Android not critical to Google? Really?

In court, Larry Page and Andy Rubin said Android wasn't critical to Google's business success. Which doesn't square easily with a Google's future plans for Android ad and app sales. 

During the Oracle v. Google trial, the value of theAndroid platform to the Internet giant has been a subject of inquiry. When Google CEO and co-founder Larry Page was asked last week by Oracle's attorney David Boies about the value of Android, he responded that Android is "important, but not critical."

On Wednesday, Google's head of the Android platform, Andy Rubin, was asked by Boies what purpose Android serves for Google, He responded that it "makes it easier to access Google services." 

Boies queried Rubin on whether he expected the Android platform to contribute substantially to the company's ad revenues. Rubin answered that he did not believe so.  

The statements by Page and Rubin on the value the Android platform to Google don't make sense in the context of Google paying $12.5 billion to acquire the patents related to smartphones from Motorola Mobility, its seven year investment in the Android platform or projected revenue.

A 2010 Google document placed in evidence by Oracle projected a target of more than $1.3 billion in revenue from ads and app sales for Android in 2013 with a very healthy gross margin. In 2011 Google had around $38 billion in revenue. The revenue at this juncture may be be large, as Rubin seemed to say, but the impact on Google's future success is significant, or critical.  

Google spokesman Jim Prosser said 2010 document isn't representative of Google's current thinking. "Our industry continues to evolve incredibly fast and so do our aspirations for our various products and services," Prosser told Reuters.

 

(Credit: Oracle v. Google trial exhibit )

As part of the Android strategy Google is planning to develop new, "monetizable" services as the slide below in evidence indicates.

(Credit: Oracle v. Google trial exhibit )

Nor do Page and Rubin's statements make sense in light of Apple's incredible growth, and the profit it is sucking out of the mobile market, in recent quarters. For its quarter ending March 31, Apple sold more than 35 million iPhones and nearly 12 million iPads.

InMobi, an independent mobile ad network,released a report based on its data showing that Apple's iOS mobile platform share of impressions in the first quarter of 2012 in the U.S. was 37 percent versus Android at 34 percent. However, a report from Raymond James analyst Tavis McCourt stated that Apple had a 59 percent share of the U.S. smartphone sales, versus 36 percent for the previous year.

Whatever the accurate numbers are, Google is in fierce competition with Apple, as well as Microsoft, Nokia and RIM, for a large share of mind and ad revenue over the next decade, and Android is Google's war horse.

As Page and Rubin said in their court testimony, providing access to Google services on mobile devices is the purpose of Android. Without Android, which Google gives to handset makers for free, the company won't have the control it wants in the massive shift from desktop to mobile service happening around the world.

In testimony at the U.S. District Court on Wednesday, Oracle placed in evidence a presentation from November 2006 outlining the vision and specifics for a Google phone. The presentation included a slide titled, "The 5 Business Units each a $10B opportunity; Android and Chrome platforms critical assets for their success." It noted in extensive detail (see below) how Android, as well as Chrome, were "emerging as critical assets for each business unit."

With Google competing for domination on mobile devices and billions of mobile ad revenue dollars at stake, it's remarkably unclear how Android isn't critical to the success of Google's business.