Back in 2005, everyone thought of Google as just another ad-supported search company. However, 13 years ago today, on July 11 that very same year, the company quietly (and cheaply) made what we think was its best acquisition to date. It purchased the startup company Android for $50 million.
Of course, we all know the deal was a great success — this website wouldn’t exist if it wasn’t. Using the skills of its new Android team members, Google spent the next three years developing an operating system for mobile devices. This culminated in the launch of the first public version of Android in 2008, released on the T-Mobile G1 phone (called the HTC Dream in other parts of the world).
Today, Android is the most popular mobile OS in the world by a large margin. The latest estimates from the research firm Gartner claim that Android was used in nearly 86 percent of all new smartphones shipped worldwide during the first quarter of 2018. Android also beat more established rivals like Microsoft’s Windows Phone (and Windows Mobile), Nokia’s Symbian, and most notably BlackBerry. In fact, both Blackberry and Nokia now license their brands to other companies for Android-based smartphones.
In May 2017, Google revealed there were over two billion monthly active Android users, and that number has likely grown since. Besides smartphones, Android is used in smartwatches, tablets, smart TVs, cars, and more. Perhaps more importantly, the launch of Android helped Google become one of the biggest and most influential companies in the world.
It wasn’t smooth sailing the whole time for Android, though.
The start for Android
Android Inc., the company that created the Android OS, actually began a couple of years before Google bought it, in the first half of 2003. The Palo Alto company’s most well-known co-founder was Andy Rubin, who had previously worked for companies like MSN and Apple. It was at Apple where Rubin got the “Android” nickname, according to The Verge, when his co-workers noticed his own love of robots.
In 1999, Rubin helped form the company Danger, which launched one of the first proto-smartphones, the Danger Hiptop (re-branded as the Sidekick when T-Mobile sold it in 2002). The Hiptop’s small screen swiveled 180 degrees, allowing for the use of its QWERTY keyboard. It was a big hit, especially among younger audiences.
According to TechRadar, Rubin departed Danger in 2003 to help form Android, along with the other co-founders Rich Miner, Nick Sears, and Chris White. The original idea for the company was to create an operating system for digital cameras. According to PC World, that’s how they pitched Android (the OS) to early potential investors. However, by then the market for standalone digital cameras was shrinking, as consumers ditched them for mobile phones. Rubin and the team decided to switch their focus and make an open-source OS for phones.
“The exact same platform, the exact same operating system we built for cameras, that became Android for cellphones,” Rubin said at an economic summit in Tokyo.
However, for a while, it looked like Android as a company was close to shutting down entirely. According to Business Insider, at the lowest point, Rubin had to ask a friend, investor Steve Perlman, for some extra money. Perlman actually went to a bank and took out $10,000 cash, giving it directly to Rubin. The day after that cash transaction, Rubin wired an unknown amount of extra money to Android to keep it going.
As it turned out, that’s all Android Inc. needed to survive before its next deal. Google asked to meet the co-founders of Android in January 2005 to see if they could help the company.
In a second meeting later that year, the Android co-founders showed off a prototype of their mobile OS to Google’s Larry Page and Sergey Brin. It was apparently good enough, because Google quickly offered to acquire Android.
The team officially moved to Google’s campus in Mountain View, California on July 11, 2005. That day is considered the official date for the acquisition of Android by Google. However, the news about Google purchasing Android didn’t become public until a few weeks later, in August 2005.
Check out our Android history article for more on the development of the OS after the company was acquired by Google.
Why Android was Google’s best acquisition
As we stated, reports claim Google spent just $50 million to acquire Android. That’s tiny compared to its acquisitions in the 13 years since. In fact, the company spent just $130 million to buy companies in all of 2005. Only a little over a year later, Google spent $1.65 billion acquiring Youtube.
It’s still debatable whether YouTube was worth the money at the time, but it’s certainly paid off by now, though Android’s actually been even more successful.
Some of Google’s other acquisitions have not been as successful. Consider the massive $12.5 billion purchase of Motorola in 2011. It was supposed to help Google fully enter the hardware market and secure some needed patents from Motorola. However, a little over three years later Google sold off Motorola to Lenovo for just $2.9 billion.
Some of Google’s other purchases could still be considered works in progress. Nest Labs, which Google bought for $3.2 billion in 2014, has been slow to take off. More and more homeowners are starting to buy home automation hardware these days, so that could change.
Earlier this year, Google made the decision to merge the Nest Labs team with its own internal hardware division, so maybe the company still feels its purchase might yield some positive results down the road.
It’s highly unlikely Google will ever get a better return on investment than it got with Android. While the company will no doubt continue buying and investing in other companies, there’s really no getting around how big of a win that $50 million startup became — even as Google and Android face new competitive threats from companies like Amazon and Apple and looming antitrust fines from the European Union.
Thirteen years later, what do you think? Was Google’s purchase of Android merely a great acquisition, or the greatest in the tech industry overall?