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Apple iOS vs. Google Android
[December 28, 2010]

Apple iOS vs. Google Android

Originally posted on VoIP & Gadgets Blog, here:

There was an interesting discussion of iOS-vs.-Android news that began with this report by Seth Weintraub for Fortune. He explains in the article the downward spiral cost of creating smartphone components and the end product smartphone as well. He also says Apple could be in big trouble as Android activations surpass iPhone because of the lower cost of Android phones. Seth writes:

Cheap smartphones could change the way carriers price contracts here in the U.S.

Whatever the case, if you thought Android going from 30,000 activations a day to 300,000 activations/day was impressive, 2011 might be an even bigger growth year for Android.

Growth targets are just starting to trickle out, but HTC, who make high end Android devices and a few Windows Phone 7 devices expect to triple their 2010 output in 2011. Yet if things play out the way Rubin, Google, Broadcom and HTC hope, even that may wind up being a conservative estimate for Android growth. What's most interesting is that unless Apple (AAPL) has a plan to keep up, their iPhone, once one of the only usable smartphone games in town, may wind up back where most Apple products are slotted-- at the top of the market, affordable only to those willing and able to pay a premium for Steve Jobs' aesthetic sensibilities.

In other words, iPhones, like Macs in the 1990s with only be owned by loyal Apple aficionados or people who like to pay more for high-end stuff. An interesting theory, which Daring Fireball took offense to:

I expect better from Weintraub. He says the iPhone “may wind up” relegated to the top of the market. But isn’t that exactly where the iPhone started, and has remained, from 2007 through today? The key is how much of the “top”. There’s a big difference between, say, dominating the top 5 percent of a market and the top 30 percent of the same market.

In July 2007, by some measure of the word “usable”, Apple had 100 percent of the market for, to use Weintraub’s term, “usable smartphones”. Things only look disastrous for Apple if you count their ever-declining share of “usable smartphones”, rather than the company’s share of phones, or even just smartphones.

I'll also add that there are way more apps for the iPhone vs. the Android, and I prefer the user experience of the iPhone, however, Android is catching up fast.

Daring Fireball hits the nail on the head when he writes:
Android isn’t like Windows. Windows was created to make massive licensing revenue for Microsoft, and to serve as a platform for additional sold-for-profit software like Office and Exchange. Google gives Android away free of charge, profiting only indirectly (but, perhaps, handsomely nonetheless) by delivering mobile ads. There&rsuo;s never been anything like Android before. But there’s never been anything like iOS before either.
Daring Fireball brings up something that has been missing from the Apple iOS vs. Google Android discussion and that is Google only makes money from mobile ads and the search data from when you search on Google from your Android device. Google gets zero, zilch, nada for any phone manufacturer selling Android phones. This is where the wildcard comes into play - Microsoft. By default Android's default search engine is Google. Now, what is to stop Microsoft from spending millions to "buy" that premium position from carriers and make Bing the default search engine? Nothing!

I expect Microsoft CEO Steve Ballmer, sitting on $40 billion in cash, will go on the offensive and undercut Google's sole revenue source from Android. Android itself won't suffer, but Google will get the short end of the stick. Microsoft is betting big on Windows Phone 7 and anything they can do to knock Google down a peg helps them. Google is spending millions developing Android and giving away the operating system for free and the revenue stream (search/advertising) which is supposed to go to Google has been hijacked by Bing because Microsoft paid to play. Then we will have an interesting 3-way race between Apple, Google, and Microsoft.

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