This week Google revealed that 500,000 phones running its Android operating system (OS) are activated every day. Senior managers say this is only the beginning, as they look to expand the system to running homes and cars, adding that the UK will play a crucial role in its development.
Dave Burke, engineering director for Google in the UK, oversees Android development in the region and has been working on the system since its launch. He said the success of the platform so far had "exceeded our wildest dreams".
Google had already developed a "mobile excellence centre" before it bought mobile software developer Android in August 2005, which brought current Android head Andy Rubin with it. Yet despite rumours, Android did not emerge on a handset until October 2008, with the launch of T-Mobile's G1. Mr Burke said: "It was clear we were seeing a dominant source of traffic from smartphones. They were using a disproportionate amount of data. It became about usage not units."
Since then the popularity of the OS has soared and there are currently 310 Android devices available.
Mr Rubin revealed the latest Android statistics this week, which also showed the levels of activations were growing 4.4 per cent week on week. Mr Burke added: "We are only just over two years into this. This is still early for a hugely dynamic industry."
London's operations are a key part of Android development. Mr Burke's team focused on the system's mobile web browser and is responsible for the voice-recognition operations. He said there are huge developments in the space that has led to a "much faster interaction now".
Android has a 36 per cent share of the market up from 0.5 per cent in 2008, according to Gartner, overtaking Apple, which revolutionised the smartphone market with the launch of the iPhone in 2007. By May of this year, 100 million devices running Android had been activated.
Steve Brazier, chief executive of research group Canalys, said: "The success of Android on smartphones has been phenomenal thanks to their rapid innovation and the fact it is free to license." He added: "Android is popular because it is a modern operating system that isn't Apple. There were many who did not want an iPhone, for whatever reason, one of which is price."
Google has invested heavily in making the platform work. Analysts pointed to the strength in its engineering team to create a platform that consumers wanted. It has continued to develop the system, with the ninth update – codename Ice Cream Sandwich – due for release later this year. It has been designed to run smartphones and tablets. It makes its own phones, but normally as Mr Burke puts it, as "reference devices". Following from the Nexus One and the Nexus S, a phone is in development with the new platform and will launch this year.
Part of its success has been driven by the mobile operators. Francisco Jeronimo, research manager at IDC, said: "They were concerned first about the dominance of Nokia, then of Apple. They started pushing vendors to make Android devices. It snowballed." The handset makers were also keen as Google charges no licensing fee for the software.
Android is important for Google, despite not receiving fees for the software, as it has helped the group cement its position in mobile search. In the past two years the rise in mobile search traffic at the company has increased five-fold. On Android phones, it has risen 10 per cent.
The advance of innovation at the operating system has been helped by the arms race taking place in mobile phones. Smartphone makers Apple, HTC, Motorola and Samsung especially are packing ever more power into the devices.
This, along with the rise of cloud computing, has given the Android developers licence to be more creative. "You will see more and more processing power, while the cloud makes sense for some of the heavier lifting," Mr Burke said.
He is hugely excited about the prospects for Android. "Currently we are focused on tablets and phones, but we encourage innovation. People can take the system to places we hadn't even envisioned. It can be used in control systems for houses and cars, as well as to run cameras and televisions," he said.
This includes the software which is running lighting , home stereos and alarm clocks. Companies have also designed a protocol that extends to diswashers and thermostats. "People are building stuff right now. I'm pretty excited to drive in my first Android car," he said.
Google will face challenges, analysts said. Partly this is because the devices are becoming so widespread that operators will fear a lack of differentiation in the market. Another issue is the one that helped its rise. The operators are expected to back rivals, especially Microsoft, to avoid the dominance of Android and the iPhone.
"Android will get stronger, but this will become a problem for operators because it can get too powerful," Mr Jeronimo said. "No one wants a market dominated by two players."
Emerging markets have been hugely important for Android, but one critical country is limited.
Google has a chequered past with China. Currently, Android devices shipped into China do not have Google search. Others have raised privacy concerns over the devices tracking users. Mr Brazier added that for a young industry it was "perfectly possible new entrants can shake up the market. Android is only two years old and the iPhone is less than four."
He pointed to moves by HP and its WebOS and a new OS developed by Research in Motion, adding: "Both Google and Apple will need to keep moving forwards."
Geoff Blaber, an analyst at CCS Insight, said: "Android is critical for Google as mobile search is becoming increasingly important... This is a market in its infancy, but Android currently has a stranglehold".
In the space of two years, Android has taken a dominant position in its core market and, according to Mr Burke, has set no limit on its plans for innovation. "We want to speed up innovation in the industry," he said.
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