Google Doubles Down On Android And Andy Rubin

Aug.23.11 | About: Alphabet Inc. (GOOG)

When Google (NASDAQ:GOOG) acquired Android Inc. in 2005, it was peripheral to the company's search ambitions.

The success of Android changed the equation. Now the phone, and its creator, Andy Rubin (right), are the very heart of Google's strategy.

It's not just the acquisition of Motorola Mobility (NYSE:MMI). Google is now preparing to put all its open source eggs in the Android basket, including its Chrome browser..

The company also quietly promoted Rubin to vice president of engineering. He now reports directly to CEO Page. The management structure of Google is now far more centralized, and Andy Rubin is at the center of it.

Rubin's job is to monetize Android while at the same time keeping the Open Handset Alliance which developed it together. Rubin made this clear in a recent blog post. “We will continue to work toward an open and healthy ecosystem because we truly believe this is best for the industry and best for consumers,” he wrote.

That task may be as daunting as turning Libya into a functioning democracy. It's one thing to organize an insurgent force against a target, as Rubin did against Apple's (NASDAQ:AAPL) iPhone. It's another thing to maintain the unity of that force once success is achieved.

Rubin, and Google, face problems on three fronts:

  1. The present patent and copyright attacks against Android threaten to rewrite American law, asserting the primacy of patent and copyright over technology and making Google's claims of “open source” a dead letter.

  2. Manufacturers like Samsung (OTC:SSNLF) are chafing under Google's control over the Open Handset Alliance and openly moving to create their own open source kit.

  3. Carriers like AT&T (NYSE:T) are trying to charge customers out the wazoo, which could force Google to open its network to direct customer connections if traffic is going to grow.

Overhanging all of this, of course, is the threat of Microsoft (NASDAQ:MSFT), which could use Google's present problems to get its Windows Mobile phone back into the game, offering deals on voice-related functionality through Skype.

Page has opened the full faith-and-credit of Google to Rubin, meaning its best legal and lobbying minds are now at his disposal, and the network Google built for itself may now be slowly opening up to handle direct customer traffic.

If Rubin succeeds Google will have something bigger than the iPhone, because its search engine and network allow it to monetize the Android system more fully than Apple can monetize the iPhone and iPad.

But Google and Rubin are pioneering new business models here, and in technology it's the pioneers who often wind up with arrows in their backs. Google has to convince its partners that its success won't be at their expense, or the whole thing could easily blow apart, leaving Google facing regulation around the world and rivals like Oracle (NASDAQ:ORCL), Apple, and Microsoft with most of the profit.

Disclosure: I am long GOOG.