Android - The Thorn In Apple’s Side?

  • Posted: 02 February 2011 04:34 PM #31

    macorange - 02 February 2011 08:22 PM

    Just a WAG, but I think that tablets and phones will end up the way mp3 players ended up:  Apple dominates, and everyone else fights over crumbs.

    I could see that. I’ve been saying for a while now that the iPod Touch, the iPhone and the iPad are to iOS what the Shuffle, the Nano and the Classic were to the iPod.

         
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    Posted: 02 February 2011 04:43 PM #32

    FalKirk - 02 February 2011 08:23 PM

    Google makes no money from advertising if their Google products are stripped from Android. Is that happening? Only Google knows. And they’re not saying. And their silence is deafening.

    The business model is simple and clear. In closed silos like iOS, Google has either no monetization possibilities or has to break off a portion of their monetization to the silo owner. In a widely adopted, open ecosystem where they set the agenda, they’ll get a good portion of opportunities to monetize. To grow the ecosystem to maximum size, they have to play fairly within it. So yeah, Google might get around to its music service. But Amazon MP3 will be an equal peer in Android so long as Amazon wants to play as an equal peer.

    The setting the agenda part is important to Google. By driving the direction of the platform, they can own it without putting up walls. They showed they could be successful on the web without really driving its direction for most of the last decade. Now they are taking initiatives to steer the web and provide direction to mobil: WebM, Chrome browser, Android.

    I’d sum up Google’s view of monetization by platform as a simple transitive relation:

        iOS   <  Web   < Android

    I’d sum up Apple’s view of monetization similarly:

      Web   <  (way less than)  iOS

    Mix in the profit levels, profit points, and control regime required for Apple to be successful, and there are plenty of attack points for Google via Android, Chrome, etc. that work nicely with its traditional model of profiting from advertising on a web it doesn’t steer, let alone control.

    Android is no thorn in Apple’s side. It will be a stake through the heart of widespread command and control business strategies when only one party takes profits.

         
  • Posted: 02 February 2011 05:18 PM #33

    Bosco (Brad Hutchings) - 02 February 2011 08:43 PM
    FalKirk - 02 February 2011 08:23 PM

    Google makes no money from advertising if their Google products are stripped from Android. Is that happening? Only Google knows. And they’re not saying. And their silence is deafening.

    The business model is simple and clear.

    Brad, I have you on ignore (the only person that I have on ignore) because your responses never seem to have anything to do my posts. The portion of my post that you quoted, above, asked whether Google was making money from Android or whether the money making portions of Android were being stripped out so that advertising and other revenues could re-directed by the manufacturers, the carriers, by the Ophone and Tapas, to themselves. Your response, as per usual, had nothing to do with the question posed.

    Want to take another crack at it? I’ll give you one and only one chance. If you go off on a tangent, I’ll just go back to ignoring you, as per usual.

         
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    Posted: 02 February 2011 05:33 PM #34

    FalKirk - 02 February 2011 08:23 PM
    relentlessFocus - 02 February 2011 08:00 PM

    Market Share times margin yields nothing to Google, as we all know, Google is playing a different game entirely (one in which the early results are not super comforting I might add which is why Google stock is going nowhere!). But Google gets no revenue from Android market share.

    Let me reverse my little rant about why market share doesn’t matter to Apple and apply it to Google instead:

    Normally market share matters because market share times margin equals total profit. Is Android’s market share multiplying their margins? No. Because Google doesn’t have any margins with Android.

    Normally market share matters to an advertising company because market share equals eyeballs which equals ad revenue. Is Android’s market share increasing their revenue? Maybe, maybe not. We don’t know and Google isn’t saying. But I know of at least too facts that indicate that Google may not be profiting from Android. The first is that they refuse to divulge Android specific revenue numbers. That is telling. The second is that sales of Android specific vendors seems to have slowed while the sales of Android knockoffs like Ophone and Tapas seems to have grown. Google makes no money from advertising if their Google products are stripped from Android. Is that happening? Only Google knows. And they’re not saying. And their silence is deafening.

    If you’re going to look at Google’s market share of something it should be market share of the advertising market, not of smartphone sales. Here’s my take:

    When Google was a hot stock in the early days, it was because advertising was undergoing a huge shift, money which once went into print and tv and movie advertising was shifting to web advertising. I don’t think the total amount of money spent on advertising was really shifting so much as where it was spent. Google rode this wave of relocation of spend and benefitted from it because they captured advertising money formerly spent on print and tv. There is now the beginning of what is predicted to be a huge shift of advertising spend from the web to the mobile web. Android and AdMob are part of Google’s mobile web advertising strategy. The problem Google faces now is that Google’s mobile revenue is mostly not “new” money, its simply shifting money from Google’s web to Google’s mobile intake (and of course there is some new money formerly spent on print and tv). So Google capturing eyeballs and market share on Android requires a complex analysis if what one is interested in is assessing Google’s profitability capacity.

