Also noteworthy is that almost all the value from the Android ecosystem is concentrated in Samsung. I did not include Google in this analysis since its mobile is so small as to be not visible in its accounting. A separate analysis of Android economics shows that Google’s benefit from the platform is modest. In contrast, Samsung, and Samsung alone, is benefitting greatly. It could even be said that today Samsung is the only Android profit engine.
Samsung has the most to lose when Google decides to ditch the modular approach. It is not a matter of if Google plans to do hardware, it is just a question of when. That is one thing that would keep me awake at night if i was Samsung’s CEO. Samsung’s biggest worry is Google itself.
Android fanboys will disagree with me but Google hasn’t shied away from making bold moves in the hardware space. Take Nexus 7 for example, It is basically sold at cost and it has essentially killed all the other Android tablets on the market.
The Wall Street Journal chronicles Apple’s souring relationship with Google and how Apple plans to oust Google Maps from the iPhone.
Apple has been hatching the plan to evict Google Maps from the iPhone for years, according to current and former Apple employees. The plan accelerated as smartphones powered by Google’s Android software overtook the iPhone in shipments.
I’m really wary of Apple forging a close relationship with a company like Facebook. Apple has been royally betrayed by a Partner (Google) in the past and Facebook is more than capable of pulling a fast one on Apple.
iPhone is the only phone on the market that has admirably withstood the attack of the Android army. I believe Google’s sole aim when they released Android 1.0 in Sep, 2008 was to destroy the iPhone. I’m really happy to see Apple’s recent moves to reduce their dependence on an unreliable partner like Google. We will see where Apple is heading after next week’s WWDC (June 11-15, 2012).
Astute Horace Dediu puts things in perspective:
Apple has an operating margin (“profit”) per iPhone of approx. $320. Google keeps about $5.5 per authorized Android phone over a 2 yr. life.— Horace Dediu (@asymco) May 17, 2012
An Apple product generates about $1/day in revenue to Apple over its life. An Android device generates about 2c/day in revenue to Google.— Horace Dediu (@asymco) May 17, 2012
In order for Google to generate the same revenue as Apple does it needs to have 50x more devices in use.
— Horace Dediu (@asymco) May 17, 2012
Android economics: An introduction
The Android Income Statement
Android Revenues in Perspective
Android’s contribution to Google
Calculating Google’s contribution to iPhone profitability
Steven Troughton-Smith has written a fantastic post on an early Android phone from 2007. Here are some of my highlights:
When Google first showed off Android, they showed it running on a device very similar to Blackberries or Nokia E-class devices of the time. This device was the Google Sooner - an OMAP850 device built by HTC, with no touchscreen or WiFi. This was the Android reference device, the device they originally built the OS on.
In short, the phone was a Blackberry rip-off.
I thought it would be interesting to take you on a brief tour of the OS. The build of Android this is running was built on May 15th 2007 - four months after the iPhone was announced; the first M3 version of Android was announced in November 2007, and Android 1.0 didn’t come ‘till a year later.
The Google Sooner, aka the HTC EXCA 300, runs on an OMAP850 with 64MB RAM, and comes in two colors: black, and white. It has a 320x240 LCD screen (non touch) and a 1.3 megapixel camera sensor on the back, which supports video recording. Its curvy profile is surprisingly light and has a certain quality to it. It has a full QWERTY keyboard, a four-way d-pad, four system buttons (menu, back, home, and favourites) and call/end call buttons. Inside is a 2G radio, which is capable of EDGE speeds, but no WiFi or 3G. It has a mini-SD slot (not micro-SD), and a mini-USB port.
It was an OS designed to search Google from the very start.
He wraps up his post by saying:
It’s quite clear that Android was being designed to a completely different target before the iPhone was released.What we see here would have fitted in perfectly with the world of Symbian and BlackBerry. This early build of Android is in fact even less capable and mature than the 2004 release of Symbian Series 90 (Hildon), the OS that runs on the Nokia 7700 and 7710 - Nokia’s first, and only, pre-iPhone touchscreen smartphones. It’s not hard to see that iPhone really changed the thinking across the entire industry, and caused everybody to start from scratch. Android, webOS, Windows Phone 7, Windows 8, BlackBerry 10 - all of these exist because of the iPhone, and standing on its shoulders they have made some amazing and unique contributions to the ecosystem.
As I mentioned in my Úll talk last week, the moment we saw the iPhone for the first time it was so clear that everything beyond this point would be completely different - it wasn’t just about smartphones, it was about the future of computing. We live in a world that would have seemed distantly futuristic only 5 years ago, thanks to all these OSes. It’s amazing how far we’ve come in such a short time, and I can’t wait to see what comes next.
Google was following a red-ocean strategy before Apple wowed the world with the iPhone by following a blue-ocean strategy. Love it or hate it but the fact of the matter is the iPhone was a rising tide that lifted all boats.
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.
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 is Winning.
On January 9, 2007 Steve Jobs Introduced the iPhone to the world at Macword 2007 ( iPhone went on Sale in the United States on June 29, 2007). Apple redefined the way the smart-phones should work on that historic day. The keynote was Steve Jobs’ greatest presentation and he had that self-satisfied smirk of a man who knew that the product he was introducing to the world was way ahead of the competition. Great men help create great products that that outlives them and Steve Jobs created not one but many during his life-time.
Macworld 2007 Keynote (iPhone Introduction):
P.S. Apple and Google were partners at the time and this keynote bought back some painful reminders of how Trojan Horse Eric Schmidt (Then an Apple Board Member) and Google backstabbed Apple by introducing Android in 2008. Early Android Prototypes looked like Blackberry phones but Google later decided to shamelessly copy the core concepts of iPhone because it was way ahead of what RIM was doing at the time. I’ll never forgive Google for betraying Apple.
Five Year of iPhone - Apple Insider
What Googles Android Looked Like Before And After The Launch Of The iPhone