Google VS Apple

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    Posted: 16 April 2011 06:54 PM

    Let’s discuss google and Apple now that google released their earnings.

    Here is an article to get us started.  Please note the last paragraph.  It sheds light on why their shares got whacked.

    http://www.betanews.com/joewilcox/article/Can-iPhone-do-better-Android-activations-are-315M-per-quarter/1302835052

    [ Edited: 16 April 2011 07:00 PM by omacvi ]      
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    Posted: 16 April 2011 07:11 PM #1

    Some of the following statements of mine may be a bit creaky.  I’m writing from recollection.

    Google is in a long-term R&D trend.  How long ?  The payoff ?  Google’s reports are hard for me to interpret and other investors may feel the same way.  Combining the trend and obscure reports, it is natural for investors to pull back.

         
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    Posted: 16 April 2011 07:22 PM #2

    Then we come to Apple’s data centers. 

    I believe there are 3 sets of targets:  content providers, search engines and PC’s. 

    The map companies that Apple purchased are certainly part of Apple’s targets.  If the rumors of a worldwide set of Apple data centers are true, then Apple could be kneecapping Google with its own search engines.  You know, Google, that could hurt.

    Content providers ?    This area is a natural area for Apple to move into, now that they have years of iTunes experience.

    Finally, PC’s.  I believe that PC growth is going to get a boxing about the ears.  If iPads, iPhones and iPod touches could do all of their syncing thru the MobileMe cloud, then both Windows PCs and Macs could take a hit.  In practicality, it would be more PCs than Macs.

         
  • Posted: 16 April 2011 07:28 PM #3

    My question is this:  with the perceived weakness in Google after earnings, when Apple announces a blowout quarter will we see some of the money that flowed out of Google into apple?

         
  • Posted: 16 April 2011 07:54 PM #4

    iPhone and Android handset activations provide for an absolutely meaningless comparison. The metrics that matter are revenue share and revenue flows to developers.

    Android is not Apple’s biggest challenge. Apple’s biggest challenge is meeting iPhone demand with iPhone supply.

         
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    Posted: 16 April 2011 07:56 PM #5

    The fact that they are spending more money and Android adoption decreased by 4% is a big red flag.  This reminds me of RIMM in 2007.  It looks good but looking at the numbers in more details paints a different picture.

    Verizon iPhone and iPhone 5 this summer will provide for some interesting analysis of their earnings release in Oct.  We will get a better picture of the Android vs iOS landscape.


    We will see if Apple’s cloud and possible entrance into search will change the landscape even more in the next 12 months.

         
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    Posted: 16 April 2011 08:06 PM #6

    DawnTreader - 16 April 2011 10:54 PM

    iPhone and Android handset activations provide for an absolutely meaningless comparison. The metrics that matter are revenue share and revenue flows to developers.

    Android is not Apple’s biggest challenge. Apple’s biggest challenge is meeting iPhone demand with iPhone supply.

    The activations does matter.  It sends red flags to WS and it has compressed our p/e because the iPhone has a serious competitor in Android.

    Secondly market share does impact long term adoption and retention of developers.

         
  • Posted: 16 April 2011 08:30 PM #7

    ... Android adoption decreased by 4% is a big red flag.

    Where did you see this number reported?

         
  • Posted: 16 April 2011 08:31 PM #8

    I’m not too worried about Android, but I am curious over the reasons people choose Android handsets over iPhones.  I’m sure some of it is carrier exclusivity (Sprint and T-Mobile).  And the Geeks are going to choose Android but these aren’t the numbers that count.  Perhaps there’s an Android cost advantage I’m not seeing here?  But what’s up with the rest out there?

    I’ve used the Android handsets and am underwhelmed.  Both the hardware and software are second tier to the iPhone yet Android has wide awareness and acceptance that is surprising to me. 

    However, as Apple adds carriers and possibly launches a scaled-down iPhone II (or some variation), Android could start looking more like RIMM than a leader it is today.

         
  • Posted: 16 April 2011 08:42 PM #9

    omacvi - 16 April 2011 11:06 PM
    DawnTreader - 16 April 2011 10:54 PM

    iPhone and Android handset activations provide for an absolutely meaningless comparison. The metrics that matter are revenue share and revenue flows to developers.

    Android is not Apple’s biggest challenge. Apple’s biggest challenge is meeting iPhone demand with iPhone supply.

    The activations does matter.  It sends red flags to WS and it has compressed our p/e because the iPhone has a serious competitor in Android.

    Secondly market share does impact long term adoption and retention of developers.

    The Android is not serious competition for the iPhone. If there’s a real competitor on the horizon it’s in HP in the tablet market not Android in the smartphone market.

    There isn’t a developer retention problem for Apple due to “market share.”

    As I said above, Apple’s biggest competitor in the smartphone market is time and manufacturing capacity.

         
  • Posted: 16 April 2011 08:50 PM #10

    but I am curious over the reasons people choose Android handsets over iPhones.

    Android is chosen because it is good enough. It is all that is required when productivity and performance are not the prime priorities. It’s simple really. If you don’t get it, why do you need a ticket to take you there ?

         
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    Posted: 16 April 2011 09:05 PM #11

    DawnTreader - 16 April 2011 10:54 PM

    iPhone and Android handset activations provide for an absolutely meaningless comparison. The metrics that matter are revenue share and revenue flows to developers.

