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Is Google's income from the iPhone offsetting its losses from Android: Cataloging Google's non-Google Phones

Google has created a partial list of phones that run Google services.

Google Phone Gallery.

I notice with interest that it’s called a Google Phone Gallery not an Android Phone Gallery.

What’s more, there is a distinction of All Phones and Phones “with Google”. Of course that implies that we can get a list of Google Phones “without Google” (or maybe more accurately, “with partial Google”).

To clarify, according to Google there are three categories of Android Phones:

  • Google Phones “with Google” have been optimized for use of Google Mobile Services, providing easy access to Search, Voice Search, Google Talk, Google Maps, Gmail, Sync, YouTube and Android Market (where available).
  • Google Phones “without Google” list includes Android phones that have the Android market, Search, Maps and Gmail. You can get this list by subtracting the Google Phones “with Google” from all the Google Phones.
  • Non-Google phones. Android phones that have no Android market or any Google services. You can get this list by taking a list of all Android phones (e.g. from pdadb.net) and subtracting all Google Phones.

I would also add a fourth category of Google phones:

  • Non-Android phones that serve up Google services just fine.

Since the list is not complete, I won’t tally it here, but it suggests a large number of Non-Google phones is possible.

[I drew the following Venn diagram to help explain the situation. The shaded areas are those which generate revenue for Google. The interesting struggle (marked with arrows) is between the non-Android Phones with some Google and the Android Phones without any Google.]

Now the question that needs to be asked is: How many of the Non-Google Android phones are built to compete with Google (e.g. on Search, Voice, Maps, Media and App sales)? And a second question: How are the Non-Android phones “with some Google” competing with the Non-Google Android phones.

In other words, from Google’s point of view: how successful are companies other than Google at delivering Google services in spite of competition from companies with Android phones delivering services that compete with Google?

The classic example being: how effective are iPhones with Google services at competing with Verizon Droid Android phones that deliver Microsoft services? In this scenario Apple is delivering value to Google shareholders while Verizon (using Android) is taking it away.

Is this trade-off a net positive?

In other words, is Google’s income from the iPhone offsetting its losses from Android?

  • Charlie

    Since Google pay Apple to keep Google as the default search engine on iPhone, do we know if Google are actually making a profit from iPhone and if so does it offset the loss of income from Verizon-Droid-Bing?

    • http://www.asymco.com Horace Dediu

      I can only assume Google is willing to pay for iPhone distribution because they see some opportunity to profit.

    • http://www.relentlessfocus.tumblr.com relentlessfocus

      The reported figure that Google pays Apple to place search on all Apple devices (including Mac) is $100,000,000 for this year.

      • Tim F.

        It's more useful to break it down by the original agreement on a per unit basis. The rumored numbers are firmer ($100 million for the first 2 years or 10 million devices), which gives $10 per user. It's safe to assume that Google mad more than an average of $10 per user, I think, but then you have situations like the massive Myspace deal just as MySpace began to decline (they may have lost money on that deal).

        This will certainly lead to some interesting modeling and pretty graphs. Not only the struggle Horace is observing, but as relentless focus points out, trying to map out Google's cost of acquiring ad targets by paying for placement — not all of those deals necessarily pay off.

  • http://www.bmob.co.uk/ marcus austin

    If I was an Android developer I'd be thinking of moving to a different platform. Google should have enforced the way Android looks and feels on phones from the start, rather than just let anyone use it, and then hide the OS under layers of confusing interface. This is too little too late.

  • danthemason

    Maybe Google was not being evil with Android. The iPhone's performance dominance told Google that was the horse to ride. But what of the remaining industry capacity? Google offered a path for their survival, an android life preserver while Google was in the IOS life boat. Verizon and others will snatch the preserver and try to go it alone. It's a treacherous ocean.

  • kizedek

    I guess it is hard to know what Google is or isn't getting out of each arrangement. I just checked Maps on my iPod touch and there didn't seem to be any ads in it. Does Google care if the Maps app is on my iOS device?

