Will Android be a spectacular revenue-generator for Google, or a spectacular failure? If you believe Google CEO Eric Schmidt, the company will eventually get $10 billion per year from the operating system. Microsoft CEO Steve Ballmer, on the other hand, has long contended that Android is an operating system without a business model. Who's right?
At a recent analyst meeting, Ballmer went out of his way to criticize Android tablets, saying that Windows-based tablets will easily outsell what he calls "weird" Android machines. According to the Business Insider, he said:
"If with the application base, with the tools that we have, with the user understanding and momentum and everything going on, we can't compete with...whatever the weird collection of Android machines is going to look like, shame on us."
Ballmer has a long history of dissing Android. Back in November of 2008, he said that Android was a money-loser for Google, and an operating system in search of a business model. According to CNet, he said about Google's plans for Android:
"I don't really understand their strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting, and said, 'hey, we've just launched a new product that has no revenue model!'...I'm not sure that my investors would take that very well. But that's kind of what Google's telling their investors about Android."
Ballmer may have been alluding to the fact that Google doesn't charge device makers to put Android on their phones. But Google doesn't expect to make money from selling the operating system, in the way that Microsoft makes money by selling Windows to PC makers. Instead, it makes money because Google search is the default search on the phones, Google Maps the default map app, and other Google ad-supported services like Gmail are defaults as well.
This according to Schmidt, is a very clear business model, and he told the Wall Street Journal that he expects Android to bring in Google $10 billion a year. Eventually, he believes that ads delivered via mobile devices will bring Google more revenue than ads delivered via PCs.
This week, by the way, Schmidt said 200,000 smartphones and devices based on Android are sold every day. So Google is certainly seeding the market.
Who's right in the war of words between Schmidt and Ballmer? I'd put my money on Schmidt. Adding 200,000 devices a day is a remarkable feat, given that back in November, 2008 Ballmer said of Google: "Google doesn't exactly bubble to the top of the list of the top competitors we've got going in mobile. They might someday. But right now..."
Right now, though, when it comes to mobile, Google is cleaning Microsoft's clock, and calling Android devices "weird" won't change that fact.