History of Android

Most associate Android with smartphones, which is no surprise when one considers that the operating system has a majority of the global mobile OS market.

However, it is worth noting that the history of Android started around five or six years before smartphones became a ubiquitous part of our lives. How the operating system came to be is told in the sections below.

Android Inc.

Android Inc. was founded in October 2003 by Andy Rubin, Nick Sears, Chris White, and Rich Miner.

The start-up initially intended to develop operating systems for digital cameras, and this formed the basis of a pitch to investors in April 2004.

The founders soon realized that the digital camera market would not support their endeavors, so they decided to pitch Android as a handset OS that would rival competitors such as Microsoft Windows Mobile and Symbian.

Despite this pivot, the company found securing investment capital problematic and was at one point close to eviction from its office space.

However, Rubin did secure $10,000 from close friend Steve Pearlman in addition to an undisclosed amount of seed funding. 

Developing the vision and slide deck

In early 2005 and with scarce capital, the team started working on an Android demo, vision, and slide deck to explain that vision

One core theme was comparing the PC and phone market and where the latter was headed.

Android’s founders believed that mobiles were ready to take off because the tech had advanced to a point where a capable platform could be built. 

The second major theme was the presence of a gap in the market for such a platform provided it was free and open-source.

This would enable handset manufacturers to use and distribute the Android OS in their own products – a strategy that was simply not possible in the early 2000s.

This vision then attracted the attention of venture capital firms and a company called Google

Google acquisition

Google acquired Android Inc. in 2005 for around $50 million.

Many saw the move as Google’s attempt to enter the market as a hardware manufacturer, but instead, the company marketed the OS to other manufacturers.

Post-acquisition, Sears left the group and the remaining three founders continued to develop the OS under the new owner.

They decided to base it on Linux so that it could be offered to third parties for free.

Public debut and subsequent releases

The operating system officially debuted in 2008 as Android 1.0.

The software featured several apps such as Gmail, Calendar, YouTube, and Maps that were all integrated into the operating system itself.

The first cell phone to feature the Android OS was the T-Mobile G1, released on October 22, 2008.

Android 1.5 was released on April 27, 2009. Known as Cupcake, this was the release that started the tradition of subsequent versions being named after desserts or sugar-laden treats. 

Cupcake was more refined than its predecessor.

It featured the first on-screen keyboard – which would prove pivotal as the world transitioned to smartphones – and also precipitated the framework that enabled third-party widgets.

Android 1.6 Donut was released later that year, and with an ability to operate across different resolutions and screen sizes, it too brought about features most users now take for granted. 

Other notable releases include 2.0 Eclair – the first to offer voice-instructed turn-by-turn navigation – and 4.0 Ice Cream Sandwich, the first foray into the era of modern design with on-screen buttons, the ability to swipe notifications or apps, and a card-like system for app-switching.

Android surpasses iOS

In 2012, Android surpassed iOS to become the most popular OS in the world for mobile devices – a position it still holds today.

The following year, it was announced that Andy Rubin would be moving on from the Android division to tackle new projects within the company.

He left Google in 2014, started a business incubator, and then launched the ill-fated Essential smartphone in 2017.

Rich Miner remains with Google as an investment partner on the company’s GV team, while Chris White has shifted into VR and AR research.

Key takeaways

  • Android Inc. was founded in October 2003 by Andy Rubin, Nick Sears, Chris White, and Rich Miner. The start-up initially intended to develop operating systems for digital cameras but pivoted to handsets because the market was more attractive.
  • The company’s vision for the mobile phone market with supporting evidence ultimately attracted the attention of Google. The search giant acquired Android in 2005 for $50 million with Rubin, White, and Miner becoming Google employees.
  • The operating system officially debuted in 2008 as Android 1.0 with subsequent releases named after desserts and sugary treats. Many of these updates featured revolutionary features such as voice-assisted navigation, notification swiping, an on-screen keyboard, and compatibility with different screen sizes and resolutions.

Inside Google’s Empire

Google Business Model

Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, which comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).

Google Revenue Model

A hidden revenue business model is a pattern for revenue generation that keeps users out of the equation, so they don’t pay for the service or product offered. For instance, Google’s users don’t pay for the search engine. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.

Google Other Bets

Of Google’s (Alphabet) over $257 billion revenues for 2021, Google also generated $753 million from a group of startup bets, which Google considers potential moonshots (companies that might open up new industries). Those Google’s bets also generated a loss for the company of over $5.2 billion. In short, Google is using the money generated by search and betting it on other innovative industries. 

Google Organizational Structure

Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

How Big is Google

Google is an attention merchant that – in 2021 – generated $209 billion (over 81% of revenue) from ads (Google Search, YouTube Ads, and Network sites), followed by Google Play, Pixel phones, YouTube Premium (a $28 billion segment), and Google Cloud ($19 billion). Over $31.5 billion went toward R&D (12.3% of its revenues).

YouTube Business Model

YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, generating more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.

Google Traffic Acquisition Costs

The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years, Google has been able to reduce its traffic acquisition costs and, in any case, keep it stable. In 2021 Google spent 21.75% of its total advertising revenues (over $45.56 billion) to guarantee its traffic on several desktop and mobile devices across the web.

Read Next: Google Business Model, How Does Google Make Money, Google Other Bets, Moonshot Thinking, YouTube Business Model.

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