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The Tricky Road Ahead For Android Gets Even Trickier
HughPickens.com writes: Farhad Manjoo writes in the NYT that with over one billion devices sold in 2014 Android is the most popular operating system in the world by far, but that doesn't mean it's a financial success for Google. Apple vacuumed up nearly 90 percent of the profits in the smartphone business which prompts a troubling question for Android and for Google: How will the search company — or anyone else, for that matter — ever make much money from Android. First the good news: The fact that Google does not charge for Android, and that few phone manufacturers are extracting much of a profit from Android devices, means that much of the globe now enjoys decent smartphones and online services for low prices. But while Google makes most of its revenue from advertising, Android has so far been an ad dud compared with Apple's iOS, whose users tend to have more money and spend a lot more time on their phones (and are, thus, more valuable to advertisers). Because Google pays billions to Apple to make its search engine the default search provider for iOS devices, the company collects much more from ads placed on Apple devices than from ads on Android devices.
The final threat for Google's Android may be the most pernicious: What if a significant number of the people who adopted Android as their first smartphone move on to something else as they become power users? In Apple's last two earnings calls, Tim Cook reported that the "majority" of those who switched to iPhone had owned a smartphone running Android. Apple has not specified the rate of switching, but a survey found that 16 percent of people who bought the latest iPhones previously owned Android devices; in China, that rate was 29 percent. For Google, this may not be terrible news in the short run. If Google already makes more from ads on iOS than Android, growth in iOS might actually be good for Google's bottom line. Still, in the long run, the rise of Android switching sets up a terrible path for Google — losing the high-end of the smartphone market to the iPhone, while the low end is under greater threat from noncooperative Android players like Cyanogen which has a chance to snag as many as 1 billion handsets. Android has always been a tricky strategy concludes Manjoo; now, after finding huge success, it seems only to be getting even trickier.
The final threat for Google's Android may be the most pernicious: What if a significant number of the people who adopted Android as their first smartphone move on to something else as they become power users? In Apple's last two earnings calls, Tim Cook reported that the "majority" of those who switched to iPhone had owned a smartphone running Android. Apple has not specified the rate of switching, but a survey found that 16 percent of people who bought the latest iPhones previously owned Android devices; in China, that rate was 29 percent. For Google, this may not be terrible news in the short run. If Google already makes more from ads on iOS than Android, growth in iOS might actually be good for Google's bottom line. Still, in the long run, the rise of Android switching sets up a terrible path for Google — losing the high-end of the smartphone market to the iPhone, while the low end is under greater threat from noncooperative Android players like Cyanogen which has a chance to snag as many as 1 billion handsets. Android has always been a tricky strategy concludes Manjoo; now, after finding huge success, it seems only to be getting even trickier.
"The 'Majority' Of New iPhone Switchers Came From Android"
With Android's huge marketshare, wouldn't you expect that to be the case?
What if a significant number of the people who adopted Android as their first smartphone move on to something else as they become power users?
That would be a possibility if there were a more power-user-friendly smartphone platform. However, Android is the platform for power users.
In Apple's last two earnings calls, Tim Cook reported that the "majority" of those who switched to iPhone had owned a smartphone running Android.
That is hardly surprising, since that is true for people in general.
Still, in the long run, the rise of Android switching sets up a terrible path for Google — losing the high-end of the smartphone market to the iPhone
While the iPhone is definately in the high-end segment of the market if we look at the retail price, it is hardly competetive to high-end Android phones functionally. They serve a different market. Hence, I don't think this is a big threat for Android's market share.
When Android has the vast majority of the market, where do you think the majority of people "switching" to Apple are going to come from? The single digit % of users running Windows phone or Blackberry?
How many of those people bought a cheap (crap) Android device and then instead of spending money for a "superphone" decided to go the the "cult of iDevices"? I've had a number of android based devices and given the broad range of hardware out there it's easy to get suckered into buying something that's absolute crap and then wind up blaming the part you can see. I've had a few friends that made this kind of switch and when I pull out my current Android device (OnePlus) most of them kinda kick themselves.
There's statistics, and then there's useless bullshit. I'm thinking this is more the latter.
If "high end" means non-replaceable batteries, I'll stick with " low end".
So 16% of iPhone purchases were made by people who previously owned Android phones. (I'm going to assume here that "owned Android devices" doesn't mean you owned a Nexus tablet and now are buying an iPhone.) This statistic is useless, though, unless you also find out how many people buying Android phones previously owned iPhones. If there's an equivalent amount of people getting Android phones to replace their iPhones, then the "16%" isn't really a loss for Android. It's just normal churn. Presenting the 16% figure on its own is misleading as it makes it seem like people are fleeing Android and nobody ever leaves Apple.
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Google doesn't care about the platform, they want screens in front of faces.
Putting 100 android screens in front of 100 faces 1% of the time is making them money.
