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Google Earns $2 Per Handset; Apple, $575
Hugh Pickens writes "While Apple generates more than $575 in profit for every iOS device, and according to estimates in 2007 Apple earned more than $800 on every iPhone sold through ATT, Horace Dediu reports that Android generated less than $550m in revenues for Google between 2008 and the end of 2011, earning only $1.70 per year, per Android device — explaining how Apple is sucking up two thirds of the profit in the mobile phone business. Dediu's starting point is a settlement offer Google made to Oracle of $2.8 million and 0.515% of Android revenues on an ongoing basis. His assumption is that those numbers represent Google's revenue from Android to date. 'If this is the case,' writes Dediu, 'We have a significant breakthrough in understanding the economics of Android and the overall mobile platform strategy of Google.' Of course profitability is not the only reason Google is in the mobile phone business. 'P&L considerations were not the only (or even at all) factors in investment for Google. Having a hedge against hegemony of potential rivals, having a means to learn and develop new business and having a role in defining the post-PC computing paradigm are all probably bigger considerations than profitability,' writes Dediu. 'My take is that [Android] is not a bad business. But it's also not a great one.'"
Do "Android revenues" include advertising, e.g. ads shown in apps?
Still, Apple does get to pick the cream of the crop.
This article compares Apple, a hardware maker, with Google and Android, who provides software to hardware makers? How is that a fair comparison?
Or the fact Google doesn't sell phones?
Google apparently earns 80% of its mobile revenue from iOS devices and 20% from Androids devices.
If I interpret TFA correctly, this is all based on Google's figures for Android revenue in a settlement offer Google made to Oracle...
I'm sure that Google bent over backwards to inflate that figure as much as possible by including every possible source of indirect income from ads, service sign up, user data collected, desktop users switching to Google Mail/Docs/Calendar to better sync with their phone etc. so that they could pay Oracle absolutely every penny they deserved. I can't think of any reason why they would try every legitimate tactic to make that figure as small as they possibly could. Can you?
Google produced Android as part of a long-term strategy to attract people to their online services. There's going to be a lot of "intangibles" there that are very difficult to account for.
In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.
What I'm incredulous about is the fact that Apple users spend an average of more than $600 on apps & markup.
They don't. Well, not in that way, anyway. The $800+ comes from two things; AT&T paying $18 per month per phone to Apple for the privilege of being an iPhone carrier (presumably why they had an exclusive for so long), and the cost of the phone itself, at $399. That ignores that Apple does actually have to pay for manufacture, shipping hardware, labour etc to make the things. Though most of that is parts; they only pay $8 to foxconn for labour per phone. That, plus ruthless pressure on suppliers to cut costs that makes Walmart look slack, is why they have a ~40% profit margin on the hardware.
Google of course, doesn't make the phones - even the google branded nexus line are made by OEMs. Samsung make the Galaxy Nexus, for example, and samsung have been making out like bandits on the galaxy line - they sell more android galaxy smartphones than apples does iphones by quite a big margin, even though they make them mostly in Korea at considerably lower margin than Apple gets from China. This may all change once google finish acquiring Motorola of course; they might start seeing some of that hardware profit for themselves.
Bear in mind, google makes quite a chunk of money from iOS users, because Google licence google maps etc to Apple, and get paid for that. They don't get to charge the same licence fees to themselves for shipping google maps on android!
So android is not a very profitable OS in and of itself for google. It may even operate at a loss, once you include all the costs of updating it, working with carriers and OEMs for all their custom versions, having the market cope with all the different versions out there etc etc.
However, it does provide google an excellent platform for their webapps - google maps, google mail, google search - where they DO make an excellent amount of money from advertising. Apple could yank googlemaps from iOS at any time, and I've heard they're looking at doing just that. Look at the fun google had getting google+ on iOS, and google voice. Even if android makes no profit at all, having their own open source wide spread competitor to iOS and windows phone* gives them a huge opportunity to support their other services, and avoid iCloud etc eating their lunch in their core market.
* ok, windows phone might be a minnow now, but they owned the pda/smartphone market once and destroyed palm and psion in the process. Blackberry used to be a big player, and look what's happening to them. Apple and Google can't assume microsoft aren't willing to buy their way back into the mobile market, just as they did going from 0 to big player in the console market. Hell, microsoft are willing to toss most desktop and server users under a bus with windows 8 in order to get developers to make metro apps which will then be usable on tablet/phone, and that's a big gamble even with their massive cash pile.
Remember kids, it's all fun and games until someone commits wholesale galactic genocide.
I was going to moderate, but that's the second time you've posted flat-out wrong information on this thread...
The Google Nexus carries the Google name, because Google commissioned it, and set specific guidelines for how it's to be used/sold. It was manufactured by Samsung, and most of the profit goes to Samsung for it, but there are certain rules governing how that particular phone can be sold, and those are set by Google.
For one, the Nexus can't be sold with a network lock. It's sold as a "reference" device, and is unlocked to any network.
For two, it is not allowed to have any manufacturer-specific branding, and is sold with a stock unmodified Android.
There's other differences, but those are the big ones.
there have been previous estimates that Google does indeed make more money per handset from iPhones than Android.
Not estimates, it's in Eric Schmidt's testimony before Congress. Fully two thirds of Google's revenue from mobile comes from Apple devices.
So, we have a Slashdot article that's using figures from another Slashdot article from when AT&T had an exclusive deal with Apple.
Not only that, but the original Slashdot article that is used as the "authority" for the Apple figures completely ignores the manufacturing cost of the iPhone.
So here, we see Slashdot click-whoring (once again!).
Newsflash! Companies make money on the stuff they sell!! Film at 11 !!!1!!!111!
The "math" in both this, and the 2007 "Apple" article is so incomplete and just plain out-of-whack that this article is an embarrassment to not only Slashdot, but to "Journalism" in general.