How much value does Android contribute to Google ($GOOG)?

Even internally, I doubt Google can appropriately value Android. Which I think is part of the problem for companies like Google and Facebook. As I wrote last week, Facebook, which has done an amazing job optimizing its service for mobile -- across virtually all mobile platforms -- has done a middling job at optimizing revenues for its mobile service. Fact is, even smart companies like Google and Facebook, which earn huge valuations and drive incredible revenue flows, do so, still, from the 'stationary' web.

That's bad. Because the mobile web is, trust me, the future. The mobile web is where we will all commonly connect and search and advertise and buy and download and upload and play and work and read and watch and find and discover and...well, you get the idea.

Being absolutely dominant in your space, be it online search, e-commerce, social media, gaming, etc., on the stationary web in no way guarantees equal success -- or even life -- on the mobile web. The future. Companies like Google, which have optimized revenues on the stationary web know they have to be (everywhere) on the mobile web, even if they haven't figured out just yet how to transition existing revenue sources, or create new revenue sources for this new world. Thus, Android. Android ensures Google maintains a vigilant focus on the future: the mobile web. Android fosters their mobile web expertise, it places their services, most importantly, their search and ad platform, in our hands, wherever we go, in a way a mere app could never do. It spreads Google to, potentially, every person on the planet.

Google, at least, has done a better job than most on building mobile revenues. On the Android and other smartphone platforms, they offer possibly the very best search engine. They offer free maps and hyperlocal advertising opportunities. They make it easy for anyone to create an ad that can be placed on a smartphone screen. They are working quickly to link voice, calling, calendars, location and more on the mobile. They continue to work on efforts that would disintermediate carriers and liberate both users and phone numbers from a fixed-line (or fixed tower) existence. They are creating mobile apps, buying mobile games and gaming services. Whatever it takes.

They are a seeking to not lose one penny they currently earn while re-making themselves and our relationship with the web. Really, it's hard to put a price on that. But we can at least try. It was on October 22, 2008 when the first Android smartphone was launched to the public (HTC Dream/G1). Google was priced at $339.29. Today (30 September), Google is $527.30. That's up about 55%. In that same time, Nasdaq's up similar, at 53%. Apple? 198%. What gives? Considering Apple's disproportionate share price growth and the fact that Android is competitive with iPhone in sales (and growing faster), this almost suggests Android is worth very little. This despite the fact that Android has been the biggest thing Google's done in this nearly two-year time frame. Far bigger than Instant and Wave and Buzz and various system tweaks. And Google does no better than the Nasdaq? While getting lapped by Apple?

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Perhaps some put no value in Android. Possibly, many are waiting to see equivalent mobile web search numbers and ad clicks before giving Android it's due. Of course, since Android is, in my opinion, the main accomplishment from Google these past tw years, let's make the easy call. The difference between Google on Oct 22, 2008 and Sept 30, 2010, $188. There. That's the value of Android, about 1/3 of Google's share price.

Which still doesn't seem quite right. Not to me, at least. Maybe there is a better way to view this.  As I believe, the mobile web is the future of the web. If Google doesn't exist on the mobile web, they cease to exist. If Google doesn't thrive on the mobile web, they cease to be Google. Android, more than anything else, guarantees that Google can be available, in real-time, in all places, to potentially billionsn of users. There are 1 billion PCs in the world. This is not a growth market. I expect by the end of this decade, there'll be over 5 billion smartphones. If Google's Android controls a 20% global market share, highly feasible, if difficult, they will have more users than they ever could on the PC.

Just as important, these smartphone users are more likely to require Google in real-time and with location-sensitive needs. They are likely to be, at that moment, and at that point of presence, more in need of Google then the typical PC searcher. However, the irony is that at the very time Google becomes even more important in people's lives, and potentially more accessible to a much larger number of users, they are more in danger of being marginalized than at any time since they've been a public company.

Google must thrive on the mobile web. Yet, every major carrier could make life hard for Google. As Google discovered when going up against Verizon, net neutrality is a hollow practice on the mobile web. Carriers, for example, can ignore Android and offer better deals, marketing and placement for competing phones -- all with competing search engines. Handset makers could (and have) cut deals with other search providers, like Bing, that cut Google search out of the picture. Competing smartphone platforms could deny Google apps and search placement on their app marketplaces. Carriers could overlay services that could disrupt or diminish Google's search, voice, contacts and mapping functions.

Symbian and Apple and Microsoft and Blackberry could control the vast majority of the smartphone operating system market share. And they would do whatever they could to limit Google's reach on their platforms. Witness Bing on mobile, or iAd on the iPhone. On a PC, I may choose to search with Google, for example, over Yahoo or Bing, or Ask. That is my preference. On a smartphone, however, there are numerous choke points that could, in effect, make it much more difficult on me if my preference was for Google and not, say, Bing. There are numerous barriers that could limit my exposure to Google ads, for example, while presenting me with an effective alternative, such as iAd. 'Open platforms' on closed networks are just one casualty of the smartphone wars.

Another is building a service for a new world. New services, like Yelp and Gowalla and Foursquare and Groupon (and Facebook) could cut better deals with carriers or other Android enemies. Worse, they can build real-time, location-based ad-supported services for this new world of smartphones; a world where even a giant like Google must compete side-by-side On the smartphone, Google has zero guarantee of replicating its 65% search engine market share as it has on the PC.

If Google wanted a future it had no choice but to acquire and modify and give away and support Android, in perpetuity. In that sense, and if a stock price today represents the understood expected value of a company, then perhaps Android represents the entire value, or nearly so, of Google.

What do you think?