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Cover Story

“Google Plays Favourites and Demands Obedience”
Sascha Segan, Managing Editor (Mobility) & Lead Analyst, The PC Magazine
Issue Date - 09/06/2011
As the Managing Editor (Mobile) and Lead Analyst for PC Magazine (, New York-based Sascha Segan has spent close to two decades analysing and commenting on subjects in the Telecommunications industry. His commentaries has been aired on FOX News, CNN, CNBC and many radio stations across US, and his columns appear in dailies spread from San Antonio (Texas) to Edmonton (Alberta). Segan speaks to B&E about Google’s next mistake – the Chrome OS, and issues like fragmentation and low earnings associted with Google’s Android OS.

B&E: Straight up – the next big thing from Google in the world of mobility is the Chrome OS for notebooks, which is also Open Source. Isn’t Google wasting time & dollars? It could easy have coupled the project with the Android OS project. Also, by making it open and free to use & modify, is Google repeating the Android mistake? 
Sascha Segan (SS): Chrome OS is a dead end. It mostly exists because Google wants an OS play on devices running x86 chipsets, i.e. Intel-based laptops, but nobody really knows what to do with it. Chrome OS is a stub. No consumer wants a crippled laptop that requires network access for most functions; that’s been tried and has failed many times. It might achieve a bit of success as a thin client solution in the enterprise, but I see its most likely future as being folded into Android as tablets take more and more of the former netbook market in the future.

B&E: Fragmentation is some headache for Android OS handset makers and app developers alike. How big is it an issue for Google, and do you see some recent effort from Google to stop it?
SS: Fragmentation is a major problem, as developers want to target a unified platform, and Google makes more money by having the latest versions of its services on devices. At the most recent Google I/O conference, Google announced an initiative to get OEMs and carriers together to reduce fragmentation. We’ll see what happens there.

B&E: There is not enough earnings from its app store – shouldn’t Google be bothered? What is the big problem with Google Android’s app world?
SS: None of the platform providers are really looking for direct revenue from their app stores; to a great extent, that revenue is gravy. Apple is looking for a platform lock-in effect that keeps people buying. Google is looking for eyeballs for its advertising, search and other cloud services. RIM is looking for customers for its BIS and BES servers. Microsoft makes its money from OEM device licenses. The disproportionate number of free apps in the Android Market doesn’t worry Google. The number of free apps only becomes a problem if it begins to drive users and developers away. That said, the Android Market needs better discoverability and search tools to help consumers find what they want. For instance, it’s not immediately obvious how to find apps designed for a specific device, or a list that only shows all the apps for tablets. Google is also in a continual battle against malware and copyright infringement on the Market.

B&E: Do you feel that a business model for a company like Google or even Apple can be framed around revenues from apps? For instance in 2010, Apple earned just ~2% of its revenues from its app store. Should Google be concerened about the outcomes of a bet like this?
SS: Google and Apple have opposing business models. Google’s is about volume; Apple’s is about margin. Both Apple and Google know that the real money isn’t in charging a percentage of initial app purchases. The problem is that if Android developers can’t make money, Android developers will leave, users will leave, and Google will lose its volume. So low earnings from apps is a concern because Google wants developers to find Android an attractive platform.

B&E: Many claim that Google love to control the OS platform completely with an iron hand. Once a critical volume of Android hits the market, do you think Google will put a price tag on its Android OS? And will vendors suffer?
SS: Android is already not an entirely open platform, and the OEMs are suffering. Google plays favorites and demands obedience, and gives certain partners early access to Android code. That has helped create the fragmentation problem which is plaguing Android today. It looks like Google will demand even more obedience from OEMs for early access to code. But I don’t see Google charging license fees for Android.

B&E: Any 180-degree turn expected from Google as far as licensing goes?
SS: I don’t see Google charging for the Android OS. I see them embedding more cloud services into each device. While you’re right – Google would make money from licensing, it would be a major about-face for them, and they’re financially successful enough right now to not need to do any 180-degree turns.

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