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Android Businesses Cellphones Iphone The Almighty Buck Apple

Google Earns $2 Per Handset; Apple, $575 366

Posted by timothy
from the rough-figures-and-harsh dept.
Hugh Pickens writes "While Apple generates more than $575 in profit for every iOS device, and according to estimates in 2007 Apple earned more than $800 on every iPhone sold through ATT, Horace Dediu reports that Android generated less than $550m in revenues for Google between 2008 and the end of 2011, earning only $1.70 per year, per Android device — explaining how Apple is sucking up two thirds of the profit in the mobile phone business. Dediu's starting point is a settlement offer Google made to Oracle of $2.8 million and 0.515% of Android revenues on an ongoing basis. His assumption is that those numbers represent Google's revenue from Android to date. 'If this is the case,' writes Dediu, 'We have a significant breakthrough in understanding the economics of Android and the overall mobile platform strategy of Google.' Of course profitability is not the only reason Google is in the mobile phone business. 'P&L considerations were not the only (or even at all) factors in investment for Google. Having a hedge against hegemony of potential rivals, having a means to learn and develop new business and having a role in defining the post-PC computing paradigm are all probably bigger considerations than profitability,' writes Dediu. 'My take is that [Android] is not a bad business. But it's also not a great one.'"
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Google Earns $2 Per Handset; Apple, $575

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  • Re:Difference? (Score:3, Insightful)

    by Quartus486 (935104) on Sunday April 08, 2012 @07:36AM (#39611783)
    It's the carriers subsidising...
  • by Vinegar Joe (998110) on Sunday April 08, 2012 @07:37AM (#39611793)

    I zone out whenever I read crap like this......

  • $575? Seriously? (Score:4, Insightful)

    by Zibodiz (2160038) on Sunday April 08, 2012 @07:39AM (#39611801)
    What I'm incredulous about is the fact that Apple users spend an average of more than $600 on apps & markup. Sure, for addicts who buy an all the licensed accessories tons of apps, etc, but for the 'average' to give that much to Apple, it just shows how much an Apple product will cost you. I spent $150 on my Android device (refurbished no-contract from T-Mo), and have never spent a penny on apps or accessories, except for a $2 car charger. I've had it for over a year, and have a dozen or so apps, including several full games and some very useful, professional-grade reference utilities.
  • by Gobelet (892738) on Sunday April 08, 2012 @07:41AM (#39611815)
    This article compares Apple, a hardware maker, with Google and Android, who provides software to hardware makers? How is that a fair comparison?
  • Re:Difference? (Score:5, Insightful)

    by palindrome (34830) on Sunday April 08, 2012 @07:41AM (#39611817) Journal

    Or the fact Google doesn't sell phones?

  • by Swampash (1131503) on Sunday April 08, 2012 @07:45AM (#39611835)

    I spent $150 on my Android device (refurbished no-contract from T-Mo), and have never spent a penny on apps

    QED

  • Re:Difference? (Score:5, Insightful)

    by GiMP (10923) on Sunday April 08, 2012 @07:50AM (#39611859)

    Which was made by Samsung. This will change with the Motorola acquisition...

  • by BasilBrush (643681) on Sunday April 08, 2012 @07:52AM (#39611863)

    Except that Google wasn't excluded from the phone market. Apple used Google search, Google maps and YouTube as the shipping solutions. And Google gets the revenue from advertising on those.

    Contrary to your assertion, there have been previous estimates that Google does indeed make more money per handset from iPhones than Android.

    But because of Android, that income from iPhone is going to disappear. Apple is in the process of moving to other map and video solutions, and presumably has a plan to move from Google search too at some point.

    With Android now looking to expand across the whole computer spectrum including, shock horror, the desktop.

    Android is finding it tough to even spread to tablets. They have no chance on the desktop. Desktop requires apps in windows. By the time you add that facility to Android, you're pretty much back at Linux. And Linux has been failing to get a foothold on the desktop for 15-20 years.

