Stories
Slash Boxes
Comments

SoylentNews is people

posted by CoolHand on Thursday May 28 2015, @10:48PM   Printer-friendly
from the fine-line dept.

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.


[Editor's Comment: Original Submission]

 
This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 5, Insightful) by frojack on Thursday May 28 2015, @10:59PM

    by frojack (1554) on Thursday May 28 2015, @10:59PM (#189381) Journal

    The likelihood of power users going to IOS, is about as probable as F15 pilots going to tricycles.

    Flame suit zipped up tight. Byt really iPhones are the entry level device.

    --
    No, you are mistaken. I've always had this sig.
    Starting Score:    1  point
    Moderation   +4  
       Insightful=4, Disagree=2, Total=6
    Extra 'Insightful' Modifier   0  
    Karma-Bonus Modifier   +1  

    Total Score:   5  
  • (Score: 2) by arslan on Friday May 29 2015, @02:49AM

    by arslan (3462) on Friday May 29 2015, @02:49AM (#189457)

    Yea the term means a different thing here, they'll probably patent it at some point and claim they invented it.

    If iPhones are entry level devices, how come I can't afford it and paid half the price for a flagship Android from a Korean brand?

    • (Score: 3, Insightful) by jmorris on Friday May 29 2015, @03:17AM

      by jmorris (4844) on Friday May 29 2015, @03:17AM (#189471)

      If you are old enough to remember, "If he's an idiot I send him to the Mac Store." as a tagline (heck, if you even remember taglines) then you understand the idea here. Entry level is meant as no knowledge and usually a strong implication of a desire to avoid acquiring any. In other words if you recommend they buy anything but the Apple (which you are careful to make clear you don't actually own because you are a power user) it means they will be your new bestest friend for years as you provide free tech support for the product "you recommended" and you will never be allowed to forget the fact you recommended it. Whereas if they buy the Apple you can say, "Don't know, don't have one. But aren't they the computers for idiots? Surely you can figure it out because you aren't an idiot... right?" In the case of an iPhone you can even say "Paris Hilton figured her's out, surely you can."

      • (Score: 2) by arslan on Friday May 29 2015, @04:29AM

        by arslan (3462) on Friday May 29 2015, @04:29AM (#189486)

        Ah.. he meant entry level from a usability point of view. I was thinking cost.. which is what people normally mean from where I come from. No wonder the post read oddly..

      • (Score: 2) by mojo chan on Friday May 29 2015, @09:28AM

        by mojo chan (266) on Friday May 29 2015, @09:28AM (#189581)

        It certainly has been a long running joke. "Wow, hold on professor! TWO mouse buttons?!?"

        --
        const int one = 65536; (Silvermoon, Texture.cs)
  • (Score: 3, Insightful) by goody on Friday May 29 2015, @02:53AM

    by goody (2135) on Friday May 29 2015, @02:53AM (#189458)

    I don't agree either that these people are necessarily power users, but I think you're conflating "user friendliness" and "entry level". An entry level phone would be like those elderly phones they used to sell (and maybe still do) which let you make phone calls to a few preset numbers and nothing else. The iPhone basically has all of the same functionality as an Android phone. Arguably the iPhone is more user friendly and has a lower technical entry barrier from a new end user perspective. Android phones tend to have a lower financial entry barrier as they tend to be cheaper phones. So the case can be made that the Android is an entry level phone for those with lower incomes. I'm not sure where you're located, but here in the US, the iPhone has essentially replaced the Blackberry in business. These business users want stability, consistency, and usability, and they're certainly not new users looking for an entry level phone.

    • (Score: 3, Insightful) by Nerdfest on Friday May 29 2015, @03:02AM

      by Nerdfest (80) on Friday May 29 2015, @03:02AM (#189460)

      I find giving either phone to a new user, their about the same, with some operations being easier on one and some on the other ... it depends on the person. For me, the lack of a "back" button in iOS drives me nuts, while the contextual behaviour of back would probably annoy an iOS user. Once you get past the basic you can keep tweaking Android to be more like *you* wish it to be, if you choose. Me, I like choice.

      On average Android phones are cheaper phones because Apple *only* sells expensive phones. For some reason a lot of Apple fans seem to be very proud of how much profit Apple makes, which I really don't understand.

