15. March 2013 · Categories: Apple, Software

Google has a problem in that Samsung is making more money by selling their phones than Google is making overall, all while much of the basis of that success is Android, provided by Google to Samsung (and others) for free. The strange part is that Google actually has a comparative advantage in producing software, so what are they going to do to ensure higher profits from their creation?

The license for Android would allow Google to stop distributing new additions for free, they have already put some popular apps under their thumb. On the other hand Samsung is working hard to replace them with their own versions to provide differentiation. Google has already published quite a lot of code, the question is whether there are enough improvements remaining, and whether Google can do them with sufficient superior quality to regain ownership and profitability for Android.

The problem is that Google’s past generosity (ignore the Java theft for a moment) has put them into a difficult middle position. The latest Android is more than good enough for webphones, those basic smartphones for cost conscious buyers who do not want much more than a web browser, Facebook and a camera. And on the high end side it has Apple to innovate against.

Their best hope is that the future will move towards the cloud phone, where they have a lot of experience.