How Android Hurts Microsoft

"Whack, whack, whack" was the sound coming out of New York, where Google, HTC and T-Mobile launched the Android-based G1. The mobile phone goes on sale Oct. 22.

Google clubbed Apple, too, but Microsoft will be the more seriously injured. Today, Google officially launched its alternative platform to the Windows PC. Microsoft is frakked.

The Android-based G1 is Microsoft CEO Steve Ballmer's worst fears bundled together in a tidy package: Google, Web applications, open source and a platform alternative to Windows. Worse: easy access to Google's plethora of online services—including Calendar, Contacts, Gmail, Google Talk, Maps Street View and YouTube—via single sign-on. There is a single point of connection and synchronization to Google's goodie bag. Get this: No PC is required. Google syncs from the Web to the phone. Microsoft has got nothing like it, but should.

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As I've blogged before, sync is the killer application for the connected world. In 2007 I warned: "If Google gets synchronization right before Microsoft, it's game over." Something else I warned: "If Google and its partners can bring to mobile devices what they have to the desktop, I predict it will be game over for Microsoft. Windows' relevance will diminish before the Web platform."

I can't blog this enough times: The PC era is waning. The cell phone is more personal than the PC, and it has great Web 2.0 platform affinity. The cell phone's destiny is inevitable. Mobiles will replace PCs as the most widely used personal devices; today, they're more adjuncts. There's a role reversal rapidly coming. For many teens using T-Mobile Sidekicks or businesspeople tapping BlackBerrys, the transition already is here.

Google Like Glue
But Google's clubbing of Microsoft is a more complex action than that. The first Android-based cell phone begins a transition that could solve some big problems for Google:

• Search isn't sticky enough. For all Google's search success, another provider is but a new Web address away. Search isn't sticky. People can easily change search providers. Applications are stickier. Hardware is stickiest. People who buy G1s will get the Google brand (on the back) and easily accessible Google-branded applications and services.
• Google is dependent on Microsoft for its success. For all Google's search dominance, the main means by which most people consume the information company's goods and services is the Windows PC. Google can't control Windows or the user experience there. Microsoft can make decisions about user interface design, Web applications integration or other platform characteristics that have huge impact on Google products—and Microsoft has huge incentive to keep computing relevance from shifting to the Web from the PC. Android-based cell phones give Google control on the emerging computing platform.
• Google didn't have its own operating system and development platform. The Web 2.0 platform is compelling, but it's not enough. As I've repeatedly blogged, the next successful computing platform must have software plus hardware plus services. In May, I blogged that Microsoft had solved the Google problem. But I'm no longer convinced. The first Android-based phone and Google's Chrome browser are game-changing. Google now has an independent platform and in the right place.

Cell phone manufacturers ship more mobiles each year—1 billion units—than the entire Windows PC install base. In many emerging markets, cell phones are the first Internet-capable devices many people own. The phenomenon is well documented from past technological transitions, where the new market skips over the old thing for something newer. Google has seen the future. Why hasn't Microsoft? The company is too bound to the desktop.

I can't express how much Microsoft has screwed up here. Compared to the iPhone or G1 UIs, Windows Mobile is clunky and chunky. There is no integrated application store, which is a killer concept, by the way. More importantly, there is no compelling integration or synchronization with other Microsoft products or services. Microsoft is driving integration from Internet Explorer 8, and I've long expected it with Windows 7, too. But not in mobile. Windows Live for Mobile has potential, but it doesn't compare to a Google-branded phone, running a Google operating system that links and syncs with Google services.

There's Still Time, Microsoft
But—and it's a big but—the G1 is but one phone available through one carrier with limited distribution (think United States in October). Microsoft could still pull together a mobile Manhattan Project that brings Windows Mobile where it needs to be. For now, Google's real competitor is the iPhone 3G. Apple has the most compelling mobile platform and rapidly expanding mobile applications store. Google has one competitor of concern. Microsoft is besieged by them: Apple, Google, Nokia and Research In Motion. All are executing better in the mobile space right now. All develop their own operating systems.

Microsoft's shouldn't dilly-dally. Google's business is about wrapping search keywords and contextual search advertising around information that people want. Where do they want that information most? Where they need it, like on a Los Angeles street when looking for a good place to eat. The cell phone, that device nearly always carried, is the place to get it. Google can provide the information, and with a little extra bling-bling for advertisers.

One scenario: Minnie Martin types in a search, but instead of a search page she gets a Google Map with pushpins for a dozen Thai restaurants within 10 miles. I haven't seen the G1, so I don't know how deep the services integration is. But that's how Google should do it, with preference given to eateries that paid for placement or bought search keywords.

Something else: Google could capture a staggering amount of information about G1 owners using the company's services. Even anonymously collected data would be hugely useful for Google's search business. Through the phone and that convenient single sign-on, Google could know where you are, where you eat, where you shop and much more. In aggregate, that data would be hugely useful for targeting advertising. Google could entice advertisers by promising more targeted, contextual search based on where you are right now. Bling-bling, baby.

Most people won't mind because the services will help them find stuff or entertain them in a meaningful context. It's the whole package—hardware, software, services and contextual information wrapped with advertising—that could make the Android-based phone into a compelling platform.

All successful platforms share several common attributes:

• They have at least one killer application people really want
• They make available a breadth of useful applications
• Development tools and APIs make it easy to create good applications
• Third parties make lots of money

For anyone already using Google applications, the G1 meets the first three criteria. But the last one is the most important. It's why Google succeeded in search when so many others failed. Third parties make money from search keywords and contextual search advertising. Now, through G1 and other, forthcoming Android-based phones, Google could extend the search advertising profiteering from the PC to the mobile device.

All this happens with a device that's even stickier than the PC. Some people may want to carry a PC everywhere. But it's the cell phone most likely to be carried and connected. Microsoft better get there, or it will be nowhere.

[Please send your tips or rumors to watchtips at live.com]

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• Does Android Dream of iPhone?, Apple Watch, Aug. 28, 2008
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