Don’t Be Evil Stupid
I’m not sure shocking is the right word, but it sure is some kind of weird about Google:
Android generated less than $550m in revenues for Google between 2008 and the end of 2011, if figures provided by the search giant as part of a settlement offer with Oracle ahead of an expected patent and copyright infringement trial are an accurate guide.
Kinda makes that $12.5 billion acquisition of flailing handset maker Motorola harder to understand. And then there’s the next graf:
The figures also suggest that Apple devices such as the iPhone, which use products such as its Maps as well as Google Search in its Safari browser, generated more than four times as much revenue for Google as its own handsets in the same period.
Android has Apple so pissed off at Google, that Apple is moving away from Google Maps for iOS with its own product, and is moving away from Google Search with Siri. Whatever the result of Apple’s patent war, it’s clear that Google’s future with iOS devices is bleak — and it didn’t have to be that way.
It’s as if, a dozen years ago, Microsoft had gone head-to-head with Dell to sell beige box PCs.
Ok, I need some help here. Android is “wildly popular” as a “smart phone” OS, and on more phones than iOS is on phone, yes?
But Google made 4x in ad revenue from iOS phones as it did from Android phone?
So to put it another way: it’s not just that more iOS users buy apps, and they buy more apps. The nub of the situation is that people who buy an iPhone buy it to use it as a smart phone, whereas a significant chunk of the people who buy an Android do so to get a phone, and couldn’t care less about any of the “Android” features, be it built in apps (like Maps), web browsing, or 3rd party apps.
Is that the essential situation?
The Android phone user I know fall into three groups. The first group are people who walked into the phone store and bought the deal-du-jour phone; these are the kind of folks Greg Q describes. The second are people who wanted an iPhone but couldn’t afford it. The third are Linux nerds who often hate Apple.
The people in the first two groups don’t generate much revenue because they either aren’t interested or can’t afford to spend money on apps, etc. Members of the third group are often into freeware and aren’t big spenders either.
Those of us who have a bit of disposable income and are willing to pay for convenience buy iPhones, and Apple and the app developers make good money off of us. And they earn it by providing superior products and services.
Sent from my iPad.
Heh. WJJ beat me to it, by a matter of minutes!
That should read “Android users” not “Andriod user.”
I’ve written about this before, and, yeah that’s part of the situation.
There seem to be three major types of Android buyers. There are cost-concious consumers who simply want a feature phone with one of those nice touch screens like they see everybody else using. Then there are power-user, jail breaking geeks. Finally, there are your Apple haters. Although I suspect those last two groups are so close, a Venn diagram of them would look like a single circle.
None of these types is ideal for app developers. The first kind don’t buy apps, and the last two won’t pay. And then there’s the fragmentation of Android’s marketplaces, not to mention outright fraud. Android is a jungle, and only the brave (or foolish?) dare to tread.
You see this in web browsing stats. iOS accounts for two-thirds or more of all mobile browsing, despite smaller marketshare than Android. There just aren’t enough power users to make up for the Nice Feature Phone users. Does any non-geek care what processor is inside their phone?
I suspect Android has lost, or will lose, a big chunk of those price-concious buyers. You can get a Retina Display iPhone 4 now for $99, or a perfectly-capable iPhone 3GS for free. By this autumn, there likely won’t be a single non-Retina iPhone available, even for free. The new iPhone will take the $199 slot, the 4S will slip to $99, and the 4 will take the place of the 3GS and be given away with contract.
Something similar may happen with the iPad, beginning next spring. And fully serviceable iPad 2 for $299? Why would anyone buy a Kindle Fire after that? Amazon can’t cut the price much lower than $199, as they’re already just barely breaking even. If that.
Re: the web browsing stats. I’ve read a couple of different times that some Android browsers mistakenly use Safari mobile as their browser ID. At best, this is anecdotal, so I don’t know what the reality is around how much of a statistical issue this is. And I really don’t know how one would research and identify the scope of the problem.
Food for thought. I’m inclined to dismiss it as a huge issue, but it may be more than simply a statistical anomaly.
Now Obama must step in to level the playing field for poor Google, a huge Democratic donor. Double the taxes on Retina Display screens, outlaw Siri whose voice is distracting to motorists, slap an anti-competing lawsuit against Apple,…
Only a matter of time before Obama mandates “an Apple a day.” Purely for our own good of course.
The “Apple a day” idea is probably buried somewhere in the Obamacare law already.
I can imagine calling Google many things over the Android platform, but evil is an odd one. How does providing competition to Apple’s gilded prison, and then giving it away for free, count as evil?
