Android Platforms Without Google Apps?

Google Inc. (NASDAQ:GOOG) introduced its Android operating system in 2007 with the strategy that developers will get it for free and then they will make money when consumers click on the ads. However, that plan has hit an obstacle. Amazon.com Inc. (NASDAQ:AMZN) and Chinese Internet companies Baidu Inc. and Tencent Holdings Ltd. are using Android for their devices, but without preloaded apps like Gmail, Google Maps and YouTube. Amazon’s Kindle Fire tablet doesn’t even come with any of those apps. It has its own app store, not Google’s Android Marketplace. “The Fire may be the best Android tablet out there, even though it’s the least Android-y of all of them,” said Noah Elkin, an analyst at research firm EMarketer Inc. “The Google experience is very much in the background.”

Mobile advertising is one of Google’s fastest-growing markets. Online traffic mostly comes through apps instead of browsers. Google’s attempt to get mobile-ad revenue from Android could be hindered if more device makers follow Amazon’s approach. “Part of the reason Android is so important as an operating system is that it lets Google put its mobile services front and center,” said Ken Sena, an analyst at Evercore Partners Inc.

Anthony DiClemente, an analyst at Barclays Capital, feels many users are looking for a smooth interchange between software and hardware. The Apple iPad’s success demonstrates that. “Apple has taught everyone that people value an integrated ecosystem that just works,” said Michael Gartenberg, an analyst at Gartner. “There’s a real possibility that Android could succeed, but not deliver what Google hopes it will.”

Amazon isn’t the only company planning to put Android in the background. Baidu and Tencent have produced their own software platforms to run atop Google’s operating system. Dell Inc. (NASDAQ:DELL) also revealed the Streak Pro, a smartphone only sold in China. The device will run Baidu Yi (NASDAQ:BIDU). Facebook Inc. is an important opponent as well. Tim Bajarin, president of Creative Strategies Inc., predicts Facebook will introduce an Android-based phone where Google apps will be replaced by a user interface designed around its social network. Other device makers have no choice but to use Android. Companies like Samsung Electronics Co. and HTC Corp. would have no platform to contend with Apple without Android. “I don’t know if any other manufacturers have the clout to do what Amazon is doing,” said Bajarin. “They need to play nice with Google.”

Android devices that don’t use Google’s services aren’t a total loss, said Maha Ibrahim, a partner at investment firm Canaan Partners. “Google has done an incredible job getting Android out there,” she said. “They’d rather have Android be part of these devices than not.” Amazon Fire users can still do Internet searches with Google or use the Google Maps website. Google may also try to create its own phone. The company agreed in August to acquire Motorola Mobility. It’s rumored that Google is also creating its own tablet. “One way or another, they need to have a tablet that’s a strong number three to iPad and the Fire,” said Evercore’s Sena.