Once a firm states its intention to start acting like a lean start-up, it’s a sure-fire sign that it has ceased to be one. That could be one interpretation of the lengthy essay penned by Google CEO Larry Page last week outlining how the search giant was aiming to harness “the passion and soul of a start-up” to underpin its future strategy.

Any business with over 30,000 employees runs the risk of its focus becoming bogged down in bureaucracy and by a disparate range of products and services – but it is a particularly hurtful charge against a company such as Google, which remains the blueprint for a successful start-up for many in Silicon Valley and beyond.

That it took Page three-and-a-half thousand words to spell out Google’s strategy arguably underscores how bloated the company has become. And the fact he was minded to at all suggests he has concerns that the mighty search giant is in danger of becoming beached. 

“We've let a thousand flowers bloom; now we want to put together a coherent bouquet,” was the disingenuously positive spin on the problem offered by Sergey Brin, Google’s other co-founder. “Separating the wheat from the chaff” may have been a more accurate phrasing; Page notes he has already “closed or combined” over 30 underperforming products since he took over the CEO reigns from Eric Schmidt last year.

The breadth of Google’s product offering always used to be seen as a positive. The company pioneered the ’20 percent time’ set aside for employees to work on their pet projects and thought nothing of pushing a product into the wild before it was ready. But many of Google’s recent hits, including YouTube and Android, were acquired rather than developed in-house. And in the era of Apple’s dominance, where products are expected to arrive fully-formed, pushing out beta products can seriously dent a reputation.

Evidence that Google’s working philosophy has soured can be detected in its efforts to counter the threat posed by Facebook. If a recent letter by a disgruntled ex-employee is to be believed, the drive to position Google+ as a valid alternative to Facebook has turned into an obsession that is crushing innovation. “The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus,” wrote James Whittaker, an engineer now at arch-rival Microsoft. “The trappings of entrepreneurship were dismantled… ideas that failed to put Google+ at the center of the universe were a distraction.”

Efforts to promote Google+ via integrating it into Google search results – allegedly at the detriment to Facebook and Twitter content – saw Google’s ‘Don’t be Evil’ ethos called into question.  Using a dominant market product to prop up another has echoes of Microsoft’s Windows/IE bundling a generation ago – and comparisons with the “evil” Microsoft of the 1990s is another damming indictment of where Google is today.

Not that Google is wrong to identify Facebook as a serious threat to its future. Zuckerberg may have vastly overpaid this week for Instagram, but the fact that Facebook is prepared to shell out big bucks to strengthen its offering is a sign that the soon-to-IPO social network now means serious business (indeed, the acquisition has parallels with Google’s US$1.65 billion acquisition of YouTube in 2006).  

Google is not a company in crisis. It generated US$38 billion in revenue last year (up 29 percent) and its share price is still on the up, even though the years of explosive growth following its 2004 IPO are now behind it. It may have fallen behind in the social networking space, but thanks to Android it’s doing pretty well in mobile. Isn’t it?

Ah.. Android. On one level, the success of Google’s smartphone OS is difficult to dispute. According to recent studies it now powers over half of all US smartphones and more than 60 percent of smartphones in China. Page reeled off some impressive stats too: over 850,000 daily devices activations, via 55 Android OEMs and more than 300 operator partners.

Page notes that Google’s revenue from mobile is on track to account for US$2.5 billion a year; while a substantial sum, this accounts for just a small chunk of the US$38 billion total revenue and – crucially – it doesn’t just refer to money made on Android but across all mobile properties where Google is present, including on Apple’s iOS.

Recent numbers included in court filings related to Google’s Android-focused legal battle with Oracle provided commentators with the first indications of just how significant (or not) the contribution from Android is to Google’s bottom line. Asymco used the figures to calculate that Google had made just US$$544 million from Android to date, equating to a measly return of US$1.70 per Android device per year (by comparison, Apple is calculated to have made a cool US$576 from each iOS device it sold in 2011). The upshot of all this is that iOS could be making four times as much money for Google (via its default search engine deal and other content such as maps) as Android does. Google also takes a share of the apps revenue generated by the Android store – but with paid-for apps far less established on Android than iOS, it’s unclear how significant this income is or even if it covers Google’s costs in operating the platform. Indeed, there’s an argument to be made that Google is running the entire Android ecosystem at a loss. Until the company itself comes clean on the precise numbers, no-one knows for sure.

Google would argue that Android was never intended as a money-making venture. By licensing the OS to vendors for free under the open source model, Google instead attempted to nurture a global platform that would allow it to seamlessly extend its products and services into the mobile age. Android has served its purpose in this regard, enabling Google to avoid the problems faced by Internet rivals such as Yahoo, which failed to make the transition from the desktop and is now fighting for its future.

But Android has also become the victim of its own success. In the early days, Google picked its Android partners carefully, ensuring its brand was associated with only top quality hardware. But now that every OEM under the sun appears able to churn out a cheap Android smartphone – and market it on the back of the Google brand – the association may not always be a desirable one. Rapid growth has also created a hugely fragmented ecosystem that has meant control of the platform is now largely out of Google’s hands (in terms of OS updates), causing frustrations for both Android developers and end users.

Recent moves such as the acquisition of Motorola Mobility and the (rumoured) return to branded hardware with a Nexus tablet suggest that Google is looking to wrestle back control of its platform. But how it plans to achieve this without disrupting the existing Android ecosystem remains to be seen.

Page and Brin famously stated back in 2004, on the eve of their IPO, that “Google is not a conventional company [and] does not intend to become one.”  The unique success of Android has underscored that commitment, but has also landed them with some pretty unconventional problems too. 

Matt Ablott

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members