Who’s winning mobile war? The numbers don’t lie

October 18, 2011

First, let’s be clear — mobile isn’t a zero sum game as the market is expanding rapidly around the world. That is, for Apple to win Google et al don’t have to lose absolutely. However, we can pick relative winners and losers, and so far it’s pretty clear who’s on top.

Apple sold a lot of smartphones over the weekend. In fact, the company announced it sold more than 4 million iPhone 4Ses alone and that 25 million people have downloaded and are using iOS 5.

“iPhone 4S is off to a great start with more than four million sold in its first weekend—the most ever for a phone and more than double the iPhone 4 launch during its first three days,” said Philip Schiller, senior vice president, Worldwide Product Marketing, Apple. “iPhone 4S is a hit with customers around the world…”


via MacStories

Yes, double the record setting iPhone 4 and likely at least four times more than the best number posted by any Android, Blackberry or whatever. Further, the iPhone 4S sold 4 million units in just three days or half the number the Microsoft Kinnect, the fastest selling consumer electronic in history, did over the course of two months.

Yeah, the sound you just heard was a sonic boom and it emanated from Cupertino.

Follow the money

Whereas Google’s mobile revenues skyrocketed from $1 billion to $2.5 billion year over year, that’s really small change. How small?


via @jonfortt

The interesting twist is this calculation assumes Apple only sold the lower cost 16GB iPhone 4S. Moreover, it’s certain the mothership also sold many — perhaps millions — of its previous generation iPhone 4 and iPhone 3GS.

Additionally, that $2.6 billion doesn’t include app or peripheral revenue, the lion’s share of which goes to third-party developers and hardware makers.

And, the carriers? Market leaders Verizon and AT&T are both reporting record sales, while also ran Sprint claims its best sales ever — finally they have a hit after failing time and again with webOS and Android powered devices.

Apple’s happy and its partners are happy, too.

Winning or leading?

Again, Google et al don’t have to lose for Apple to win. Nevertheless, at this specific moment in time, there’s no question which company and platform are on top — that’s absolutely clear.

Where things get dicey, however, is over the long time. The sustainability of a platform depends on how much money the various partners can put into development and ecosystems, which comes straight out of revenue.

In Google’s case, they’re spending to develop an operating system so people will continue to use their search which drives ad clicks. Right now, this roundabout mobile business model is at best a loss leader.

Eventually, as the market saturates, mobile’s growth potential shrink’s toward zero and the game gets reduced to who can put up the biggest numbers.

Which leaves me asking the question again — why is Google in this business?. Seriously, Ice Cream Sandwich needs to be more than a home run…

What’s your take?

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5 Responses to “Who’s winning mobile war? The numbers don’t lie”

  1. Peter:

    Agreed. And laurels to Apple for the iPhone 4S.

    The question I have, though, is “How many of those people were already iPhone users?” I know I upgraded my 3GS to an iPhone 4S. The guys in front of me in line was doing the same, and the two guys in line behind me were in a similar boat (one had lost his iPhone a week or two ago and the other guy was upgrading a 3G).

    While selling inside the network is great money for Apple, it doesn’t really improve the installed base. And once that initial glut of upgraders is gone, the slow and steady march of Android will continue.

  2. Ken Berger:

    Actually Google’s mobile revenue is based on iPhones as much as Android’s. That is mobile ad revenue and almost half of that is from iPhone based ads.
    Until Google has Motorola they do not have any direct revenue or profits from Android.

  3. Nick Belli:

    I don’t think Google’s decision to enter the mobile hardware market has ever made much business sense. Google didn’t need to sell their own phones, they only needed to make sure virtually every phone sold used Google for search. Google is making no direct profit on Android phones. In fact I suspect on average Google makes more in advertising revenue on iPhones than on Android phones if market studies about how much more iPhone users use their Internet access than Android users.

    If Google was truly concerned that hardware makers would try to lock them off they phones, the potential enemy wasn’t Apple. It was and is Microsoft. As Jobs said, “Apple didn’t go into search…” But Microsoft did and is going after Google’s lunch with Bing. And while Windows Phone 7 has failed to take off, Microsoft has proved with xBox that if there is a market they really, really want, MS will keep trying. And they have the money and talent to brute force dominate markets. Is it inconceivable that MS would block or at least make Google difficult to use on Windows phones if Windows phones take off and regain market share?

    Maybe the whole Google vs. Apple meme is a mistake. Google started planning their phone before Apple released the iPhone. Maybe Google didn’t believe Apple’s phone would be the hit it was. Google might have discounted Apple’s ability to succeed and felt they needed to establish a smartphone environment favorable to themselves on their own.

    Or maybe the engineers in Google were too powerful and the business people overwhelmed by the engineers’ desire to make their own toys. Was the question, can we make a cool phone OS, not will we make more money spending capital on developing and giving away a phone OS and alienating one of our partners?

    If I was a stockholder, I would be outraged. Yes, Google is still very successful, but how has the money put into Android development added a cent to the bottom line?

    Another issue that cast further doubt into Google’s strategy:

    I may be wrong but does Google get any benefit out of Amazon’s use of the Android OS. It is my understanding that Amazon will pretty much strip all Google monetizing elements out of the OS and replace it with their own. Amazon has their own browser. Search for just about any product will go to Amazon’s store, not to any of Google’s advertisers.

    And if that isn’t bad enough, doesn’t it look like the same thing will happen in China. My understanding is that Chinese companies are taking the Android software and building it around the main Chinese search engine, “Baidu”. Again, Google spending time, money, and resources build a product competitors can take and kick them in the teeth with.

    It seems to me that Google was flying so high a few years ago, they made some arrogant assumptions about their ability to outdo any competition.

  4. jbelkin:

    First, Google thought they could replicate the “free” market with search to mobile. But Apple is proving to be a tougher competitor than Yahoo & MS in search.

    The reality is that “android” is a wide sweeping term that means very little. Only two android phone sellers WORLDWIDE even turn a profit in phone sales (LG & samsung). Apple makes 67% of ALL of the profits of the smartphone industry – and this was before the iPhone 4S.

    Android has 50% of the market but only 18% of app sales.

    Android phones have no price sustainability beyond a few weeks while the iPhone 4 was NEVER discounted in 20 MONTHS! And the iPHONE 3GS was the second best selling phone in that same time period!

    CONSUMERS have spoken – Android is a passable OS on a free phone or when saving up enough to buy an iPhone – otherwise, prices would stay high or stable – why do prices drop? out of the telcos goodness or when sales drop? SUPPLY. DEMAND. Simple as that.

    most reports put sales in the first weekend as 60% upgraders, 40% new which means much and means very little because it’s one weekend and that 96% loylaty retention is not just random. Plus $3 BILLION in sales for 48 hours is still $3 BILLON dollars – it’s more phones than Blackberry sells in a QUARTER now and of course, RIM is not pocketing $700 per phone sold.

    So, the numbers are something but other numbers tell a better story. Android is free to telcos. Each telco makes/sells their OWN version – it’s like Linux not Windows because Google is not making $300 per system sold as Windows was 30 years to MS. It’s also NOt a cohesive OS – with different versions, different chips, different resolution, different sizes, and different app stores.

    The only meaningless number is Android market share – because the rest of the numbers are like Android, a nice front screen but not much depth and much more telling.

  5. James Katt:

    Interestingly, with the iPhone 4S ushering in the age of the voice interface, the days of Google Ads are numbered.

    Siri leaves no room for ads in its search results.

    The more people use voice for search, the fewer Google Ad impressions will occur.

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