Asia drives Android

Andy Rubin, the executive in charge of Google’s mobile software effort, said that international expansion lay behind the latest advance. Speaking in an interview with the Financial Times, he also predicted that a boom in sales in India, Brazil, Indonesia and other emerging countries would contribute to the fast growth rate for the foreseeable future.

Quoting independent research suggesting that Android has also come to account for half of smartphone shipments in China, Mr Rubin said that the open-source nature of the software had made it popular there. However, in the wake of Google’s dispute over censorship with the Chinese government, Android handsets shipped by China Mobile, the dominant supplier, do not carry the company’s search or e-mail services.

via / Technology – Booming Asia drives Google’s Android.

This was already confirmed by the data published here this morning.

Verizon alone or with the other US operators cannot account for the majority of Android volumes and anecdotal evidence points out that Europe is not contributing much more.

  • r00tabega

    Question – does Android's "open" nature really benefit Google in China (that bastion of IP)?

    When you have egotistical organizations like Verizon or the People's Republic of China using your "free" product, and replacing your services with things like Bing, Baidu, and VCast Store, is it all really worth it?

    Perhaps that will be their undoing? Or does Google think they have a hidden one ring

    • sha

      More people drown into your ecosystem (even closed or heavily customized, it's still Android), more developers learning and working on your platform and not competitor's, etc. Even with no direct profits, I guess it's still beneficial

      • r00tabega

        So this is the platform equivalent of the infamous saying "we're losing money on each sale but we'll make it up in volume"?

      • sciwiz

        It would be true if Google was selling Android, but as it seems your point is moot.

      • Iosweekly

        Google is all about the mobile search and ad revenue. While it makes no money directly from android, as long as android is the dominant platform for third party handset makers, it means Microsoft windows mobile isnt, and so there is no danger of Microsoft being the default search provider on those phones (even though they are exclusive on some android handsets, they had to pay for this arrangement).

        Plus google gets a cut from the android market sales.

      • But they are making money, at least according to Schmidt, Rubin et al

        I think the interesting thing about Android is that Google think they can control it via the 'soft' power they have; Google-branded HW, Android Market, customer demand for Google services. Also, as the developer of the OS they are able to make sure that their apps work best with it and make sure they have a first move advantage whenever new HW functions are supported e.g. NFC.

        I have recently been thinking that Google are crazy as it is so easy to fork and/or put bing on there. But now I think maybe they are crazy like a fox…

    • OpenMind

      That is the reason that I think Google is evil. Android hurts RIM, Symbian, even iOS a bit, yet not benefit Google. It is a greedy business to hurt competitors and benefit itself. And it is a pure evil intention to hurt others yet not benefit itself.

      • Narayanan

        I agree partly, but it is more like a bull in a china shop. They do have some powerful ideas, but do not understand the consequences of not having the control that has to go with it. Perhaps none of the Google engineers watched Spiderman 😉
        It also shows a underlying insecurity( high IQ and low EQ) that causes them to rush out with those ideas without thinking things through. Case in point is the endless strting of half baked betas.

      • sciwiz

        Yeah, how dare they give others control….

      • sha

        "Open source is evil"
        Microsoft's favorite tag line 🙂

      • Google's defense would be if they don't do it, someone else will. It's red in tooth and claw this business.

      • Survival of the fittest.

        Google's game plan may be to suck a lot of the value out of the OS market, but then capture what is left.

  • even though goog may not get direct search revenue in china they benefit from the blowing up of the Android ecosystem in China, the fruits of which can be exported all over the world.

    • FalKirk

      Your statement, as written, makes no sense to me. You concede that Google may not benefit financially from the introduction of Android into the Chinese market, but then suggest that Google gains an indirect benefit by disrupting…what exactly? Can you please elaborate?

      • I am not talking about google. I am talking about the android ecosystem, the people who make screens chipsets processors memory and apps. the android ecosystem. the more phones they sell in china whether goog gets search revenue or not, the better it is for ecosystem participants and the better it is for Android.

      • FalKirk

        Well, you said "even though goog may not get direct search revenue in china". So since you were talking about "goog" and since you were talking about search revenue I hope you'll understand why I did then and do now think you were talking about Google.

        The rest of your point about the "android ecosystem" is irrelevant. I doubt any of the manufacturers you mention are making more money by supply their products to Android than to any other operating system.

    • asymco

      Hardware components are not exclusive to the Android ecosystem. If anything, the components' price erosion and economies of scale benefit equally all device assemblers no matter what platform. Android is built on standard components.

      If there is any benefit from widespread adoption of "non-Google" Android it may be in the apps that are built for that platform. Perhaps a blossoming of Chinese app writing and distribution could be exported.

      However here again I struggle to see huge value. I remember when Windows was widely pirated in China and Microsoft looked the other way as they knew that expansion in China even without revenue would yield long term benefits. Eventually Chinese buyers would pay *something* in license fees. But Chinese software built for Windows was not a great export industry.

      In the case of Android there are no prospects for Android licensing (by the way this is not just on a whim of Google, Android IP is not "owned" by Google as it's open source and can't be sold legally). So Google won't wake up some day, decide to charge license fees and force a then-hooked world to pay up (as Microsoft did).

      And the Chinese software industry emerged but mostly for outsourcing, not original software titles on Windows. I don't see a generation of Android carrying Chinese engineers committing themselves to Google's tenuous mobile platform.

      I guess what I'm concluding is that Android has no barriers to growth but it has very weak network effects. Meaning it is unconstrained by licensing but it does not create loyalties or rents.