      • (Score: 3, Insightful) by goody on Friday May 29 2015, @03:26AM

        by goody (2135) on Friday May 29 2015, @03:26AM (#189473)

        Likewise a lot of Android users seem to be proud of Android's market share. However market share doesn't put food on the table, profits do. If you're in business to make money and you can delight customers while doing it, you have the quintessential money-printing machine. Apple has this figured out. Google delights customers as well, has more of them, but doesn't have the revenue thing figured out.

        Apple only sells expensive phones because manufacturers using Android make cheaper phones. See what I did there? :-) But seriously, Apple made a conscious business decision to sell more expensive devices because they didn't want to compete on the low end of the market. It seems a lot of Android users can't wrap their heads around this and can't understand why anyone would want an iOS device when Android is cheaper. Android is ideal for lower end devices, and arguably its cost appeals to phone manufacturers not wanting to invest in developing an OS, like Apple has done. It also appeals to manufacturers making cheaper hardware to begin with, those attempting to compete on the lower end of the market where margins are thin. Android does and will continue to get the short end of the stick when it comes to any sort of business analysis. It's a given considering how Google has positioned the OS.

        Undoubtedly some people do mindless buy Apple, because it's Apple. But is that wrong if they get a usable, stable, and consistent device and OS, it works for them, and they can afford it? In these Android versus Apple debates, it reminds of the Linux versus BSD debates of years past. Linux users hate Windows, BSD users love Unix. Android users hate iPhones. iPhone users love their phones.

        • (Score: 3, Insightful) by frojack on Friday May 29 2015, @04:30AM

          by frojack (1554) on Friday May 29 2015, @04:30AM (#189487) Journal

          However market share doesn't put food on the table, profits do

          There are plenty of profits in Android. It funds 4 or 8 of the largest electronics companies in the world.
          And dozens of other companies as well. But Android is an Alliance, not a single company [openhandsetalliance.com]. And all members fund software development at different levels.

          That all of those profits do not flow to Google, is somehow portrayed as some observers as some kind of flaw or weakness. An awful lot of people seem to find that concept hard to grasp. They suggest it should be some other way, that Google should get all the profit.

          So yes, Android is cheaper, because cooperative efforts spread costs. Those costs are passed through to end users. The BOM of many android phones exceeds that of the iPhone.

          The question isn't why andorid costs so much less. Its why an inferior phone that is cheaper to build, costs so much more.

          --
          No, you are mistaken. I've always had this sig.
          • (Score: 2) by goody on Friday May 29 2015, @11:42AM

            by goody (2135) on Friday May 29 2015, @11:42AM (#189620)

            That's a pretty broad and unsupported claim that the iPhone is inferior, and empirical evidence flies in the face of this. The claim doesn't pass the smell test. The iPhone is used by everyone from housewives to businesspeople day in and out, most being quite satisfied with it and they continue to buy new models. Perhaps it's inferior to you because you can't put widgets/applets on the screen or change the OS font, but the fact is it has the same core functionality as an Android.

            I don't think anyone expects Google to get all the revenue. I don't. Google developed an advertising eyeball delivery machine, and that's what they got. But even using that metric, according to the article, Android is second to iOS which is delivering more ad revenue. That's a weakness. Also, despite alliances or cooperative efforts, Android suffers from forking and upgrade issues. That's a weakness.

            If the BOM cost of a cheaper Android phone exceeds that of an iPhone, it speaks to a business decision and not malice on the part of Apple. The Android phone vendors are targeting the lower end of the market, with smaller margins. Additionally, Apple has mastered the supply chain. People tend to joke when Apple buys a supplier, but there's a reason for that. That's how they get lower raw material costs and can have a most consistent supply chain. They're getting their cake and eating it, too.

            I don't understand all the angst against the iPhone from Android users. You've got marketshare and a cheaper, more customizable phone. Life should be good. Does the success of Android depend on the failure of the iPhone? I don't think so.

        • (Score: 0) by Anonymous Coward on Friday May 29 2015, @03:12PM

          by Anonymous Coward on Friday May 29 2015, @03:12PM (#189689)

          Their lack of huge Apple magnitude profits help put food on my table. Who the heck cares if HTC or whoever cxos get sacked.

  • (Score: 0) by Anonymous Coward on Friday May 29 2015, @03:25PM

    by Anonymous Coward on Friday May 29 2015, @03:25PM (#189698)

    Yeah ios was too restrictive for the CEO at my work place. So he switched to android and passed his iPhone to his wife. Then even she switched to Android later.
    For me ios has nothing really like tasker. And even I find having to root my phone a bit of a restriction.