Thursday, May 30, 2013

Android market share

KI see articles like this http://www.zdnet.com/is-androids-market-share-really-a-joke-7000016097/  and I have to laugh.  This guy is basically insinuating that profits from the initial sale of the OS or device + OS is where all money comes from.  What is he missing here is the fact that Apple sells hardware (with the OS) and services whereas Google is and always has been an advertising company.  Google uses its OS to reach people with advertising.  They are not concerned with monetizing the OS or their apps which explains why it is all free and available on so many platforms.  It is just a means to an end.  Comparing where the profits are derived for Google and Apple is not a valid comparison since they approach profits in very different ways.  If Google want profits from the apps and OS they surely would not have made it open source and given it away for free.  That is not the point.  Their goal is exactly market share because that means they have access to more people and data to better target ads and those ads drive Googles profits.

For Google Android is an upfront investment with a long term payoff.  Here is an article that shows it is paying off http://www.mercurynews.com/business/ci_23055285/google-profits-trounce-expectations-mobile-advertising-business-ramps but this is only the tip of the iceberg.  As Google gets is apps into many devices including TV's, Blu-ray players, phones, appliances, etc, it will better understand what people like and don't like person by person.  Then it can use that detailed information to support its advertisers products in a very timely and specific manner.  You don't just get blasted with ads.  Instead you get useful information based on what you want at the time and place.  For instance, Google Maps is the clear winner in maps and navigation.  This means when you are navigating and decide you need fuel, Google can point you to one of its advertisers gas stations.  For the gas station this beats nearly every other kind of ad.  In this scenario you never saw an ad.  It was just timely and helpful information.  This is the ways Google has become the advertising powerhouse it is.

So it baffles me when people (like the clown in the first article) tries to compare Google to Apple in specific profit streams.  Especially when those companies have such different profit streams and business models.  The only similarity they really have is they both make an OS for mobile devices.  We as consumers see them as competitors.  To Google, Apple is not a competitor in their prime business.  To Apple, Google is eating away at market share of their prime business.  Google biggest issue with Apple would be the fact Apple has such a closed ecosystem that Google is too limited and can't get the data or provide the services they need to the depth they need to sell more advertising.  Android has pushed Apple to slowly open this up a bit.  As long as Google can get their apps on iOS and get the rich data they need as well as provide the information flow to the user they don't really care if there are more iOS or Android devices.  For Google it is the total sum that matters.

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