Google Aligns Itself with Losers: Why Android Will Never Beat Apple

by Jeff Wiener on August 19, 2010

As much as I’m sure several of the writers here at TheTelecomblog have been pricking their Steve Jobs voodoo dolls in hopes that Apple’s overall good fortune will soon come to an end, it is looking more and more like that will never happen—in the foreseeable future at least.

Despite the fact that these pseudo-spiritual efforts at bringing down one of the most popular mobile tech companies in the world has seemingly produced a string of bad luck for Apple–with reports that Android is outpacing the company in the operating systems race; news that a global supply manager for Apple has been charged with accepting bribes from suppliers; the fact that Apple’s mobile iAd feature is not panning out as planned; and the perpetual threat of companies gunning for that #1 spot– I am confident that Apple will retain its market dominance and eventually run Android out of town.

But how can this be, you may ask, with Android experiencing an unprecedented growth rate over the past year? The simple answer, the recent success of the Android OS has been a matter of quantity over quality, as throngs of mobile losers and midrange competitors have grabbed Google’s free OS to help turn around their slumping sales.

So while a strategy like this may have strong short-term effects, it’s the reason Android will never beat Apple. You want to kill the iPhone? Make one good device, not thousands of poor ones.

One needs only to look at the recent quarterly sales reports to realize that while Android may be outpacing Apple in terms of OS popularity, any single company producing an Android device is absolutely nowhere near Apple in the sales/profits rankings. Amazingly, despite only generating 3% of total mobile sales over this past quarter Apple has found a way to grab almost half (48%) of the $6 billion dollars of overall mobile profits, while the closest Android manufacturer, Motorola, managed to eek out a measly 2%.

Add to that the fact that both Apple and RIM have soared from a combined market share of only 7% in 2007 to a whopping 65% this year and you have an idea of how popular the incumbent Blackberry and iPhone smartphones really are.

But how do companies like Apple and RIM post such astounding numbers when they’re clearly dwarfed by Android in terms of unit sales and popularity? Simple, both these companies have found their niche; their specialty device(s) that they pour all their available resources into. For manufacturers using Android the situation is much different, as these companies pour relatively few resources into several Android devices to try and appeal to a wider market. While this strategy results in a market full of Android devices, it also results in none of them challenging the dominance of the iPhone.

In the end though, the cold hard reality is that Android will never see long-term success with this business model. If Google continues to depend on the mobile losers to market its revolutionary OS, Android will die; it’s really just a matter of time. Further, if Android does provide the sales boost these midrange companies are looking for, it will too be just a matter of time before these companies reinvest in their own mobile operating systems, as clearly that’s where the money is.

Beyond that, the fact that the biggest players in the game—Nokia, RIM, Microsoft, and Apple—have no need for Android means that the little-robot-that-could may forever be forced to hang out with the losers, never being part of the popular crowd.

So how will Android maintain its popularity? Good question, if I had the answer I’d probably be working for Google.

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{ 5 trackbacks }

TheTelecomBlog.com’s Top 6 Posts for August 2010 — TheTelecomBlog.com
August 13, 2012 at 12:16 pm
Taking the Droid out of Android: What Success will mean for Motorola — TheTelecomBlog.com
August 14, 2012 at 5:37 am
Android Loses Ground to Apple in OS Race — TheTelecomBlog.com
August 20, 2012 at 3:41 am
Samsung Ponders Life after Android — TheTelecomBlog.com
August 21, 2012 at 5:36 am
Will Android Destroy the World? — TheTelecomBlog.com
May 2, 2013 at 5:57 am

{ 18 comments… read them below or add one }

laptop August 19, 2010 at 6:34 am

Good Blog

Jordan Richardson August 19, 2010 at 6:34 am

I think a lot of Apple’s success comes down to having a remarkable marketing campaign. I’m sure the product is good and all, although I’m not really sure how much “superiority” there is to it in terms of anything significant. Sure, it may or may not have some bells and whistles and that’s all well and good. But I think Apple’s biggest component is its image as a company. People align behind it, lining up for products before they even know what they are.