    1) Is this just part of the arrangement of paying Apple to make Google the default search option? As such, is just a bid at mindshare, so that I get used to Google Maps and keep bookmarks in it, and stop using other Map apps?

    2) Is it a calculated bid at tracking me so that they can better serve ads to me when I am browsing or on a desktop computer where I can be served ads? (I hope they can't link my iOS devices and my desktop computer to the same user and tracking history, but I suppose they can.)

    Since I do seem to spend time in mobile apps and "search" from within them, as Steve Jobs said, then it would be ironic if Google felt its most profitable course of action was to take out Apple iAds and place them in the Google iOS apps like Maps. That would be funny.

    Actually, what it would amount to is a more equitable sharing of ad revenue that more fairly includes the platform that people choose to do their mobile computing, the Advertiser, the App developer, and lastly the Ad Seller/Server.

    This is the business model that Apple has come up with to see that everyone is included and that it doesn't favor an incumbent giant who wants to milk its cash cow to the detriment of everyone else, including consumers (just as the studios and record labels have tried to do). This is the kind of "fresh" (there shouldn't have been a need for it) thinking that Google should have done for itself.

    • Z

      In order to use some/all closed-source Google apps like "Gmail, Android market" etc, a licensing fee has to be paid, which answers what they're getting out of "with Google" and "with some Google" phones. As for "with no Google Android OS devices", it still increases the number of advertising targets by one, as even with no Google apps installed, it's likely the owner of the handset will still use Google in some form through the browser if connectivity is available, allowing impressions to be served (even if no impressions are served, the potential of facilitating access to the Google ecosystem is enough).

      • Tim F.

        There are hidden costs and profits everywhere. I wouldn't be too sure that licensing is that great a source of profit. One area of hidden costs that comes to light with Horace's Venn diagram is that these blended devices also give other apps and services access to data that only Google may have had otherwise. If Google is displaced in social services, location services, analytics, advertising, general data-mining because they are providing an open platform that opens up similar licensing opportunities that Google can't oppose, they lose. Imagine a far simpler scenario where Google left, RIMM and Apple who both preferred and only permitted Google services because of their de facto standard and general excellence, to compete with Microsoft — Google could own a larger piece of the market they truly desire (not devices but data) than what they ma eventually end up with.

      • Tim F.

        That comma decided to wander off on its own ;-)

        That should be:

        Imagine a far simpler scenario where Google left RIMM and Apple, who both preferred and only permitted Google services because of their de facto standard and general excellence, to compete with Microsoft…

    • Cadillac88

      Actually, there are ads in the maps app. They are low profile so are easy to miss. If you search some areas you will notice names of businesses in small letters, sometimes denoted with restaurant icon ( knife&fork) or something; not with red pins like the result of a usual search. These show up regardless of what you searched for. I'll bet they get a little cash back from yellow pages. Can't be worth much but they are there. I suspect this will be developed into something much more at the right time.

  • Shaun

    Is the diagram supposed to indicate the size of Android v Non-Android phones?

    I would think the second bubble would be a lot bigger bearing in mind the current split in advertising impressions as 48% Nokia/8% Apple/3% Android.

    Source: http://uk.reuters.com/article/idUKLDE68J1LA201009

    • Nate

      Venn diagrams generally don't indicate size, merely the relationship between different categories (is a, is part of, overlaps with, etc.).

      And that Reuters article is kind of bizarre — it's drawing conclusions about the ad market by only looking at the reach of one ad provider. Not including Google's own ads (on their own or via AdMob) or Apple's iAds or anything.

      • Tom, the reader

        And google does about the same thing with its admob service: excludes all other ad providers, and counts just its own impressions. Millenial counts 'em all, putting Apple ahead.

      • famousringo

        I'm pretty sure Millenial also only tracks data from their own network. Analytics is bread and butter to these ad firms, so they're not too keen on sharing data with others. I don't think anybody can give an accurate picture of ad revenue share per platform.

