Industry executives and Wall Street analysts are criticising Google for being short-sighted and focusing too intently on online advertising, accusing the search giant of being a “one trick pony”. Google doesn’t have a problem with that label however, even its CEO Eric Schmidt agrees, stating “I think that’s probably true”.
Speaking in a recent interview, Schmidt added:
“If you’ve got a one-trick pony, you want the one we have. We’re in the ad business, and it’s growing rapidly. We picked the right trick.”
Clearly he’s on the mark… in the second quarter of 2010 alone, Google posted revenues $5.1 billion with advertising accounting for 96% of its revenues during that period, 66% of its total revenue in Q1 and Q2 combined. Apparently, Google isn’t sitting still in the emerging mobile ad market as they are shooting for a billion a year with the help of its Android operating system. Schmidt has been quoted saying: “If we have a billion people using Android, you think we can’t make money from that?” – If you think about it, that’s just $10 per Android user. With Google setting its sights on recommendation engines, building Admob (its mobile advertising platform) and incorporating location-based advertising, it certainly could achieve that.
While Android has matured very rapidly some see the real problem is customers not going back to Android if the handset makers use different versions of the OS as a marketing tool. Android 2.2 is rocking better Exchange support and portable hotspot capabilities. Both are big deals for perspective buyers, particularly the former as Exchange integration means business customers can use their handsets for work. But when handsets come to market running Android 2.3, you can bet the people stuck on 2.2 are going to feel shafted. When their contracts are up, a lot of those people may jump to the iPhone or something else where they always know that they’re going to at least be capable of running the latest software. Of course handset makers could fix this problem by hiring more coders (or we as users could simply root our phones and run custom ROMs) and pushing out updates faster. However, it’s usually the case that handset makers would prefer to spend resources on the NEXT phone rather than keeping their older phones up to date.