What other options did Google have in this scenario? Being a software and data-focused company, they clearly were not positioned well to build and ship handsets.
Google's best option is to ensure to ensure that their services (search, Docs, Maps, etc.) are the best available options. They were able to unseat Yahoo earlier in the decade due to quality of results, they just need to continue innovating and convince users to do the same again.
Google would be in a much worse position if Apple had mobile handset hegemony. iAds + native apps isn't something they can break into. Now developers targeting mobile have a much stronger incentive to just develop a web app and cover both platforms when possible. That's a much better situation for Google, even if they don't have default services installed on the handsets.
That always seemed like the reason for the initially very limited storage on early Android handsets. The original iPhone was out with 3-15 gigs of storage for apps, while the G1 had around 100mb.
What the author did not consider is whether consumers are willing to buy a phone which does not have Google's apps installed or at least available (tight GMail integration, maps, etc.).
I'd venture to guess most consumers really don't even know about the tight integration of Android and Google apps. They'd probably just want to make sure they can get to Facebook on it.
"Google makes money off advertising, not software"
AFAIK that's not true. While the core of Android is free as in beer, if you want Gmail and any other Google-branded software on your handsets, you'll have to pay.
True, but I think when people make that point, they are implying that Google's main focus is making sure they can make good money selling ads, not that they make zero profit on Android. Or in other words, their main goal is to sell ads, not to sell Android, even if they do make some profit selling Android.
I think the strategic focus of Android is to prevent any vendor from having control of the mobile experience. By providing a free alternative phone makers can use, it creates market fragmentation and no vendor will be able to steer the market in one or other direction.
I think that now that Google has the manufacturers and networks hooked, they will close the loopholes (e.g. swapping out the search engine) by changing the licensing for newer versions.
Sure they will, if they feel like shooting themselves in the foot. Android would probably survive the accident, but it'd certainly start limping.
The open source part of Android created by Google (which is most of Android) uses the Apache Software License (v2.0). If they change any conditions, Android would no longer be open source.
The biggest winner would be Nokia, because Meego & Symbian would then become the only viable open phone stacks, although some would defect to Apple, because if you're going to use a non-open phone, you might as well go with Apple.
Realistically, Android without the market and Google apps is not Android and Google can charge whatever they want for those apps. I suspect they're better off giving those apps for free and making money from the ads inside them.
Honestly, the whole "OMG they replaced Google with Bing!" story is overblown; there's a lot more to a phone than the Web browser.
This was a no-so-directly stated purpose and intention of Android since day one. That any late to the party analyst looks at the situation and thinks they've discovered a hole in the plot speaks more to how ill informed the field of analysts are than to Google's strategy.
Google's intention with Android -- they haven't been quiet about this -- was to create an open, competitive ecosystem that isn't controlled by any one vendor (incl. themselves). If Apple dominated and decided to cut Google out (and smartphones continued their path to dominance), that single point could decimate Google. However if 20 handset makers make Android, and one of them decided to cut Google out, the damage is limited. If Google provides an experience that customers want, they would vote with their wallets because they could.
(see the negative reception of Bing on some Verizon handsets)
I believe their intention was to make sure that they get a piece of the mobile ads pie. There are a lot of clues indicating this and it's the reason that I'm disenchanted by Android.
I'd rather use products from someone who's in the business to make money from products: Apple, Nokia, RIM, MS (and Palm I guess).
There's a huge difference in having ad revenue and being completely dependent on ad revenue. If Google lost ad revenue it would immediately collapse, unlike Apple or MS.
I believe their intention was to make sure that they get a piece of the mobile ads pie
Well sure -- the reason they want you using Google search is so they can advertise to you. And they can get you using Google Voice, and Google Maps, etc. They are less likely to have their products -- which are largely sponsored by ads -- cut out.
I'd rather use products from someone who's in the business to make money from products: Apple, Nokia, RIM, MS
Apple is a terrible example of that. Aside from the fact that they have a very big advertising initiative, a big part of the iPhone experience is lock-in with various other Apple products and conduits. Want some music? Oh well look, Apple is your conduit, taking their piece of the pie. How about a movie, or a book, or a newspaper? Hi, Apple here, ready to tax you.
Music, movies, books, newspapers - I can get all of these painlessly on the iDevice without the Apple tax. The only lockin I have with the iphone/ipad, is iTunes. That's an aggravating piece of software, sure, but it doesn't really lock me into paying apple anything.
PS- When i say newspapers, I mean news delivered digitally. Not issues, so to speak.
Just as you can use an Android device without ever seeing a single Google ad.
However Apple's media strategy is a big part of their iDevice push. Simply selling you a piece of hardware is only a small part of their plans for you.
"However Apple's media strategy is a big part of their iDevice push. Simply selling you a piece of hardware is only a small part of their plans for you."
You say this as if it's a bad thing, like it's some secret plan by Apple. They tell you up front they are selling you the complete package. It's what they tout as their advantage. You want music on your phone? Tap one icon on the screen and you can pick from arguably one of the most complete catalogs there is. Movies? No problem, they are just as easy. Want to play a game? One tap away from the store.
If you don't like to use Apple's services for getting your media, don't get the iPhone, but don't pretend they are hookwinking everyone by integrating it all so nicely on their phones.
Google's best option is to ensure to ensure that their services (search, Docs, Maps, etc.) are the best available options. They were able to unseat Yahoo earlier in the decade due to quality of results, they just need to continue innovating and convince users to do the same again.