Three Guys and a Podcast: Apple News & Analysis
It wasn't complicated. The Big 3 automakers sold fleets of cars, each owned great chunks of market share, and all were amazingly profitable. Coke dominated soda market share, reaping fantastical profits as a result, and Google dominated global share with Android, piling up mounds of mobile cash for over a decade...
The digital age has changed the game of what it means to be successful. Sky high IPO's and companies that never turn a profit are deemed successes, yet businesses with amazingly profitable track records are labeled as stale or failures.
What's going on?
Illusion and hype coupled with long-term hope for financial reward is wreaking havoc within markets, the media, and eventually investors. For now, up is down and down is up. But eventually, the marry go 'round stops, cognitive dissonance sets in and investors will demand real returns on their investments, tiring of the sizzle with no steak. Such is the world of Google's Android OS, and how it is fairing against Apple's mobile ecosystem.
Android's world wide market share explosion is being hailed by many as the measure of success for Google's mobile efforts. It is these analysts and journalists alike that are living in a bygone era, where market share equaling profits, more often than not, worked out. But in the world of tech and software, where products are free, and software continues to lose value, market share means nothing if profitability does not follow.
Amazon is able to hide behind the mask of ever growing market share, popularity and the belief it will soon turn amazing profits. Google's Android hides behind an amazingly profitable search engine, delivering the assumption that if Google is profitable so too must be Android. Executives at Google have publicly stated Android is profitable, but have not backed up their vague claims. Android is never broken out within Google's profit (or loss) columns, nor is it seen in any of Google's 10-K filings. Based on Google's overall returns since Android's launch in 2007, it is hard to see any correlation to Android's amazing market share growth and Google's overall increase in earnings.
The devil is in the details. With an ever increasing crescendo, Android apologists are now touting world wide market share for the OS as an indicator of success. IDC's latest figures show Android was deployed on 187 million devices world wide during the June 2013 quarter, compared to 50.3 million iOS deployments (between iPhone, iPad and iPod touch). Don't assume 187 million of the latest Android Jelly Bean 4.3 OS's were sold on new phones, or that these devices could truly be considered smart - phones.
Global mobile devices grouped into smartphones are hardly that. Tens of millions of mobile handsets dumped into the Android smartphone figure are more akin to feature phones. Android has become the cheap alternative to marketing devices as "smart." Android phones running Cupcake (version 2.3), originally launching in 2009, are hot sellers in Asia. These devices come complete with 2G wireless (EDGE), 128MB RAM, 2.0 megapixel cameras and 4 hours of battery life. Millions of cell users across the globe are purchasing new, what is akin to a second generation iPhone, the iPhone 3G, or far worse.
Unless Google is thinking of turning into a non-profit organization, mark share simply means nothing in terms of their success or failure with Android. Free, low-end Android deployments in Asia and other third world regions drive zero revenues to Google. Apple continues to grow its amazingly profitable market share in the U.S., Japan, Europe, and even within Asia's high-end sales, selling to those who can afford "true" smartphones, purchase applications, and utilize feature rich smartphone tools (usually tied to a fee).
The uptick with legacy Android deployments continues at a rapid pace, allowing devices with creaky chip sets and horrific screens to sell into impoverished markets. These devices may enrich users, but free solutions containing no Google search, deliver Google zero advertising revenues, and does not enrich Google short or long term.
There is recent evidence suggesting Google clearly understands that market share does not equal a winning formula.
Google is focusing more and more on Chrome, while their development speed in Android is slowing. Chrome is a browser, but is rapidly morphing into a mobile OS for not only drive-less laptops, but tablets and soon smartphones beyond being just a mere browser. Chrome is a product Google has full control of and has no plans to deploy as an open source product. Rather, Google seems intent on making Chrome Android's replacement. Chrome cannot be co-opted by Samsung, HTC or any Government. Chrome cannot be turned it into a product devoid of Google's profitable search with advertising solutions, or whatever Google chooses to keep front and center within the software. Google can win with Chrome, because it can become a long term, profitable solution, but Android holds none of these virtues for Google.
Media gurus and financial analysts alike, continue to live in the past touting Android market share equals winning. Ironically, massive growth for Android coupled with zero proof of profitability, are the key indicators it has lost, and is continuing to lose to a massively profitable, and ever growing iOS.
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