You see, Android is an open-source project owned by a non-profit foundation. Handset manufacturers have to pay very little to use it and it comes with very few strings attached to Google, if you prefer it that way.
In the early(ish - iPhone 3G) days of the mobile era, there was still a widely held belief that the model of Apple, Blackberry and Nokia controlling both the hardware and the operating system, was not necessary for success. Google had neither the ability to produce or retail the hardware, but it smartly knew that it had to have a strong mobile play, so it opted to do what it was good at, purchased the Android operating system and open-sourced it. The ensuing low cost, cutting-edge mobile operating system meant that Google created a strong incentive for handset manufacturers to switch to its operating system. The Open Handset Alliance was launched at the same time by Google and handset manufacturers, to match the new operating system with hardware and take on Blackberry, Nokia and Apple.
This has proven to be fantastic for consumers, with the iPhone increasingly being matched by strong alternatives running Android. Unfortunately, this has also meant that in the act of destroying Blackberry (a case study in how to go from hero to zero, if ever there was one) and Nokia (Nokiasoft?), Google has created its own next generation of competitors in the mobile space - and it's using its software!
In fact, recent claims by Baidu suggest that 80% of recent Android phone shipments in China do not have the Google search service as the default. Chinese market-specific issues aside (Google does not have an official market presence or servers in mainland China), Android has enabled the handset manufacturers (Samsung, LG, and so forth) and mobile network operators (MNOs) to massively improve the quality of mobile service at lower cost, without doing very much of the hard work. Samsung is now the largest mobile phone manufacturer in the world and even Amazon is expected to ship 6 million Fire HD tablets during Q4 - using its own fork of Android that Google makes little, if not no revenue from.
Although Google now makes US$8bn a year in mobile revenue (including Google Play revenue), there's still no reason to believe that its 2011 numbers of 20% revenue off of its own operating system and 80% from IOS has reversed.
All of this combines in a perfect storm, which could see Google lose its place as the foremost search engine and advertising platform for the mobile device. Viable competitors to their mobile advertising throne are shipping daily as a default on handsets shipped with the operating system that it created. What an exciting time we have ahead of us!