Putting 50 iOS screens in front of 50 faces 2% of the time, is making them money.
There is nothing tricky about this for google... They want to grow, they biggest source of income is ads, ads are all about getting people to look at things.
They have two options, they can try to compete for a bigger slice of the same sized pie, push all the other ad companies out of business...
OR they can get us to spend more time with our screens in front of our faces, the pie gets bigger and even if every one keeps the same percentage of the pie, Google makes more money than the rest of them.
Why is google working on self driving cars? They want you to use your commute time to browse the web.
Why is google working on glass? They want to be in front of your face every waking hour of the day.
Why is google running internet lines and looking into connectivity by high altitude balloons? Every hour they can one additional person connected to the internet is making them money, connectivity to places that don't have it expands their portion of the pie.
Google provides Jquery libraries, graphing software, mapping software, and DNS servers to make the internet faster and more reliable because the more people looking at more pages makes them more money...
Screens in front of faces, that is what google wants... They don't care about the platform, they gave andriod away to get cheap devices out there to put screens in front of faces.
Google pays billions to Apple to make its search engine the default search provider for iOS device
Think of how much MORE Google would have to pay if Android was not the dominate OS. . . HINT: Companies usually Open Source technologies to reduce costs, not to DIRECTLY increase revenues.
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You need to learn more about the "Settings" area of iOS configuration app security. Don't let hate blind you to OS configuration.
Why would a 'Power User' move from Android to iOS? They won't be able to do any of their 'power things' any more.
This article makes no sense at all.
I don't think there is really a fight between iOS and Android. iOS is Apple, Android is the rest. OK, there's Windows Phone and Blackberry but they don't really count in this market. Windows Phone is almost exclusive to Nokia; Blackberry is just Blackberry.
The battle is between Apple, Samsung, LG, Huawei, etc. Not between the OSes. Samsung is targeting the high-end market about as much as Apple, though while Apple targets only the high end, Samsung targets also other segments of the market. The other manufacturers are targeting anything from rock bottom to the top.
We should really stop this "Android vs iOS" nonsense. I've never, ever heard someone choosing a phone based on it having iOS or Android. Instead they want an Apple iPhone (which happens to come with iOS). Or they want the latest Samsung (which happens to come with Android - Samsung's Android, a version of Android bastardised to an extent that it is hardly recognisable as the same OS that runs many other phones, from manufacturers that use something close to stock Android).
Now it may very well be that Apple users are the ones that are more susceptible to advertising (which in turn could explain why they chose Apple's offering; after all Apple's marketing is second to none), and hence more valuable to advertisers. But it's not just that "Apple/iOS has the high-end market". Samsung's top end is at least as high end as Apple's iPhones and they seem to compete quite strongly, taking a good share of that market.
That Apple makes a lot more profit on their phones than Samsung and other Android makers do... that's a whole different story. Maybe it simply is the case that Apple users are those that are swayed easiest by advertising, making them pay a massive premium for their phones. And people that already have shown to be happy to buy big in an advertising ploy should be valuable for other advertisers as well.
Google is an advertising company. They make money from getting the advertising targets (you) to use their services, and charge the advertisers for access to you.
They're not going to make money off Android directly, it is just a way to get people on their platform.
This is why Google still makes iOS and Windows Phone applications. They just care that you're using their platform, regardless of how.
Apple is a hardware company.They make money from selling phones, and increasingly off of their app stores, but obviously not enough to open their app store to Google.
This is why you DON'T see iTunes, Facetime, or iMessage for Android. Their goal is to sell devices.
Microsoft is a software company. They make money off selling software, so they will, like Google, try to make their software available on as many platforms as they can. They, also like Google, care less about the phone sales and more about getting you as a loyal user of their products.
Unlike Google, Microsoft users are their customers.
Whenever people compare these three companies, they need to look at the core of who these companies are.
I'm not claiming one is better than the other, and in fact I use all three daily.
They just have different motivations for playing on the same playground.
It is somewhat like 3 kids all playing baseball together, but one is playing to be a pro baseball player, another is playing to have fun, and another is playing to impress a girl.
You can't compare the 3 kids to each other and say one is doing better than another, because each is measuring their success a different way.
Grammer Nazis - I mod you "troll" unless you actually add something on-topic. Yes, I know I have mispellings in my sig.
The interesting thing on trying to find the number going the other way... I came across conversion numbers from previous years for Android to iOS. They have been slowly decreasing year after year. 2012 the rate was 25% (http://appleinsider.com/articles/13/11/11/more-iphone-buyers-switching-from-android-this-year-than-in-2012). 2013 the rate was 20% (http://appleinsider.com/articles/13/08/19/study-finds-20-of-apple-iphone-users-switched-from-android-in-past-year). This article says 16% in 2014. Judging from the derth of articles touting the rate the other way... would seem to indicate the rate from iOS is less than the rate to iOS... but that's far from proof.