  • So, hang on... (Score:5, Insightful)

    by itsdapead (734413) on Sunday April 08, 2012 @07:52AM (#39611865)

    If I interpret TFA correctly, this is all based on Google's figures for Android revenue in a settlement offer Google made to Oracle...

    I'm sure that Google bent over backwards to inflate that figure as much as possible by including every possible source of indirect income from ads, service sign up, user data collected, desktop users switching to Google Mail/Docs/Calendar to better sync with their phone etc. so that they could pay Oracle absolutely every penny they deserved. I can't think of any reason why they would try every legitimate tactic to make that figure as small as they possibly could. Can you?

    Google produced Android as part of a long-term strategy to attract people to their online services. There's going to be a lot of "intangibles" there that are very difficult to account for.

  • by BasilBrush (643681) on Sunday April 08, 2012 @08:09AM (#39611939)

    I'm sure Windows Phone will be as successful as the Zune, the Kin and the Spot Watch.

  • by openfrog (897716) on Sunday April 08, 2012 @08:22AM (#39611987)

    The whole idea of Android is provide Google with access to a market from which it would otherwise be excluded.

    Furthermore, as a user, if I care at all about the profits that those companies providing technologies make, my interests lie much more in one that does not make 575$ in profit on a phone it sells me.

    That is the whole idea of "opening" technologies, and actively investing markets that are on the verge of closing them.

    On this one, I would hope that Google makes more than 2$ on each phone it sells, so that I am not left at the whims of Apple.

  • by stms (1132653) on Sunday April 08, 2012 @08:31AM (#39612027)

    Comparing a software provider to a hardware provider? Thats like comparing apples to microsofts.

  • Re:Ads included? (Score:5, Insightful)

    by errandum (2014454) on Sunday April 08, 2012 @08:38AM (#39612045)

    The article still fails on showing what google gets out of all of this - Information. By using an Android phone you pretty much become a google centric person. You'll use their mail, calendar, contacts, news, etc on mobile and even shift your PC habits to google. In turn that will allow them to give you better adds and to charge more from the companies that serve them.

    Google's approach at android is pretty much the same as google's approach at e-mail. They gave you an e-mail service better than most payed services offered at the time (for free) just so they could profit from the information they gathered.

    This kind of news is misleading since Google pretty much has been using that business model everywhere with enough success to keep betting at it. It might not generate as much raw money as apple from each handset (even though they might get some from the Nexus line), but they still make more than enough from each smartphone.

  • by Kjella (173770) on Sunday April 08, 2012 @09:00AM (#39612139) Homepage

    I can believe that, take something as simple as the iPad Smart Cover... it's a very simple folding cover with a couple magnets, yet they want $40/70 for that, buying an extra official cable or charger is also hilariously expensive. Or just look up the prices on the 16/32/64 GB versions of an iPad and compare with the hardware costs, you don't pay $100 for another 16GB anywhere but Apple. Nor to you pay $130 to add a 3G/4G connection, you get complete 3G/4G routers [staples.com] for less than $100. Personally I bought the iPad 16GB wifi-only for $399 recently and I think it was worth it for the excellent display, but all my accessories are 3rd party. Compared to what I've seen with friends that's where they rake in the big bucks.

  • by recoiledsnake (879048) on Sunday April 08, 2012 @09:13AM (#39612179)

    I'm sure Windows Phone will be as successful as the Zune, the Kin and the Spot Watch.

    Anything Apple makes will be as successful as the Newton and Ping.
    And anything Google makes will be as successful as Buzz and Wave(and G+?).

    See, I too can make non-sequitur arguments by digging up past failures and ignoring successes like the XBox and Kinect(which is the fastest selling consumer electronic device ever).

  • by macs4all (973270) on Sunday April 08, 2012 @09:23AM (#39612213)
    So, we have a Slashdot article that's using figures from another Slashdot article from when AT&T had an exclusive deal with Apple.

    Not only that, but the original Slashdot article that is used as the "authority" for the Apple figures completely ignores the manufacturing cost of the iPhone.

    So here, we see Slashdot click-whoring (once again!).

    Newsflash! Companies make money on the stuff they sell!! Film at 11 !!!1!!!111!

