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Google’s Not-So-Profitable Android Venture

5 points by NaOH 15y ago

dsmithn 15y ago
I'm curious how much revenue Android phones have taken away from Apple. Considering how much more Apple makes per phone, if even half the Android phones out there were iPhones, that's a massive potential loss for Apple.
nextparadigms 15y ago
There are still more iOS devices in total, and iPads are used more as a device than a phone, so more potential to click an ad. Eventually Android will surpass iOS devices, but the point of Android was to not depend only on Apple. Wasn't Apple this close to disallow advertising networks that were not "independent" last year? That's why Google wants to control their own future.
nknight 15y ago
I find this new world where $800 million in profit is "not so profitable" to be very bizarre. Equally bizarre is that these bloggers on both sides keep getting attention. It's just another holy war.
- kylerbaxter 15y ago
  Revenue isn't profitability. Profit is what you have left after you subtract your costs. You could have $100b of revenue and still not have a cent of profit. Or even lose money. Besides, $830m of revenue isn't significant when you're a $30b+ business, which Google is. And that's my point: whereas iOS has completely remade Apple and overwhelmed its prior businesses, Android hasn't even made a dent in Google's financial statements, and for all we know, may be hurting them, depending on how much Google has invested in developing Android.
  - nknight 15y ago
    Apologies, seems one of your fellow bloggers was less clueful, the first post I'd read said "profit", not "revenue". Even so, you're still looking at this from a very narrow worldview. Not everyone thinks massive profits are necessary for success, and Google has made clear they don't seek profit above all else.
    - kylerbaxter 15y ago
      That's fine, but it's a business—and no matter what your actual goals are, being profitable is a necessary prerequisite for doing it long-term. Google certainly does want Android to contribute significantly to their profitability long-term, even if it's through ad revenue generated through those devices. Mobile is going to be the most important market, so it needs to if Google is going to continue to be such a profitable company, which I'm sure they have every intention of continuing (since profitability allows them to do all the other interesting and cool things they do). My point is, that if Android is contributing so little money relative to their size now, that's not good long-term—because it's not going to support their current size or growth rate.
nl 15y ago
Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense. They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. http://abovethecrowd.com/2011/03/24/freight-train-that-is-android/ http://abovethecrowd.com/2011/03/24/freight-train-that-is-an... (Personally I think Android will be more than just a moat for Google. But it will never generate Apple-level profits, and that is just fine for Google.)
deleted 15y ago
[deleted]
fragsworth 15y ago
"iOS has completely overwhelmed Apple’s prior businesses, while Android contributes next to nothing to Google’s revenue. You decide who’s winning." Google's strategy is so fundamentally different from Apple's that this kind of comparison is ridiculous. Neither company has to outright "win" game in order for its endeavors to be successful.
- amorphid 15y ago
  Agreed. Google makes money mostly from advertising. Apple makes money mostly from selling gadgets. Both use mobile as a way of expanding their primary markets. They aren't playing the game, although there are of course superficial similarities.
- GiraffeNecktie 15y ago
  Also one of the drivers for Google is to prevent mobile from becoming a walled garden that is dominated and controlled by one company (Apple), which could easily decide at some point to replace Google (and there's already some talk that Siri will be the first step in that direction). Whether or not it's a major contributor to Google's profitability at this point in time, is really not so important as creating an independent mobile ecosystem where Google products can thrive.

5 points by NaOH 15y ago

I'm curious how much revenue Android phones have taken away from Apple. Considering how much more Apple makes per phone, if even half the Android phones out there were iPhones, that's a massive potential loss for Apple.

nextparadigms 15y ago

There are still more iOS devices in total, and iPads are used more as a device than a phone, so more potential to click an ad. Eventually Android will surpass iOS devices, but the point of Android was to not depend only on Apple. Wasn't Apple this close to disallow advertising networks that were not "independent" last year? That's why Google wants to control their own future.

nknight 15y ago

I find this new world where $800 million in profit is "not so profitable" to be very bizarre. Equally bizarre is that these bloggers on both sides keep getting attention. It's just another holy war.

kylerbaxter 15y ago
Revenue isn't profitability. Profit is what you have left after you subtract your costs. You could have $100b of revenue and still not have a cent of profit. Or even lose money. Besides, $830m of revenue isn't significant when you're a $30b+ business, which Google is. And that's my point: whereas iOS has completely remade Apple and overwhelmed its prior businesses, Android hasn't even made a dent in Google's financial statements, and for all we know, may be hurting them, depending on how much Google has invested in developing Android.
- nknight 15y ago
  Apologies, seems one of your fellow bloggers was less clueful, the first post I'd read said "profit", not "revenue". Even so, you're still looking at this from a very narrow worldview. Not everyone thinks massive profits are necessary for success, and Google has made clear they don't seek profit above all else.
  - kylerbaxter 15y ago
    That's fine, but it's a business—and no matter what your actual goals are, being profitable is a necessary prerequisite for doing it long-term. Google certainly does want Android to contribute significantly to their profitability long-term, even if it's through ad revenue generated through those devices. Mobile is going to be the most important market, so it needs to if Google is going to continue to be such a profitable company, which I'm sure they have every intention of continuing (since profitability allows them to do all the other interesting and cool things they do). My point is, that if Android is contributing so little money relative to their size now, that's not good long-term—because it's not going to support their current size or growth rate.

nl 15y ago

Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense. They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. http://abovethecrowd.com/2011/03/24/freight-train-that-is-android/ http://abovethecrowd.com/2011/03/24/freight-train-that-is-an... (Personally I think Android will be more than just a moat for Google. But it will never generate Apple-level profits, and that is just fine for Google.)

deleted 15y ago

[deleted]

fragsworth 15y ago

"iOS has completely overwhelmed Apple’s prior businesses, while Android contributes next to nothing to Google’s revenue. You decide who’s winning." Google's strategy is so fundamentally different from Apple's that this kind of comparison is ridiculous. Neither company has to outright "win" game in order for its endeavors to be successful.

amorphid 15y ago
Agreed. Google makes money mostly from advertising. Apple makes money mostly from selling gadgets. Both use mobile as a way of expanding their primary markets. They aren't playing the game, although there are of course superficial similarities.
GiraffeNecktie 15y ago
Also one of the drivers for Google is to prevent mobile from becoming a walled garden that is dominated and controlled by one company (Apple), which could easily decide at some point to replace Google (and there's already some talk that Siri will be the first step in that direction). Whether or not it's a major contributor to Google's profitability at this point in time, is really not so important as creating an independent mobile ecosystem where Google products can thrive.