Tuesday, July 24, 2012

Mobile: Old Versus New Google – Will It Deal with Rampant Android Piracy?

It has come to light that the piracy situation is untenable.  Maybe that’s not the right word.  It’s really, really bad.  Take that times ten.  Developers are wondering if it’s worth their time to invest in developing for Android when clearly, many users rather pirate the apps than to pay even a buck for it.  That’s the case with game maker  .  I’m absolutely in the came that privacy isn’t what Android users are about but users who play games on Android aren’t willing to pay for them.  I’m sure it’s the same with other apps as well.

And let’s face it.  Outside of Angry Birds, I’m not sure many people are making a heck lot of money on free apps trying to score ad revenues.  And that’s what Google’s about anyway.  Where does Google stand on this issue.  Publicly, they have to condemn these pirates and those who are unwilling to for apps so they go out and download a copy for free.  Privately, it is a lot more complicated.

It’s about old Google versus new Google here.

I’d have told you before Nexus 7, it would be the old Google that would prevail.  Back then, Google was about trying to make ad revenues from search and apps.  And to maximize their investment in Android, they would need as many deployments of pure Android with Google apps and search in it.  What ever its successes or failures are in this business model, there was always search that would prevail.

Now, there’s the new Google.  It’s the Google with hardware ambitions.  No matter what folks say, it will eventually have to leverage its Motorola assets beyond just the wireless FRAND patents.  Clearly, the Droid and RAZR lines are going strong as is the default Android device, the Nexus.  That’s a lot of hardware.  And this is where the new Google comes in along with the Nexus brand.

The Nexus 7 is essentially selling at cost.  It is likely we’ll see a Nexus phone that will follow with a near-cost price point.  Why?  It’s the Amazon strategy with the Kindles.  The Fire is also selling at near cost because Amazon is hoping to make money back through media and apps sales.  And with Google working hard to line up video, since it’s already got a music, ebook, and app store, Google is looking to follow this path as well.

In fact, Google does have a very good strategy here that trumps that of Amazon.  Amazon may have a mega online store that sells just anything you can think of, it doesn’t have the lucrative high-margin search and ad business that Google has.  You couple that with an incredible and insatiable appetite for all things mobile and media/app sales, Google can afford to sell hardware cheap.

And between ad sales and app/media sales, Google is finding that it can make more money with the latter.  On top of that, with companies like Amazon, Baidu, and Barnes & Noble forking Android for their own use with Google benefiting at all from hardware or media sales (and maybe not even ad revenue), Google has to rely on its own ecosystem to make a buck.

This is why I’m looking for Google to take crackdown hard on piracy in mobile.  In fact, I think Google could leverage any anti-piracy measures that would eventually benefit only its own hardware and those of trusted partners like HTC and Samsung.  Google might not completely do away with piracy but it could make it hard enough for the pirates and users who use pirated apps to think twice or go elsewhere.

However, Google has to move fast.  As more and more developers become discouraged and interests in Android development wane, Google could find itself not being able to get them back.

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