    The "math" in both this, and the 2007 "Apple" article is so incomplete and just plain out-of-whack that this article is an embarrassment to not only Slashdot, but to "Journalism" in general.
  • Re:Difference? (Score:4, Insightful)

    by jellomizer (103300) on Sunday April 08, 2012 @09:25AM (#39612227)
    Financial Analysis is ripe with ways of twisting the truth. It happens all the time.
    Companies make it so they look like they are poor to the government to not pay taxes and Rich to the share holders to raise stock price.

    The first formula you get in accounting is A=L+E Assets = Liability + Share Holder Equity.
    So that means every risk you have is also part of an asset. Every Asset you have could be a liability.
    when you do your numbers for a news article you can either Press on the Asset to make it sound really good. Or focus on the Liability to make it sound bad.

    Numbers don't lie. But you need all the numbers to get the truth... We don't normally get all the numbers. and if we do most of us are either to afraid of the math or are too lazy to look at them and interpret it. We look at percentages and summarized data. Where they have been neatly prepared to show us what they want to show.
  • by Fred Ferrigno (122319) on Sunday April 08, 2012 @09:27AM (#39612231)

    But because of Android, that income from iPhone is going to disappear. Apple is in the process of moving to other map and video solutions, and presumably has a plan to move from Google search too at some point.

    Wouldn't that happen anyway? If Android didn't exist, do you think Apple would be content to leave that revenue to Google permanently, as a sort of "thank you" for not competing in the mobile space? That seems awfully nice of them. In fact, I think it might be illegal.

  • by mystikkman (1487801) on Sunday April 08, 2012 @09:50AM (#39612345)

    The Xbox is only a success because Redmond bought it's market position.

    And Google didn't buy it's market position in mobile by giving away an entire mobile OS for free to the OEMs. Can't believe how idiotic people can be in their hate and fanboyism.

  • by macs4all (973270) on Sunday April 08, 2012 @09:51AM (#39612349)

    The whole idea of Android is provide Google with access to a market from which it would otherwise be excluded.

    Furthermore, as a user, if I care at all about the profits that those companies providing technologies make, my interests lie much more in one that does not make 575$ in profit on a phone it sells me.

    That is the whole idea of "opening" technologies, and actively investing markets that are on the verge of closing them.

    On this one, I would hope that Google makes more than 2$ on each phone it sells, so that I am not left at the whims of Apple.

    No, instead you'd rather be left at the whims of Google and your carrier.

    And rooting/jailbreaking doesn't count. What counts is what ships on the phone; because not 1 user in 10,000 has the interest, or the ability, to root/jailbreak their phones, regardless of platform.

  • by mystikkman (1487801) on Sunday April 08, 2012 @09:56AM (#39612381)

    I'm sure Windows Phone will be as successful as the Zune, the Kin and the Spot Watch.

    Anything Apple makes will be as successful as the Newton and Ping.
    And anything Google makes will be as successful as Buzz and Wave(and G+?).

    See, I too can make non-sequitur arguments by digging up past failures and ignoring successes like the XBox and Kinect(which is the fastest selling consumer electronic device ever).

    Add Google TV and Chromebooks to the list of Google failures. Apparently, Chromebooks sold only a few thousands, ouch.

    http://www.eweek.com/c/a/Search-Engines/Logitech-Giving-Up-on-Google-TV-After-Losing-100M-344197/ [eweek.com]

    http://www.digitimes.com/news/a20111109PD222.html [digitimes.com]

    In June 2011, Acer and Samsung launched their Chromebooks ahead of other PC brand vendors, but by the end of July, Acer had reportedly only sold 5,000 units and Samsung was said to have had even lower sales than Acer, according to sources from the PC industry. However, Acer has declined to comment.

    But looks like it's fashionable here to rail only on MS' failures and not any other company's.

  • by mystikkman (1487801) on Sunday April 08, 2012 @10:05AM (#39612433)

    This article compares Apple, a hardware maker, with Google and Android, who provides software to hardware makers? How is that a fair comparison?

