Google's+less+than+free+business+model

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Google's Disruptive Strategy by Michael Mckerracher

[|The article] by Bill Gurley

Google’s Android OS has proven to be a major threat to mobile phone providers. Apple’s Iphone and RIM’s Blackberry will likely find it hard to compete with the offerings of Google going forward. In the words of Google "the first truly open and comprehensive platform for mobile devices.” With the launch of Google’s free turn-by-turn GPS app for Android, the massive market change took place. Not only did it prove to disrupt existing GPS manufacturers market capitalization, but also the entire mobile phone market. For Apple or RIM to compete they will likely have to dip into their profit margins on each phone sold in order to have a similar product offering. With the flexibility of the OS it is likely that the telecom providers will manipulate the open OS to install their own mobile applications. By doing this they can lock in customers to their own mobile services driving revenue higher. Perhaps the biggest market shift that could come from the release of Android would be the home computer market. As Android becomes more refined and user friendly it becomes an attractive option for the small computer segment know as netbooks. The OS is light and flexible making the user experience on the netbook easy. Similarly the hardware manufacturers have an incentive to adopt an Android based OS, as it can be profit generating. Google has established a revenue sharing model for hardware manufactures that install Android on their devices. Unlike any of the product offerings from Microsoft, Google will actually pay the hardware manufacturers use their OS. Could this be the decline of Microsoft in the home computer market? Only time will tell, however if the adoption rate of netbooks continues to grow as it has, the Google will be well poised to take over.