Panos Papadopoulos stands on the showroom floor at Google's annual convention in San Francisco, showing off a real-time heat map of the world that blinks bright red every time an Android app crashes.
Mr. Papadopoulos is the founder of a company called BugSense, and one of the countless developers who make a living by building software for Google's Android operating system. The BugSense service is basically a monitor for other app developers – it sends them messages every time their apps crash on a customer's phone. Because Google allows anyone to customize the Android software, and because there are so many versions of Android out in the wild, the odds of an app crashing on an Android phone somewhere are fairly high. For smartphone users, this is not a good thing; for BugSense, it's a business opportunity.
"We develop for other operating systems," Mr. Papadopoulos says. "But we love Android a little bit more."
Against all odds, Android has become perhaps Google's most important product, even though the company makes very little money off the software itself. In fact, since it launched Android in 2008, Google has given it away for free – anyone can use or alter it as they please. Companies such as Samsung have piggybacked on the software to avoid the cost of building their own mobile operating systems, and have generated billions in profit as a result.
But Android's importance to Google is two-fold. First, it allowed a company that developed its search services for the desktop age to gain a foothold in the mobile world. Second, it allows Google to put the products where it does make money – primarily, its search engine – front and centre on all Android-based devices. Indeed, whatever revenue-generating software comes up in the future has a natural home on the hundreds of millions of Android devices already on the market.
At first glance, Google's Android strategy mirrors that of countless failed startups – give the product away for free and worry about making money later. But it differs in one key respect: Google is giving away a platform, not a product. The company that dominated the Internet search market by acting as an advertising middleman in billions of user queries is taking the same approach to the mobile world. Rather than looking to profit off the sale of its software, Google is aiming for a critical mass, and attempting to put Android everywhere.
"Increasingly, people are using many many different types of computing devices," said Sundar Pichai, Google's senior vice-president in charge of Android, the Chrome browser and Google Apps, on the same day Google announced that Android has now been activated on 900 million devices, making it the most popular mobile operating system in the world.
"It's not just desktops, phones and laptops any more – it's watches with displays, thermostats with displays, maybe a car console as a display and maybe something like Google Glass. The amount of computing power in these screens is incredible."
Android is now one part of a much wider strategy at Google, whereby the company builds platforms and technologies on which all kinds of other services can run, and then gives them away for free. The other well-known example of this strategy is Chrome, the browser-based operating system. On the surface, Chrome is simply a Web browser, no different than Firefox or Internet Explorer. But Google has developed the software as a full-blown operating system in large part because the company believes that the days of local hard drives are coming to an end. Instead, Google believes almost all computers will use the cloud to download software and save data. If that vision becomes a reality, Google's Chrome could become the Microsoft Windows of Internet-only computers.
Google's free strategy is not without myriad immediate and long-term risks. Since launching the operating system in 2008, Google has updated Android multiple times. But since many of the upgraded releases are not compatible with older versions, customers worried about the risks of spending hundreds of dollars on a new Android phone, only to discover a few months later that a newer, better flavour of Android had hit the market. The fragmentation issues also gave app developers headaches, as they tried to build software that would work on the many versions of Android still running. Developers had an easier time creating apps for companies such as Apple who kept tight control of their own operating systems, not allowing other companies to add any customization, and upgrading the software only at regular intervals.
Over the past two years, Google has focused on trying to slow down the Android upgrade cycle, such that new versions of the software aren't constantly rendering older ones obsolete. But increasingly, such upgrades are no longer entirely within Google's control. Because anyone can customize Android any way they please, some of Google's corporate competitors (and some of its allies) have started building their own versions of the operating system. Earlier this year, Samsung unveiled a new Galaxy Smartphone with a custom app store, partially bypassing Google's own software marketplace. More significantly, Google's biggest competitor in the social networking arena, Facebook, teamed up with a number of device-makers to build phones that run on a Facebook-focused version of Android.
Still, if it is ultimately able to replicate the role it built as a middleman for search queries in the mobile industry and pull in advertising revenue, Google may well be able to live with losing some control of the software it happily gives away for free.
"For Google, overall loyalty still accrues significantly even as device makers layer more customization on top of Android because most Android users are still using Android services, even if they're less visible," said Forrester analyst Charles Golvin.
"In an ideal world, every one of those Android devices would be full-on Google ... but even when that's not the case, there's still a great deal of benefit to Google."