      • Shaun

        InMobi are about the same size as AdMob but their coverage is less US based than AdMob or iAd. That's why the stats appear 'bizarre' compared to commonly reported stats from US-centric Ad companies.

  • Kafka’s Vault

    Betteridge’s Law would say no.

    But I also have the feeling that I don’t think history would look back and say that, other than a sense of ubiquity, the whole Android episode was not one of Googles finest. That one is gut, no law needed.

    • Tim F.

      I think Horace probably thinks the answer is NO now as well. But I also think Horace can foresee "open" biting Google in the ass eventually and costing them more than if there were 3 or 4 closed platforms and all but Microsoft's preferred and only allowed Google's services anyway.

      And certainly the present NO is actually a future NO. At present, Android is probably, at best, a zero sum game for Google.

  • Iphoned

    Google wave, google buzz, countless other google products now forgotten,….Android?

    Did google just get lucky with search?

    • Tommi

      Google didn't get lucky with search at all. It was their core competence. They seem to be very good in "computer stuff" and very bad in "human stuff". The problems that Google (superbly) solved with its search were all about computer stuff: they had that very smart algorithm and they were very good at managing huge loads data.

      Whenever Google has to actually mess with human beings, they seem to fail. Their ventures in social media and their futuristic collaboration stuff such as Wave are always over-engineered and under-designed. They get all that fancy technological infrastructure set up first. The actual users are an afterthought.

      In this light, Android is a very interesting case. Google is once again incompetent in "human stuff", failing to realize what tele operators and device makers actually want to do with an OS.

  • diesel mcfadden

    is there a standard manufacturer's licensing agreement for phones
    with "some Google"? I thought originally the idea was that if
    you wanted to build an android phone with stock android, that was open source.

    Then if you wanted Gmail, Android Market, etc. you had to take Google Search and/or pay a fee.

    It seems now that manufacturers can get "some Google" without taking all of Google and switch to non-Google search.

    Is that the case?

  • Rob Scott

    Looking at Ping and Game Centre the newly launched social networks, it looks like Apple tries to figure out how they are going to make money before they launch a product/service.

    Google does the opposite like its CEO said.

    We know that the Apple strategy works as all its endeavors make money. It is very difficult to say that about Google and its product outside of search, but we will see

    • Tim F.

      Google hires more economists than most technology firms. They get the laws of very large numbers quite well. I wouldn't discount Google's level of forethought in any of this. I do think they were more focused on Microsoft more than Facebook and Apple and didn't necessarily see how these two bigger threats could pursue new strategic avenues to forestall the threat from Google while defending their own core competencies. But the financials of making very small sums on billions of web interactions, foregoing profit to provide the benefit of stickiness to other money-making services — that, Google understands better than anyone.

  • Tom

    So, does it matter at all how many google services are on an android phone?

    For a more invasive example, consider a mobile application that perhaps reads your SMS messages looking for information about what kind of products your friends mention so that it can advertise to you more effectively. In practice, it's not profoundly different from what Google does with contextual advertising in GMail. It wouldn't surprise me at all if the possibility of doing exactly these kinds of things was a major factor in inspiring Google to create Android in the first place. As smartphones become ubiquitous, it's likely that users will be expected to give up more of their privacy in order to get access to the next generation of hot mobile applications and services.

    First it was msft with windows, then google with search: dominance brings a sense of permanence. That is, until a truly disruptive innovation undercuts it.

  • http://mac.com Jerome

    I'm testing the hashcash

  • Tom

    From Digital Daily, we find out where the WP7 are headed, and from whom:

    announce AT&T as the exclusive carrier of the first smartphones to run it–one from HTC, another from LG and a third from Samsung

    So, it's not just Android that attracts the biggest losers…

  • Kafka's Vault

    Sir, I totally agree.

    My hope on HP's webOS offering true technical and valid market competition are fading with them having chose Leo Apathetic as their CEO.

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