    The other thing which strikes me is that I’m not sure that the total advertising spend is very elastic. I wonder if the saturation point of smartphone advertising spend is an ultimate limiter for Google’s strategy.

    [ Edited: 02 February 2011 05:37 PM by relentlessFocus ]

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    Posted: 02 February 2011 05:38 PM #35

    FalKirk, you posited a false premise. They do make money on Android even if some portion of Android devices is stripped of all the Googlishious stuff. You either do not understand or fail to acknowledge the mechanism. I took the time to explain what I see as the mechanism. Of course it doesn’t match the Apple model, so it can’t possibly be a profitable mechanism. Throw in silly insults because I’m not participating in your circle jerk, and you have your post above.

    It is interesting to see what an unfriendly bunch many of you have become coincident with the “inferior” Android going from 0 to kicking the iPhone’s and every other smartphone’s @$$ in 14 months. There are trends that shed light on this story, but you don’t want to consider them, perhaps because they don’t fit in your narrative that doesn’t match reality. Whatever. I’ll continue to chronicle them. You can continue to ignore me and be hostile about it.

         
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    Posted: 02 February 2011 06:30 PM #36

    Bosco (Brad Hutchings) - 02 February 2011 09:38 PM

    FalKirk, you posited a false premise. They do make money on Android even if some portion of Android devices is stripped of all the Googlishious stuff. You either do not understand or fail to acknowledge the mechanism. I took the time to explain what I see as the mechanism. Of course it doesn’t match the Apple model, so it can’t possibly be a profitable mechanism. Throw in silly insults because I’m not participating in your circle jerk, and you have your post above.

    It is interesting to see what an unfriendly bunch many of you have become coincident with the “inferior” Android going from 0 to kicking the iPhone’s and every other smartphone’s @$$ in 14 months. There are trends that shed light on this story, but you don’t want to consider them, perhaps because they don’t fit in your narrative that doesn’t match reality. Whatever. I’ll continue to chronicle them. You can continue to ignore me and be hostile about it.

    Bosco it is your distortion of reality which humors most of us.  We as a group on the AFB are here to make money investing in stocks and the stock AAPL has done much better then the stock GOOG over the recent past.  Wether I think Apple’s business model using a walled garden approach is philosophically better then Googles Open software approach is really a minor issue when you look at the profits the walled garden is bringing in, it is obvious that the system doesn’t scare away the average consumer and if anything attracts them and then gets them to purchase more within the ecosystem.  You continually say that Android an OS is destroying the iPhone, yet Apple’s iPhone sales are growing faster then the overall smartphone market, and Apple claims they are selling all the devices they are manufacturing.  Google made one phone they claimed as their own and it was pretty much a commercial failure.  Their are a ton of device manufactures using Android OS in their devices, most were previously relying on Windows for their OS.  I believe Android has moved consumers away from Symbian and Win Mobile and will continue to take that market share.  Apple must chose at what price point they care to compete.  They can make an iPhone at a cheaper price if they want to attract customers who cannot afford the current models.  Google has very little control over the Android hardware and IMO this will degrade the brand over time.  When the market is flooded with free devices based on Android, why would anyone pay?  The Android manufactures are in a death spiral with their pricing since they have little means to differentiate other then price, the Chinese whitebox manufactures will win that game and Android will become the smartphone for the developing world stealing Nokia’s market.  Apple will continue to win the high end customer and those who aspire to affordable luxury.

         
  • Posted: 02 February 2011 06:58 PM #37

    Bosco (Brad Hutchings) - 02 February 2011 09:38 PM

    FalKirk, you posited a false premise. They do make money on Android even if some portion of Android devices is stripped of all the Googlishious stuff. You either do not understand or fail to acknowledge the mechanism. I took the time to explain what I see as the mechanism.

    Brad, I went back and re-read your previous post. Twice. It didn’t even begin to mention a way that Google could profit if Android devices were stipped of their Googalishous inner stuffing. You said:

    You either do not understand or fail to acknowledge the mechanism.

    You’re right. I have no idea what you’re talking about. I don’t think you do either.

    Goodbye.

    [ Edited: 02 February 2011 07:48 PM by FalKirk ]      
  • Posted: 02 February 2011 07:02 PM #38

    Jeez I wish you guys would ignore Bosco.  Every one of these threads where an argument breaks out degenerates into something no longer worth reading.  Groundhog day comes to mind.

         
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    Posted: 02 February 2011 07:12 PM #39

    Here is the relevant passage:

    In a widely adopted, open ecosystem where they set the agenda, they?ll get a good portion of opportunities to monetize. To grow the ecosystem to maximum size, they have to play fairly within it.