    Your second metric is plainly self-serving for AAPL fans and starting to put downward pressure on perceptions as people begin trying to reconcile the reality of the Android onslaught with all the noise of what Google is doing wrong.

    The reason that second number will continue to work in Apple’s favor even as Apple markethare diminishes to a small niche is simply that Apple has a choke point on all software sales on the iOS platform and Google does not. So on the Apple side, we have something we can count with very high accuracy and on the Google side you don’t. Problem for the Apple counters is that on the Google side, because there is no control, there is tremendous unexpected opportunity and fluidity. Big example: Amazon Appstore for Android. Little examples: countless Flash games deployed through the likes of Kongregate. Medium example: Gameloft still has some games available only on its web site.

    DT, you’re continuing to make a very strong bet that mobile is not like computers, that it needs to be controlled tightly to be useful. Forget profitable. Everyone except Apple is moving to positions of less control, distributed control, or no control, relying on the familiarity of PC software models. The shift (which isn’t really a shift, but a maturing of competition) ups the negative perception of Apple’s model, further pressuring it into a niche of true believers.

    Welcome to 1991. A denial… A denial… A denial…

         
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    Posted: 16 April 2011 09:12 PM #12

    omacvi - 16 April 2011 11:06 PM
    DawnTreader - 16 April 2011 10:54 PM

    iPhone and Android handset activations provide for an absolutely meaningless comparison. The metrics that matter are revenue share and revenue flows to developers.

    Android is not Apple’s biggest challenge. Apple’s biggest challenge is meeting iPhone demand with iPhone supply.

    The activations does matter.  It sends red flags to WS and it has compressed our p/e because the iPhone has a serious competitor in Android.

    Secondly market share does impact long term adoption and retention of developers.

    I agree with DT. iPhone vs Android FUD only has a very minor effect on AAPL share prices. There are many theories as to why Apple’s P/E has compressed. The simplest explanation is that the E is growing so fast the market has trouble moving the P up at the same rate.

    Developers follow the money. iOS apps have paid developers billions, while Android apps have paid them maybe $100 million if you count ad revenue. Developers pay attention to the installed base on a given platform. iOS installed base is still much larger than Android’s and is likely to retain that lead for at least 2 more years. I wouldn’t worry about iOS retaining developers.

    Apple tells developers that there are 160 million iOS devices sold and 200 million iTunes accounts with credit cards and one-click purchasing access. Google gives out daily activation numbers without really explaining what that means. Why not announce how many Android devices are actually in the hands of consumers? How many of those activated Android devices are in the hands of lower income people in developing countries who have no method of paying for an app?

    Google is trying to hype up Android’s success, but the market wants to see revenue and earnings. Android/Admob is not giving much of either. Meanwhile, Apple will be reporting billions in both revenue and earnings growth from iOS device sales. Just the YOY growth in revenue from iOS devices will surpass Google’s total revenue for FY2011.

         
  • Posted: 16 April 2011 10:04 PM #13

    Bosco (Brad Hutchings) - 17 April 2011 12:05 AM
    DawnTreader - 16 April 2011 10:54 PM

    iPhone and Android handset activations provide for an absolutely meaningless comparison. The metrics that matter are revenue share and revenue flows to developers.

    Your second metric is plainly self-serving for AAPL fans and starting to put downward pressure on perceptions as people begin trying to reconcile the reality of the Android onslaught with all the noise of what Google is doing wrong.

    Google reported revenue and earnings this past week and on Friday the stock tanked 8.26% to the same trading range as July, 2007.

    When Android becomes an “onslaught” I’ll expect to see it in Google share price appreciation, rising earnings and strong revenue flows to Android developers.

    I will not contest the fact that Android handsets are being sold by the millions. But I do suggest Android handsets are much greater competition for Nokia than Apple and hinder Microsoft’s efforts at an effective reentry into the mobile phone market. There’s no denying Android handsets are having an impact in the market. They generate handsome data service fees for telcos and require lower subsidies than the iPhone. This keeps potential competitors from entering the smartphone market because the plethora of Android handset makers competing for unit sales are pressured on margins.

    Android is a factor in the smartphone market but far less of a factor for Apple than the unit sales and activation numbers suggest.

    Android handsets are making a market in consumers stepping up from feature phones. Apple’s biggest competitor, as stated above, is time and iPhone manufacturing capacity. Apple continues to sell every iPhone the company can make.

         
  • Posted: 16 April 2011 10:15 PM #14

    A comment on installed base. 

    Installed base equals the number of activations minus the number of units no longer in use.  I believe that there is a higher percentage of Android units no longer in use than IOS units. IPhones, iTouches and iPads seem to be recycled through eBay, families and friends more than Androids.  Wish someone would do a real study on this.

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    The measure of the worth of a product is how much people are willing to pay for it, not how many people will buy it if the price is low enough.

         
  • Posted: 16 April 2011 10:51 PM #15

    westech - 17 April 2011 01:15 AM

    A comment on installed base. 

    Installed base equals the number of activations minus the number of units no longer in use.  I believe that there is a higher percentage of Android units no longer in use than IOS units. IPhones, iTouches and iPads seem to be recycled through eBay, families and friends more than Androids.  Wish someone would do a real study on this.

    I don’t think Android handsets have been in the market long enough to reliably measure legacy units still in service. Give it a couple more years and that survey would be an insightful one.