Categories: MarketingMobility

Android Will Suffer If Google Leaves China

Google gets about one percent of its revenue from China’s 360 million users. But if the search giant pulls out of China, the impact might be greater on its nascent mobile business, according to analysts.

Google threatened to cease operations in China after it discovered some Gmail accounts had been hacked, using an exploit which is now circulating online. The threat led many experts to wonder what the company’s exit from the country might do to its search business.

Some look at Google’s current search market share and search revenues in China and say such a move would have little impact. Google’s China search share at 31 percent and analysts say Google banks about $300 to $600 million from search advertising in China or between 1 to 2 percent of the company’s total revenues.

But it’s hard to imagine how Google wouldn’t be impacted by leaving China. The country has some 360 million Web users. Google butters its bread online with advertising and that value proposition extends its Android mobile operating system effort.

Google has only just begun selling the Android-based Nexus One smartphone through its new retail Webstore channel.

If Google ceased to do business in China, surely its opportunities to sell Android-based phones such as the Nexus One there would dry up like a desert. That depends on who you ask.

Workarounds could keep Androids in China

Gartner analyst Ken Dulaney pointed out that because while Google would not be selling its own Android phone, the Android  operting system is open source, so software developers and manufacturers in China are free to do what they want. “I doubt the Chinese will care if it’s free code.”

That would be different from the case of the iPhone: if Apple were to exit China, the channel for its iPhone would effectively dry up because Apple is the sole force behind the successful smartphone. Operators just service it and iPhone developers are at the mercy of Apple. Thanks to its open source genesis, Android could survive the Google imbroglio in China.

Others think Android would have more problems. Enderle Group analyst Rob Enderle believes that if Google moves out of China and China blocks access to Google services then the platform is effectively dead there. Even so, there is a workaround.

“However, Google could license their tools to a Chinese company or another firm who has a better relationship with China to get around this and I expect that is what they would do. So while initially it would create some problems there are workarounds and I would expect Google to take them.”

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Clint Boulton eWEEK USA 2012. Ziff Davis Enterprise Inc. All Rights Reserved

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Clint Boulton eWEEK USA 2012. Ziff Davis Enterprise Inc. All Rights Reserved

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