    For years, the Apple fanboy bloggers like Horace and Gruber claimed an Apple win based on the number of devices and made twisted arguments about how Android device shipments can never exceed Apple's. After having to eat crow because of Android outselling the iPhone by a huge margin, now they have shifted the goalposts and now the new metric is profitability. If Android makes more profit in the future, the new standard for declaring a winner will be 'sales by a company with a starting with a 'A' and ending with a 'e'.

  • by macs4all (973270) on Sunday April 08, 2012 @10:26AM (#39612527)

    I can believe that, take something as simple as the iPad Smart Cover... it's a very simple folding cover with a couple magnets, yet they want $40/70 for that, buying an extra official cable or charger is also hilariously expensive. Or just look up the prices on the 16/32/64 GB versions of an iPad and compare with the hardware costs, you don't pay $100 for another 16GB anywhere but Apple. Nor to you pay $130 to add a 3G/4G connection, you get complete 3G/4G routers [staples.com] for less than $100. Personally I bought the iPad 16GB wifi-only for $399 recently and I think it was worth it for the excellent display, but all my accessories are 3rd party. Compared to what I've seen with friends that's where they rake in the big bucks.

    So, I guess it's just an accident that no one can sell a tablet with equivalent features to an iPad (I notice you bought one, too) for less than an iPad? Apple must really be gouging, then!

    Oh, and it's a newsflash that companies make insane profits on "accessories"? How many HP laptops come with a power supply that will cost $70 to replace from HP? My old Nokia phone's car charger cost me $30 from the AT&T store, just because Nokia used a proprietary connector. Yet there weren't hand-wringing Slashdot articles complaining about those insane profits...

    I, too, use third-party Chinese junk accessories whenever possible; but don't single-out Apple for doing what every single manufacturer does with "Accessory" sales.

  • Re:Ads included? (Score:3, Insightful)

    by Mistlefoot (636417) on Sunday April 08, 2012 @10:42AM (#39612609)
    You do realize that Apple makes more than just smartphones, don't you?

    You quote the same one article that I was replying too.

    And from the article I linked to discussing the Samsung $5 billion: "“(While) 60-70 per cent of (Samsung’s) profit came from handset sales this quarter, ... with memory chip prices rising, chips will play a big part in second quarter profits,” said Kim Sung-in, a chip industry analyst at Kiwoom Securities."

    So $3 billion alone from handset sales this quarter.
    How much of Apples $6 billion is from handset sales?

    Apple don't say. But they do say "The Company sold 17.07 million iPhones in the quarter. Apple sold 11.12 million iPads during the quarter. The Company sold 4.89 million Macs during the quarter. Apple sold 6.62 million iPods."
    So less then 50% of the devices sold by Apple were handsets.

    Per your article, Samsung = 15% and per my link they made $3 billion. That would mean that Apple made $17 billion on iPhone sales and lost enough money on everything else to bring them down to the $6 billion profit.

    I don't believe your article is correct.
  • Re:Ads included? (Score:5, Insightful)

    by SerpentMage (13390) <ChristianHGross@ ... o.ca minus punct> on Sunday April 08, 2012 @11:55AM (#39613001)

    Why are people modding this person as a troll? Are Slashdot users that ignorant???

    http://www.appleinsider.com/articles/12/03/29/google_earns_80_of_its_mobile_revenue_from_ios_just_20_from_android.html [appleinsider.com]

    Here are March 2012 statistics that show how the stores are doing, and notice how 1.3% of apps downloaded and installed on Android devices are paid for!

    I would argue that slashdot mod's in this situation are the trolls not the person making the comment! Mod me down I don't care, but let's keep things at facts shall we...

  • Re:Ads included? (Score:3, Insightful)

    by LordLucless (582312) on Sunday April 08, 2012 @09:18PM (#39615741)

    Because he's trolling. The OP asked if it was including apps sold in the Google marketplace, which is a fair enough point. The parent responds by disparaging the idea that you can use "sold" to describe apps in the Android Marketplace.

    Yes, there's a lot of freeware (or adware) there, but there's plenty of for-dollars apps too - even if they don't dominate the place as much as they do on Apple's App Store.

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