFT are clever enough to realize that people use Google products, and that they first-and-foremost have to serve their users (which is why windows phone allows you to link gmail accounts on the same level as live accounts)
2.3) Like earlier stated, googles services are mainly "in the cloud". Unless Apple/MSFT plan on blocking google (and be slammed with a bn dollar fine) Google does not need to ensure that people have access to their services. In this respect they dont need to "do the plumbing", we have a world wide plumbing net already; "Internet is the platform" (Oreilly).
2.4) Its not an innovative business model at all, its called giving away the razors and selling the blades (ok, the analogy fits somewhat akwardly here). Skewed pricing is very common in multi-sided platform settings. Google is still Google. Google is still dealing in information. (btw: Just like Chrome, i am sure that Android is just another way of getting more of this valuable information).
(ill jump past "the cracks")
it has become increasingly difficult to ensure that Google's revenue-generating services are properly "flowing" to the end users.
Say what? First, you dont need to ensure "proper flow" to something people will dig their way to. Second, if Googles services are not on a device it is due to them not licensing these services. Its Open Source, they can do whatever they choose. If people want to use services "the internet is the platform". No biggie.
The smartphone as we know it today is not good enough or mature enough to support Google's initial strategic approach with Android.
Im not sure that he even gets Googles strategic approach (my guess: push users towards google services to get more data; use device to capture even more data).
Instead, with Motorola, Google got a hold of the vehicle through which it can create and sell integrated products.
Effect: OEMs abandoning Android. Result: Less data for Google. Hardly something they want, right?
The company is thus no longer just a plumber but also a house builder and real estate developer.
A problem, not a solution. (STB is a different matter, if they can get into our TVs they can get data on what shows/movies/channels etc. we watch. Good to know for someone in the business of selling Ads).
It can now build showcases that demonstrate the value of its services.
You dont need to own a hardware company to do that. You can just license someone to make the device for you - like they have been doing already.
The challenge then is how it will sell plumbing to contractors while it also competes with them by building houses.
It wont. "Your" whole analysis seems off from start to finish - except for the part covering ANDROID issues (which are not the same as Google issues).
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Since Google's Android related income is constantly increasing, it wouldn't take but probably five years for that revenue alone to pay for the MMI purchase from it. That's not a very long time, and it's a fraction of Google income.
We also don't know what royalties Google has avoided, and/or will gain, from ownership of Motorola's patents. That could count billions towards the price they paid.
My guess is we'll see some MMI downsizing, though, and cutting back of products to make it profitable again. It's really close as it is, with sales and
revenues increasing, and the last operating loss was a fraction of those.
Hmm. You're claiming that Google would've still made the same amount of mobile revenue from other devices if Android or the Market had never existed?
That's always possible, but they wouldn't have had the same control over the experience... or the search engine.
Bear in mind that when Android was begun, Microsoft was a big mobile honcho, and they wanted to push Bing, and still do.
If Google didn't have a compelling OS and apps, they could've lost the mobile search crown.
At least seen it got dented quite a bit. After all, we dont really care that much what search engine we use (do we?). We use google, cause google is what we use (right?). If we get in to the habit of using bing (and bing works somewhat fine), well stick with it (wont we?). Heck, these days its all crap anyway : -)
Addendum (mostly first post):
Another example of the value of data is shown in the way MSFT has used people using voice-commands on Wp7 to make the voice-functionality better on Kinect. Google employed a similar tactic a few years ago.
From Oreilly:
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Google Admits "Data is the Intel Inside"
by Tim O'Reilly | @timoreilly | +Tim O'Reilly | Comments: 22 | 17 December 2007
That least-understood principle from my original Web 2.0 manifesto, "Data is the Intel Inside," is finally coming out of the closet. A post on the Google Operating System Blog entitled Google is Really About Large Amounts of Data notes that in an interview at the Web 2.0 Summit in October, Marissa Mayer, Google's VP of Search Products and User Experience, "confessed that having access to large amounts of data is in many instances more important than creating great algorithms."
Right now Google is really good with keywords, and that's a limitation we think the search engine should be able to overcome with time. People should be able to ask questions, and we should understand their meaning, or they should be able to talk about things at a conceptual level. We see a lot of concept-based questions -- not about what words will appear on the page but more like "what is this about?" A lot of people will turn to things like the semantic Web as a possible answer to that. But what we're seeing actually is that with a lot of data, you ultimately see things that seem intelligent even though they're done through brute force.
When you type in "GM" into Google, we know it's "General Motors." If you type in "GM foods" we answer with "genetically modified foods." Because we're processing so much data, we have a lot of context around things like acronyms. Suddenly, the search engine seems smart like it achieved that semantic understanding, but it hasn't really.
(Sounds like she's very much in my camp on the Web 2.0 vs. semantic web debate.)
In particular,
Marissa admitted that the reason for offering free 411 service was to get phoneme data for speech recognition algorithms. You heard it first on Radar. What's also interesting, though, was her note on why they want better speech recognition algorithms right now:
to improve video search. There's an interesting principle here, namely that the obvious applications for a technology (e.g. transcription or speech recognition interfaces) aren't necessarily the ones that will have the biggest impact. This is a great reason why companies like Google are increasing their data collection of all kinds (and their basic research into algorithms for using that data). As the applications become apparent, the data will be valuable in new ways, and
the company with the most data wins.