(I have no dog in this fight – my phone is a Christmas-present Blackberry – but it sure is fun to see the competing narratives)
I said Google was being stupid, not evil. They’re pissing in the face of a platform which generates three or four times more revenue for them than Android does. And that doesn’t even count their “defensive” purchase of Moto for $12.5 billion.
Android is costing Google money hand-over-foot.
It did have to be that way, Stephen, because Google had to ensure that it couldn’t be locked out of the smartphone market entirely by Apple.
In other news, Blackberry? Its dead, Jim.
http://finance.yahoo.com/news/blackberry-maker-cede-most-consumer-212323407.html
My point being, Apple was perfectly happy with Google Maps, Google Search, etc, on its devices — until Android.
As to Blackberry, I’m formulating (yet another ) “Fill it to the RIM — with Fail!” post for later this afternoon.
Apple was fine with using Google products until they figured out how they could make money with their own.
Making a good Map program, and a good Search program, both cost a lot of money. Apple had other places to put their resources. Would they have put them there, and not put the effort into their own Map and Search, if Google hadn’t produced Android?
How much has Android cost Google, and how much have they made off of it? Have they even broken even?
First off, this is a number that is certainly going to be used in any calculation determining how much Google pays Oracle, so I’m certain it’s the lowest number Google felt they could get away with providing.
Secondly, Google receives revenue from handsets based on use, not sales. The phones sold in 2011 have, so far, generated the least revenue.
Thirdly, it doesn’t matter what price Android users are willing to pay, Google is still going to generate revenue. Download a paid app from Google Play and Google gets a cut of the price. Download a free app that contains advertising and Google gets a cut of the ad revenue. It’s such a successful model that Apple copied it.
Finally, absent Android Google would be staring down the barrel of a monopsony. That’s not a good place to be, just ask Walmart’s suppliers. I think a better analogy would be if Dell had decided to build their own OS to compete with Windows. Seeing how efficiently Microsoft captured the profit in the desktop sector that might not have been a terrible idea, if they could have pulled it off (and that’s a huge, massive, pretty much impossible if).
The phones sold in 2011 should be the ones used more often for browsing the web. Does iOS still have 2/3 the mobile phone web browsing market?
Yes, iOS still dominates, 2-1 over competing browsers.
You want to use internet use as a proxy for app use and hence revenue for Google. I’m not sure that’s accurate, but I can’t really argue it. StatCounter’s latest numbers have Apple at ~25% (iPhone and iTouch), Android at ~23% (I’m not sure if Android PMP’s are included). The big wild card is Opera, which StatCounter gives 21%, but I can’t figure out how that breaks down between iOS, Android, Symbian, etc. The 2-1 useage number comes from including tablets, which I don’t think is germane to the current discussion.
Remember, this isn’t a competition. It doesn’t matter how much money Google makes relative to Apple, the question is if Android is the best use of Google’s resources. I think, long term, it is.
I’m using web browsing as a proxy for “smart” phone use. I’m also assuming that the majority of ad revenue for Google from Android phones comes from the web browsing. No?
On iOS, you have to add Ads to an app for them to appear, are they the default on Android? (Thus my assumption that most of the ad revenue comes from web browsing.)
It’s a “competition” in that Google has to decide how to deploy its resources to get the best bang for the buck.
If Google is making money from having Google Maps be the default Maps application on iOS (and I assume it is), then if Apple boots it off and replaces it with their own Maps, Google should subtract that lost revenue from Android’s revenue stream, since Android presumably cost it that money. Same for Google Search.
In the 1990s, the Windows software market was a LOT larger than the Mac software market, but a significant chunk of that market went to Microsoft. In the almost-teens, the iOS market is significantly larger than the Android market, but Apple is pretty much willing to just take 30%, and leave the rest for everybody else. That makes it a much more attractive market for 3rd party developers.
And that part IS a competition. It’s a lot easier for 3rd Party developers to make money on iOS. And it’s a lot bigger PITA to support and distribute apps on Android. If you’re Google, that’s a nasty vicious cycle.
The war is no longer over platform, its over content. Apple was fine with Google when Apple didnt have a cloud of its own on which to deploy its content. Now that it does, its clawing back the real estate they previously ceded to the competition.
What Cloud content? How does existence of an Apple Cloud lead Apple to want to replace Google Maps? Or for that matter move them to get a different Search engine?
I dont care why im just glad that those pricks at google are having their a$$ handed to them
Am I the only one who gets weirded out when I hear people brag that they plan not to be evil?
When someone tells me that they are A, I begin to suspect that they are not-A.
Otherwise, why tell me?
The Moto acquisition wasn’t about making money, it was about gaining ownership of a double-crapton of patents related to cellphones, wireless, and other technologies that are basically the foundation of modern communications technology.
Google’s strategy has shifted from profits-by-innovation to profit-by-litigation.