    So you’re saying (rather rudely, I might add) that you don’t understand probability. Here’s a classic graduate level book on that topic:

    An Introduction to Probability Theory and Its Application by William Feller

    It also seems that you do not understand how influence can work without control. Here’s the classic from that realm:

    Influence: Science and Practice by Robert Cialdini

    With an understanding of these topics, you might be able to see a business model in strongly influencing a market (rather than controlling it) and being happy to capture revenue from a portion (that’s the probability piece) of that market based on the strength of your influence. Your revenues are then a function of how bug you grow that market and what portion you capture as leading influencer. Meanwhile, those who play along and grow the market grow your chance of influencing it. Oh, and an added benefit is that you don’t look like a dick espousing a whole widget model that rejects most everything you didn’t claim to invent.

         
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    Posted: 02 February 2011 07:26 PM #40

    Bosco (Brad Hutchings) - 02 February 2011 09:38 PM

    FalKirk, you posited a false premise. They do make money on Android even if some portion of Android devices is stripped of all the Googlishious stuff. You either do not understand or fail to acknowledge the mechanism. I took the time to explain what I see as the mechanism. Of course it doesn’t match the Apple model, so it can’t possibly be a profitable mechanism. Throw in silly insults because I’m not participating in your circle jerk, and you have your post above.

    It is interesting to see what an unfriendly bunch many of you have become coincident with the “inferior” Android going from 0 to kicking the iPhone’s and every other smartphone’s @$$ in 14 months. There are trends that shed light on this story, but you don’t want to consider them, perhaps because they don’t fit in your narrative that doesn’t match reality. Whatever. I’ll continue to chronicle them. You can continue to ignore me and be hostile about it.

    Are you simply referring to the money Google makes from search? that dosen’t really have anything to do with google android, as google is generally available natively on all mobile platforms (except WP7 I presume).

    Netapplications just reported that the iOS platform has a 2% web market share compared to androids 0.5% share, so google probably earns 400% more from search on iOS devices than it does from android.

    My theory is that Android is purely a defensive play by Google. They run it at a loss, make it free, just so microsoft is unable to gain a large mobile marketshare and in doing so prevent Microsofts Bing search from gaining any of googles search business.

    The biggest competitive threat for google at present is if Nokia decides to adopt Windows phone 7 as its main smartphone platform - Microsoft would gain a big chunk of global mobile search for new devices overnight (assuming bing is the built in search).

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    Posted: 02 February 2011 07:27 PM #41

    Lstream - 02 February 2011 11:02 PM

    Jeez I wish you guys would ignore Bosco.  Every one of these threads where an argument breaks out degenerates into something no longer worth reading.  Groundhog day comes to mind.

    It challenges your assumptions, so it’s not worth reading. Do I understand you correctly?

         
  • Posted: 02 February 2011 07:30 PM #42

    Bosco (Brad Hutchings) - 02 February 2011 11:27 PM
    Lstream - 02 February 2011 11:02 PM

    Jeez I wish you guys would ignore Bosco.  Every one of these threads where an argument breaks out degenerates into something no longer worth reading.  Groundhog day comes to mind.

    It challenges your assumptions, so it’s not worth reading. Do I understand you correctly?

    No - these things inevitably get personal and the insults fly.  Not much use in reading that.

         
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    Posted: 02 February 2011 07:35 PM #43

    Lstream - 02 February 2011 11:30 PM

    No - these things inevitably get personal and the insults fly.  Not much use in reading that.

    Interesting. Notice who flings the insults. Notice who laughs them off.

         
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    Posted: 02 February 2011 07:45 PM #44

    Bosco (Brad Hutchings) - 02 February 2011 11:12 PM

    Here is the relevant passage:

    In a widely adopted, open ecosystem where they set the agenda, they?ll get a good portion of opportunities to monetize. To grow the ecosystem to maximum size, they have to play fairly within it.

    So you’re saying (rather rudely, I might add) that you don’t understand probability. Here’s a classic graduate level book on that topic:

    An Introduction to Probability Theory and Its Application by William Feller

    It also seems that you do not understand how influence can work without control. Here’s the classic from that realm:

    Influence: Science and Practice by Robert Cialdini

    With an understanding of these topics, you might be able to see a business model in strongly influencing a market (rather than controlling it) and being happy to capture revenue from a portion (that’s the probability piece) of that market based on the strength of your influence. Your revenues are then a function of how bug you grow that market and what portion you capture as leading influencer. Meanwhile, those who play along and grow the market grow your chance of influencing it. Oh, and an added benefit is that you don’t look like a dick espousing a whole widget model that rejects most everything you didn’t claim to invent.

    Hi Bosco, can you narrow down your android theory down to a paragraph with some practical examples of what you mean?

    Is it based on a theory that goole is protecting itslef from being locked out of mobile search revenue (see my previous post in this thread), or is it something else? or a mix of this and something else?

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  • Posted: 02 February 2011 07:50 PM #45

    Lstream - 02 February 2011 11:02 PM

    Jeez I wish you guys would ignore Bosco.  Every one of these threads where an argument breaks out degenerates into something no longer worth reading.  Groundhog day comes to mind.

    Acknowledged. For my part, I can say that it won’t happen again.