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When Sameer Samat was last at Google, he spent his days thinking of ways to beat Amazon. In his second stint, his days will be filled with thoughts of another formidable foe: Apple.
After a brief stay at Jawbone, Samat is returning to the search giant to work on Google Play, as we reported on Friday. His move is bad news for Jawbone. But it’s good news for Google, whose CEO, Sundar Pichai, is building his inner circle of product chiefs and consiglieri. Samat is a long-time confidante.
And Samat’s move is telling news for Play, the digital media store that has lagged behind Apple and other media companies despite its massive presence on Android devices.
The Play unit is seen inside the company as one of two crucial revenue growth engines, after search ads, according to sources familiar with Google’s business. (The other is YouTube, although the margins on these engines are probably nowhere near as big as search.)
Google has never broken out Play revenue (and may not anytime soon, post-Alphabet), but the bull case for the division sees it, with sales from the app store and broader media library, as bound for at least a $10 billion-a-year business, sources say.
To put that in perspective, Apple’s media sales compose the majority of the $10.1 billion in sales it reports in its “other” item on its income statement. In 2014, Google reported $6.4 billion in “other revenues,” which includes Play sales along with its hardware and cloud storage sales.
For Google, much of that growth will come from Play’s expansion beyond its basic app store model; it plans to grow app store ads, introduced last year, and is bolstering its streaming service, subscription e-books, podcasts and so on. These ventures, of course, run up against competent media rivals like Netflix, Spotify and Amazon.
Samat, who used to run Google’s shopping and travel products, will move into a newly formed position leading product and engineering for Play. He will likely push for more uniformity across Play’s (sometimes disjointed) offerings, a Google priority. And he’ll manage Play’s operational extension alongside Jamie Rosenberg, the reserved and respected business lead.
But first, the Play chiefs have to confront the Android problem.
Google’s operating system is on roughly four of five smartphones worldwide, yet Apple commands the lion’s share of mobile money — from what we can tell. Between February 2014 and February 2015, Google paid $7 billion out to developers. Apple paid $10 billion over that period, from a smaller base of phones. We might (fingers crossed!) get updated figures soon, but they will probably show iOS revenue still ahead.
To catch up, Play’s best shot comes thanks to its widespread pre-installation on Android. But that’s predicated on Google keeping Android handset makers happy. And with those hardware partners facing ever-slimmer margins, Play faces pressure to make the Android app store robust enough to keep users from gravitating to Apple.
Google announced in May that Play had crossed 50 billion downloaded apps worldwide. Yet in Android’s biggest growth markets, like India, consumers are often reluctant to download or pay for apps, given data and income constraints. Play moved to address this recently on the pricing side. And Samat is now tasked with shaping the product in a way that can tackle this problem.
Last but not least, the prodigal exec will be critical to Google’s return to China, should it do so this year, as several reports have claimed. Google does not reap mobile services revenue from the massive market. Industry sources say that Google does indeed want to extend its business there, and will lead with Play. If so, Samat will have a whole new set of foes to think about.
This article originally appeared on Recode.net.
