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One theme that became abundantly clear during Google Inc.'s (Nasdaq: GOOG, GOOGL) flurry of announcements yesterday (Wednesday) was the company's determination to put its Android operating system on every device imaginable.
What wasn't as clear was how this strategy will affect Google stock.
But make no mistake. What the Mountain View, Calif.-based search giant unveiled at its I/O developers' conference yesterday is destined to have a huge impact on GOOG stock over the next several years.
Let's first take a look at just what Google is doing.
Yesterday Google said it was expanding Android to run not just on tablets and smartphones, but also on wearable tech like smartwatches, in-car entertainment systems, and its own Android TV. The software on Google's Chromebook laptops will also be better integrated with Android.
But there's more to Google's Android plans than just having Android everywhere. Devices running Android will also be able to "talk" to each other. Actions taken on a notification on a smartphone will be mirrored on another device, like a Chromebook.
That's not all, though. An Android smartwatch could communicate the presence of a user, triggering another Android device to take a particular action.
"If I go and pick up my kids, it would be good for my car to be aware that my kids have entered the car and change the music to something that's appropriate for them," Sundar Pichai, the executive who oversees Google's Android and Chrome software projects, told The New York Times.
This "Android everywhere" makes a lot of sense for GOOG – when you control a platform, you want it be as pervasive as possible.
But doesn't Google give Android away for free? How will that help the company – or for that matter, Google stock?
Ah. It may be true that Google doesn't make any money from Android directly, but the platform is absolutely vital to Google's overall business.
Why Android Is Critical to Google (Nasdaq: GOOG, GOOGL) Stock
Android has never been an act of benevolence on Google's part. The idea has always been to seed the world with a platform that would drive people to the company's real money-makers, search and advertising.
Along the way, Android delivered a bonus – app revenue via the Google Play store. Like Apple Inc. (Nasdaq: AAPL) with the iTunes Store, Google takes a 30% cut of each app purchase.
So while Android itself generates no revenue, it's vitally important to Google's overall business – and particularly to GOOGL stock.
But even that is only half the story…