Apple makes almost obscene profits with every new product launch. Google plays a long term game with Android devices, hoping that sheer numbers of devices will translate into massive profits. How is that working out?
Numbers Do Not Lie
While Apple’s revenue and profits come from a variety of sources– Mac, iPhone, iPad, iTunes, Apps– Google’s revenue and profits come mostly from one source. Advertising.
That Google’s free Android OS disrupted the status quo in the smartphone arena is old news, but Android on 80-percent of the world’s smartphones has yet to benefit the company’s coffers.
Apple may spend billions of dollars a year on research, development, refining products, and new product launches, but the company turns a hefty profit almost instantly.
Look at the rest of the industry. Other than Samsung, which has copied Apple at every turn, smartphone makers and tablet manufacturers are in a shambles; a chaotic disarray of technology has beens.
Go down the list. Microsoft, HTC, BlackBerry, Nokia, Motorola. All are struggling to remain relevant in smartphones and tablets; discounting products heavily to gain marketshare at the expense of profits.
The Winner Is Not
With an 80-percent smartphone marketshare, Google’s Android looks like a winner, but it is not. The numbers of Android devices on the market is huge, and dwarfs all others, but Google has yet to translate those big numbers into anything beyond negligible revenue and profits.
Why? The jury is still out. The game is not yet over. Estimates of the Android smartphone and tablet base indicate that nearly 70-percent of the devices have no bearing on Google’s mobile revenue and profits. For example, Amazon’s Android-based Kindle Fire HDX doesn’t use Google’s apps, hence, no revenue or profit for Google.
Other than Samsung, Google gains very little from the hundreds of millions of cheap, plastic, underpowered smartphones and tablets which have overrun Asia and elsewhere. Big numbers, indeed, but nothing for Google. That’s a problem. A big number problem.
Betting On Big
The smartphone field was once crowded with participants, all vying for a dominant or profitable role. Android changed all that. When it comes to revenue and profits, it’s a two horse race between Samsung and Apple. Google’s presence is made up of money-losing Android and money-losing Motorola. Mobile advertising is the great white hope for Google’s future and it has yet to bear fruit.
The problem is that the premium end of the smartphone and tablet arena is owned by Samsung and Apple. Everyone else is playing the game, but not scoring any points. Maybe one day in the future premium smartphones and tablets will be used by the masses, and Google’s bet on big number may payoff. For now, and for the foreseeable future, Google still has a big number problem.