Google’s Android Is ‘the Next Windows,’ Volpi Says

Mike Volpi of Index Ventures
Index Ventures partner Mike Volpi. Photographer: Matthew Staver/Bloomberg

Index Ventures is revving up investment in companies that tie their fortunes to Google Inc.’s Android mobile operating system.

“A significant portion of our investment dollars in the next five years will go to Android,” Mike Volpi, a partner at the Geneva-based venture-capital firm, said in an interview. Index may pour as much as $125 million into mobile-related businesses in that time frame, he said.

Venture investors are starting to view Android as a big opportunity -- a reversal from a few years ago, when many balked at funding startups focused purely on the software, Volpi said. The operating system’s surging growth has piqued their interest. Google accounted for 33 percent of smartphone shipments in the fourth quarter, up from 8.7 percent a year earlier, according to Singapore research firm Canalys. Twice as many Google-based devices shipped as Apple Inc. iPhones, Canalys said.

Android is poised to become as big a phenomenon on mobile devices as Microsoft Corp.’s software was on personal computers, said Volpi, who used to oversee strategy at Cisco Systems Inc. Windows runs more than 90 percent of world’s PCs.

“Android is the next Windows,” said Volpi, 44, who joined Index in July 2009.

Index has already invested in Android-focused companies, including LookOut Inc., which raised $19.5 million in a funding round led by the firm in December. LookOut offers security software and services for devices powered by Android, BlackBerry and Windows Phone software, and counts McAfee Inc. as a competitor. Most of its more than 5 million customers use Android devices, Chief Executive Officer John Hering said.

Main Focus

“Android has been the largest and fastest-growing part of our business,” Hering said in an interview.

Volpi sees Android running as much as 65 percent of smartphones, e-readers and tablet computers globally in three to four years. Today, the Google software has about a fifth of the tablet market, according to Strategy Analytics.

“Most of us will have one tablet and one phone, and maybe one reader,” Volpi said. “Not every child will have a PC, but every child will have a tablet. You’ll have much greater reach in demographics, such as the young and the elderly.”

Market Share

Will Stofega, program director at research firm IDC in Framingham, Massachusetts, said Android may grab as much as 60 percent of the markets for smartphones and more basic phones in three to four years. Unlike rival operating systems, including Apple’s iOS, Android works on both high- and low-end models. As consumers in India and China snap up inexpensive smartphones, Android should enjoy faster growth than other operating systems, Stofega said.

Google, based in Mountain View, California, rose $3.65 to $628.15 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have climbed 5.8 percent this year.

Volpi, who is based in London, also serves on the board of telecommunications-gear maker Ericsson AB. Previously, he was CEO of Web TV service Joost and a senior vice president at Cisco, the biggest provider of networking equipment. As chief strategy officer, he helped Cisco acquire more than 70 companies.

He’s currently looking at startups that are developing games for Android devices. Mobile-gaming companies focused on Cupertino, California-based Apple have already proven to be a goldmine. Gaming-industry market research firm Newzoo BV conducted a survey in September, and among the 10,000 respondents worldwide, it found that almost 52 percent of Americans who own portable Apple devices play games on them.

Tweeting a Book?

Volpi is also interested in e-reader technology for Android devices that would make books more social.

“A reader today is a largely solitary experience,” Volpi said. “Books right now don’t have a lot of social capabilities. What if you could highlight a paragraph you liked and tweet it?”

Early last year, Index was one of several VC firms to fund mobile-payment service Boku Inc., which lets consumers buy extra levels and virtual products in online games using their mobile-phone number and charge the fees to their phone bill. The company is developing an application for Android.

“Virtually every one of our companies we’ve invested in, we are telling them, ‘You have to do Android,’” Volpi said.


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