And they’re also very forgiving as consumers. This whole antenna debacle could have ruined iPhone 4 sales, but the hype has been enough to float the product into the stratosphere. No other company could have gotten away with such a blaring blunder.

Matt Klassen August 19, 2010 at 12:58 pm

While I have no doubt that Apple is a superior marketing machine, they’ve built their empire on the back of one phone and, now, one tablet. I find it amazing that they can capture the profit share that they have with such a miniscule lineup of devices.

sha August 19, 2010 at 12:59 pm

“if I had the answer I’d probably be working for Google”

wow, you should start your own OS I guess :)

Mark August 19, 2010 at 2:40 pm

“Make one good device, not thousands of poor ones”…so you see the most recent HTC and Samsung Android phones as poor products?

Matt Klassen August 19, 2010 at 4:32 pm

I think Jeff’s point would be that the “poor” devices in question are only poor in the sense that they have nowhere near the popularity, sales, or market appeal of Apple’s singluar offering, the iPhone. Just look at Samsungs overall sales, capturing 10% of available profits this past quarter with a plethora of devices, while Apple captures 48% with just one (or two if you could the iPhone 3G).

At least that’s my take on it.

Mark August 19, 2010 at 5:08 pm

I have to confess that I’m not up on the numbers in terms of Profit margin V Sales but I think Apple are still benefiting from producing a product that at the time was revolutionary. But I think this is starting to change (in the UK at least) and people are now not willing to pay the over inflated prices for the Apple logo when there are alternatives which are equally as good/better.

I think the profit figs in years time will tell a different story. There is a trend …Android sales up…others down…maybe its just a matter of time before that trend is reflected in profits?

Also does it matter if the android profits are spread across different suppliers? Why does that put the OS at risk? Producing your own OS is clearly seriously costly and risky and the early signs are that the latest Microsoft attempt is already outdated before its even been released.

I would love to see a breakdown of those numbers, 3% of the total sales but nearly 50% of the total profits…I think the Apple marketing boys have got involved! :o )

Joel August 19, 2010 at 5:11 pm

Don’t forget the iPod. Even with all the Macs out there, and any other incarnation of computers Apple has created, me thinks that the iPod really started the whole apple trend for Mr. Jobs, and I believe Steve Wazniak as well. I’m not sure why the iPod was sooooo popular as there were and are so many other alternatives that work just as well if not better then the iPod. How did Apple get such a name that people just had to have? The iPod now in “Touch” version is still very popular, but then came the iPhone. I’ve never had one, but I still don’t get that one either. But it’s incredibly popular, and seems everyone just has to have one. I feel old, and don’t get the whole Android thing still, so I’ll just stay neutral on that. As for the iPad, it hasn’t been out long enough yet to see what that will do in the market place. Guess we’ll see soon enough.

Matt Klassen August 19, 2010 at 7:10 pm

Joel,

Great point. I’ve thought that for a long time. Why is the iPad still the go-to MP3 device? I think the point I’ve made in several of my posts over the past year still rings true. If you build an MP3 device that does things “just as well” you’ll never unseat the popular choice. If you build a device that does things better, you better make it affordable and advertise the hell out of it, otherwise everyone will still go with the popular choice.

Jordan Richardson August 19, 2010 at 8:19 pm

“I find it amazing that they can capture the profit share that they have with such a miniscule lineup of devices.”

Yes, through marketing.

If you look back into the history a little, you see Apple used to be the underdogs of the computer world. They flipped that role around with the release of the iPod, marketing it in such a way that soon enough everyone was using the little players and the name was ubiquitous. You weren’t listening to Walkmen anymore; you were using iPods. And even if you didn’t have an iPod (maybe a Sansa View or something), it was still being called an iPod. Marketing.

You can’t just “advertise the hell out of it.” You have to advertise it the “right way” and Apple has done that brilliantly. Using their underdog position was the smartest thing that company ever did. They sold a lifestyle with their products by illustrating the “connectivity” and “style” you can have with the iPod, iPhone and iPad. One product literally led to the others.

