Google's Pichai: China is 'a huge opportunity' for Android

A top Google (NASDAQ: GOOG) executive said the company is seeing interest from Chinese Android application developers, and is working on ways it can reintroduce its services into the country.

"China is obviously one of the biggest markets out there," Sundar Pichai, Google's product chief, told Forbes. "Android is powering a lot of innovation in China. That's important to me. It would be a privilege to serve Chinese users. We obviously have had a set of issues in the past, but we also see opportunities. We have seen a lot of interest from Chinese developers on Google Play, because the extent to which Android is used."

Pichai added: "If we can figure out a model by which we can serve those users, it would be a privilege to do so. So I don't think of China as a black hole. I see it as a huge opportunity in which we are playing as an enabling platform today and hopefully we have a chance to offer other services in the future."

The comments are noteworthy considering Google exited the Chinese market in 2010 over security concerns. Since then, Google's Android has grown into a major operating system in China--but largely without carrying Google's services like searching and mapping. Last year research firm CCS Insight predicted that by 2015 fully 30 percent of Android phones globally wouldn't access Google services, largely driven by Chinese users. The situation could impact Google's ability to derive advertising revenues from the country--a particularly critical concern as China eases into its new role as the world's biggest smartphone market.

Further, a number of companies are now stepping into the void left by Google's Chinese absence. According to the Wall Street Journal, Chinese Internet giants Tencent and Alibaba Group are working to generate support among smartphone makers for their own respective smartphone operating systems. Specifically, Alibaba bought a $590 million stake in Chinese handset maker Meizu Technology in order to collaborate on the development of its OS, YunOS. For its part, Tencent recently allowed users to test its new Tencent OS platform, and received nearly 62,000 applications, the WSJ said. (This isn't the first time Tencent and Alibaba have attempted to enter the smartphone OS space: Tencent developed an OS called Tita, but ditched the product in 2012. And Alibaba and Chinese search provider Baidu launched their own mobile OS in 2011 but didn't find support among handset suppliers.)

Both Tencent and Alibaba are hoping to mirror the success of Chinese smartphone maker Xiaomi, which sells phones in China running on its Android-based MIUI operating system. The WSJ said Xiaomi recorded a total of 12 billion app downloads through its MIUI app store by the end of 2014.

Google's desire for the Chinese market may also be propelled by Apple's (NASDAQ: AAPL) recent successes there. Last year Apple managed to ink deals with all of China's major wireless carriers to sell its iPhone in the country; in Apple's most recent quarterly report, the company said China was its second-largest iPhone market behind the United States. Apple reported $16.1 billion in quarterly revenue from "greater China," which includes mainland China, Hong Kong and Taiwan, up 70 percent from the year-ago quarter.

Pichai's comments to Forbes represented his first major public statements since his October promotion. Pichai had been Google's senior vice president of Android, Chrome and Apps, but was promoted by CEO Larry Page to oversee Google products such as search, maps, Google+, commerce, research, advertising and infrastructure.

In his comments to Forbes, Pichai also said that Google continues to strive to obtain more revenues from its mobile products--investors have fretted over the company's ability to migrate its successful search advertising model from the desktop computer to the mobile phone. Along these lines, Google recently announced sponsored search options inside its Google Play app store.

Pichai also said Google plans to expand its offerings in the mobile payment space via its Google Wallet service (the company is widely expected to announce new Android mobile payment services at its upcoming I/O developer conference).

For more:
- see this Forbes article
- see this WSJ article

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