Steve Jobs Is Wrong: Android Is Good For Google

In an interview with The New York Times, Apple chief Steve Jobs takes a swing at partner -- and Apple board member -- Eric Schmidt, whose Google is developing Android, the cellphone operating system that will compete with the iPhone.

"Having created a phone, it's a lot harder than it looks," he said. "We’ll see how good their software is and we’ll see how consumers like it and how quickly it is adopted" ... "I actually think Google has achieved their goal without Android, and I now think Android hurts them more than it helps them. It’s just going to divide them and people who want to be their partners."

We understand why Jobs wants to brush off a competitor before they make it to market. But he's wrong. Google can get into the phone business and make its partners -- both its advertisers and the wireless carriers -- happy.

As an ad company, Google needs to be in front of as many people as possible, and that now means mobile phones. There are several ways that Google can do that, including powering official search/portals/ads for a wireless carrier, attracting people to its own Google.com mobile Web pages, and by pushing out free apps for peoples' phones, like Google Maps Mobile, which it can eventually slap ads on.

Google has had some success getting carrier portal deals, including Sprint's forthcoming "Xohm" WiMax service, and Clearwire, another WiMax service. But most carriers haven't signed on with Google: T-Mobile, for instance, is rolling out a new version of its "T-Zones" start page, and we hear Google won't be powering search on that. In the U.S., cellphone carriers still want to control their lucrative portals, or "decks," where they can sell ringtones, wallpaper downloads, etc.

Google's free mobile apps are popular among the early-adopter set. But that's a tiny niche: About 4.2% of U.S. wireless subscribers used a downloaded app last fall, according to research firm M:Metrics. Likewise, while Google's mobile Web site is handy, M:Metrics says only 12.6% of U.S. wireless subscribers accessed info/news via a mobile browser last fall.

But a Google-owned mobile OS solves lots of problems. It can offer its ad network to third-party developers as an enticement to build Android apps. Google can also pre-load Android phones with its own, ad-supported software. And by offering a built-in Web browser that doesn't suck -- unlike the vast majority of today's phones -- Android can make it easier for subscribers to get on the mobile Web, where Google can sell ads yet again.

That may be the best news for Google -- and for carriers. Why? Because as wireless subscribers spend less money on plain-vanilla phone calls, carriers must sell more data services, like mobile Web access packages, to drive revenue growth. AT&T execs rave about how the iPhone, with its powerful Safari browser, has increased mobile data usage. There's no reason Android smartphones won't do the same thing -- and compete head-on with Apple.

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