That word, “winning”… I do not think it means what you think it means

Google Chairman Says Android Winning Mobile War With Apple: Bloomberg

Booming demand for Android-based smartphones is helping Google add share at the expense of other software providers, Schmidt said yesterday in an interview at Bloomberg’s headquarters in New York. Android snared 72 percent of the market in the third quarter, while Apple had 14 percent, according to Gartner Inc. Customers are activating more than 1.3 million Android devices a day, Schmidt said.

“This is a huge platform change; this is of the scale of 20 years ago — Microsoft versus Apple,” he said. “We’re winning that war pretty clearly now.”

Except for the slight detail that Google makes no profits from those Android activations, yeah. it’s exactly the same as Microsoft versus Apple in the 1990s.

Ironically, most of those companies building Android devices are paying Microsoft for the privilege, thanks to patent agreements, with two more signing up this week.

But … winning!

12 thoughts on “That word, “winning”… I do not think it means what you think it means

  1. Except, like MS and Apple, they make a LOT of profit off the selling of apps. So if they continue to grow at this pace, their apps profits will follow accordingly.

    1. @Scott,

      Got a source for the assertion that Google makes any significant revenue from apps? Because their annual reports say they make 96% of revenue from advertising.

  2. You overlook the fact that every android device by default links into all Google services, e.g. search, calendar, gmail etc. it’s precisely this what gives them added value over e.g. windows phone: why would one buy a windows phone if you consume most services from Google and not Microsoft?

    This gives Google the ad target audience they’re looking for: the more people who are visiting google’s websites, the more ads can be sold. After all, that’s what Google does: selling ads.

    So, yes: winning. Not by direct sales, but through indirect sales. As direct sales through a phone will degrade anyway (lower costs of devices, smaller margins), it’s better to do your earning through the indirect sales.

    1. Frans,

      Actually, that’s not true. It’s only true for Google Experience devices, which have to pass compatibility testing and can then use Google apps and services. The majority of Android devices are not Google-approved devices so don’t have those Google apps and don’t contribute much if anything to Google’s bottom line.

  3. @Scott, a year ago I saw the estimate that, since the inception of the App Store, Apple had expenses of approx half its $600MM cut.

    Of course a quarter billion ain’t hay. But at one-third of one percent of its last two years profit, Apple would be crazy to do anything to increase its store revenues that would harm other profits in the least.

    (The recent issue about Microsoft being “forced” to give up the same 30% cut that small devs ALSO pay Microsoft to be in the WP8 App Store is not about revenues—it’s about platform control.)

    Google is less forthcoming about its finances. (The big shareholders know what they care to, and the Hell with the others.) But by all analytics ever published, app sales are nothing to Google. I’ve even seen a claim by a boots-on-the-ground reporter I trust, that Google gives carriers the app revenues (which is why Verizon setting up its own App Store is no issue to Google).

    Microsoft app store profits are negative, and utterly insignificant anyway—even after they get to a double-digit market share.

    @Ed’s snark about “winning” is spot on: Google is on a Great Adventure, not trying to run a great business.

  4. Note that the Google annual and quarterly reports still break out Motorola revenues separately. So that 96% does not include the revenue from selling phone hardware. Besides, it isn’t the type of revenue that’s good for Google. Last quarter Motorola generated a $527 million loss on $2.58 billion of revenue.

    Mobile is, frankly speaking, a disaster for Google. Yes, Google still gets ad revenue from mobile. The problem is that the price-per-click is lower than what they get from desktop ads. If it’s incremental, then it wouldn’t be so bad. But mobile search is actually displacing desktop search.

  5. @Walt French: “Google is on a Great Adventure, not trying to run a great business.”

    I don’t this is think a fair statement. As someone stated above, Google makes 96% of its profits from advertising on desktop search. Google, as well as anyone else who is paying attention, knows that desktop search usage is rather rapidly migrating towards mobile. Google sees other mobile platforms as as not offering the same level playing field that the desktop does, thus they felt compelled to enter mobile to insure its own presence.

    Now I’m not saying that this was the right move for Google, or that they haven’t shifted their rationale. Possibly last year’s rationale for Android was that by continuing to give it away, they will eventually destroy their competitors’ mobile profits, and thus keep them from becoming too powerful. I say last year’s, because this year Samsung’s Android related profits have gotten so big that clearly that is not working. The original rationale is not working either, if you look at iOS vs. Android web browsing (and thus search) statistics and especially when you add to that Google payments to various Android producers/ carriers to keep Google as the default search engine.

    So what is left is a bit of a “great adventure”, and Schmidt is trying to bamboozle developers and others that Android is the place to be. But Google is trying to run a business, just not doing it very well when it comes to Android.

  6. @Ted T.: I think you said that despite the world’s acknowledgement that Google’s average IQ is up there with the best, they are stuck in a declining business and have a quasi-random business plan to deal with the shift to a time when “desktop search” is a quaint notion, sorta like “AOL portal.” (Yes, AOL & Yahoo are STILL alive with that business model; it hasn’t totally imploded, either.)

    Google does LOTS of neat things, but I don’t see any conscious effort to create value for users who migrate from desktops. In Android, they did a great job in the concept of disrupting arch-rival Microsoft, but of course it was Apple’s 2007 iPhone that actually did the deed. The Android pivot may have given them flexibility against the known imperial ambitions of Apple, but it has cost them dearly in their best platform, too.

    So I think I’ll stick with my statement. Thanks for the perspective.

  7. WEll count me as one who went to Android but is going back to apple. The android is buggy has poor battery life and is too complicated for what I need. I returning my new droid and going with an Iphone 5.

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