Jeff Wiener August 19, 2010 at 8:35 pm

Hey Mark,
 
Thanks for the comment. While I may have overstated things a little, I think my core argument is sound. Apple has found a way to combine in-house OS development with one particular marquee smartphone. I think once these smaller manufacturers (like Motorola or HTC) achieve the increased profit margins they hoped Android would bring them, you’ll see them abandon Google’s OS with startling speed. The more parts of the mobile assembly line (as it where) you can do in-house, the more money you’ll make.
 
Further, Matt just about covered what I meant by ‘thousands of poor [devices]‘. The point I was getting at is that no one Android phone has come close to what Apple has managed with the iPhone. Does this mean those phones are terrible? Absolutely not. I only question why no one Android phone has seen even a fraction of the same success as the iPhone. If these companies are hoping to unseat Apple, the iPhone, or the iOS from the market dominance each is enjoying, it will most likely be from one or two serious competitors running Android, not a thousand Android phones competing against each other.

Jeff

Mark August 20, 2010 at 4:18 am

Hi Jeff,

Yep..well I cant argue with the numbers..Apple clearly are doing something right with that profit share.

But I cant help thinking that timing is clouding the numbers, the smartphone alternative to the Iphone is in its infancy (and clearly smartphones is where the profits are). HTC and Samsung are now producing phones that are considered to be as good/better that the Iphone, but this has only happened in the last 3-4 months.The app argument between Apple and Android is now leveling out as well.

The buzz around Android is now hitting the streets not just the Iphone/apple bashers. In the UK you now see the green robot in high street retailers windows.

I’m still unsure about the manufactures dropping Android, the cost and risk of producing your own OS is big, just look at MS, there new OS is already being considered to be outdated before its even been released. Also the reason why there is a buzz around Android is because more manufactures are getting on board. Thats free advertising for all involved.

Its also interesting to note that the numbers that have been used do not include profits from HTC!

Mark.

dolphin February 13, 2011 at 1:45 pm

6 months later…

http://reviews.cnet.com/8301-19736_7-20030974-251.html

Looks like you have to eat back your words now….

Matt Klassen February 13, 2011 at 8:54 pm

Dolphin,

I think Jeff’s point is still sound, as all Android has proven is that its present on more devices than Apple’s iOS is (a point Jeff clearly conceded). The point of the article is that Android finds its success in quantity, not quality, and it remains to be seen what companies utilizing Android will do when it becomes more profitable to create and maintain their own mobile OS like Apple does.

Primal March 23, 2011 at 2:14 am

I have to agree. As an owner of an HTC Desire, I’m really, really frustrated with its severe lack of quality apps. Facebook, Skype and even GOOGLE Translate all work better on iOS, and by “better”, I mean they just work. The Android equivs of their iOS bretheren often lack the basic funamental options, abilities or functions that make Android apps at least lacking and at worst, broken or useless.

Android can easily be compared to the inventions of “Data”, the Chinese kid in “The Goonies”. Even his super-blinder-torches ate up the batteries (another Android curse).

Android: The Wallmart of phones.

rj5555 December 28, 2011 at 10:31 am

Now in Dec 2011, how stupid looks this blog post

LOLEd at “the fact that the biggest players in the game—Nokia, RIM, Microsoft, and Apple—have no need for Android means that the little-robot-that-could may forever be forced to hang out with the losers, never being part of the popular crowd.”

Matt Klassen January 2, 2012 at 1:50 pm

RJ, I don’t think any of this looks stupid. Even at the time it was written the post acknowledged that Android would continue to outpace Apple and other competing operating systems well into the future. That wasn’t the point.

The point of the piece was that with Android Google was offering mid-range companies like Motorola, Samsung, and HTC a much needed lifeline to grow their respective mobile brands. Once they’ve grown their brands, I still would look for them to abandon Android. The day hasn’t come yet, so it may be too early to LOL.

Matt Klassen June 18, 2012 at 2:02 pm

Almost two years after this original post it looks like at least some this bold prediction is starting to come to fruition, as Samsung is rumoured to be leveraging its success with Android into building its own in-house mobile OS, a move that will likely see the only current successful Android partner eventually abandon the platform altogether.

http://www.thetelecomblog.com/2012/06/19/samsung-ponders-life-after-android/

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