  • Fernando

    It might be beneficial to the Android ecosystem in general as long as it won't be too different from being almost a fork. If now developers like Rovio (Angry Birds) already have to supply a list of "supported Android devices", how bad it will be if even basic google services disappear?

  • KenC

    So, if Android or some Android fork is growing in the BRIC countries, which smartphone maker is getting hurt? Unsurprisingly, it's Nokia, and its Symbian phones.

    • Steko

      Don't fall victim to zero-sum thinking.

      Nokia looking good in Brazil:

      And even better in India:

      • Steko

        Just as a note Google Insights has a nifty little feature that lets you view search over time over the globe. Set it for a couple years and watch each OS or product wax and/or wane throughout the world over time.

      • Steko

        It'd be a pretty cool video to do a sequence for each major country with a video showing multiple platforms at once. You could see who's growing faster where, who's losing traction, etc.

        Another thing Insights drives home is how important carrier relationships are. You can see 1 country with completely asymmetrical adoption patterns to it's neighbors.

      • those searches could reflect a lot of things such as problems with the current phone you own and how to get rid of it. it also doesn't distinguish between feature phones and smart phones. obviously Nokia sells lots of feature phones in brazil and India. Nokia is the biggest loser as feature phones turn into smart. You know all those phones Andy is activating in Asia? they are coming out of Nokia's hide.

      • Steko

        You can see the top searches at the bottom. No one googles to find a non-smart phone to buy imo.

      • asymco

        Realize that 2G and GPRS and 3G are all being deployed into these markets, but a with few years delay after they are in high ARPU countries.

        Follow the network technology adoption and you will see which platforms go where. Nokia and RIM are popular in countries with weak mobile broadband. That's because they are good enough on no- to low-data rates. Once bandwidth ramps up expect bandwidth hungry devices like iPhone and Android to follow.

      • JonathanU

        How soon can we expect this to be implemented in the larger developing markets such as China, Brazil and India?

      • asymco

        China is moving quickly with 3G as we speak. India is lagging by one or two years behind China. Don't know about Brazil. Keep in mind that much of the roll-outs are urban area only.

  • Rob Scott

    This “After the US, we saw Asia go crazy,” seem to backup the previous article, maybe you should remove the disclaimer.
    This makes your analysis even more striking and you were brave to publish it without the confirmation that now most Android growth is in the developing world particularly Asia and will stay that way for the foreseeable future.
    Maybe with this confirmation from Google itself you need to look at what does it really mean, for users, developers, and Apple and its competitors.
    I have seen some of these $150 or less Android phones and they are not comparable to even the iPhone 3G. How is Android going to run on these underpowered devices? What does it mean for developers?

  • I'm thinking now of Blogger / Blogspot, which lets anyone create a blog in an instant.

    Once the blog is created, Google then encourages you to put Adsense on it, with clear steps laid out, and even prods you to open an Adsense account if you don't have one.

    Your blog goes live, and if you've put up Adsense on it, has the potential to earn money for you (and Google) immediately.

    It used to be that Google had strict guidelines on the kind of content your blog puts out before they approved your Adsense account.

    Now, even blogs hosting content linking blatantly to pirated movies, books, music and other media has Adsense on them, with Google's blessings.

    I think Google wants the same with Android. Let Android handsets reach far, wide and deep, and make it easy for developers of all kinds to create apps for the platform …

    … and, with nothing more than a click, insert a piece of Google Adsense code in the app.

    Just like Adsense on ubiquitous Blogger / Blogspot blogs, so will Google ads appear on apps running on billions of Android handsets, garnering tens of billions of views per day.

    Google just needs one measly US$ cent for each page view or click. The Android platform costs almost zero to Google. Making money this way is just too easy.

    • OpenMind

      Google can do Adsense without Android. Google are doing Adsense in PC without google PC OS. Also iPhone gives Google large amount of Adsense traffic and revenue. Why you want to kill the geese to get egg? With Android, Google not only alienate its formidable former partner, but also give potential weapon of mass destruction to all those Asian bottom feeders. I think one day those Asian vendors will disrupt current ecosystem that no one but a few still are standing.

  • Wilhelm Reuch

    Why pay the app developer to carry ads? Why not just dedicate a fixed area of the screen and display ads all the time without involving app developers? The most useful apps on android are from Google anyway.

    • kevin

      Oh, shoot, now you've given the carriers another concept to screw their customers with. If they can only figure out how to commandeer and control a part of the screen at all times (even in airplane mode) …

  • dchu220

    So Steve Jobs caught this a while ago when he called out Google's questionable reporting of Android 'activations'.

    I saw a Hello Kitty phone the other day in Taiwan. It was made with a customized Android OS. It didn't have Marketplace on it, but it did have the google search app. As long as it includes the search app, im sure google doesn't mind.

  • kevin

    So is Google counting those China sales, the ones without Google search or email, as Android activations? That has been the key, and irritatingly-never-answered, question all along.

    • dchu220

      Don't forget the Nook.

  • davel

    Who is reporting Android sales?

    I have looked at several quarterly reports and no one that I came across breaks out the numbers of Win phones, Android, etc.

    They may break out smart phones vs. other, but that is it.

    • kevin

      No handset mfr or carrier is reporting "Android sales." Google is "releasing" a number for Android "activations" per day though nobody knows exactly what that number means, and no analyst deems it necessary to question Rubin or Schmidt as they rattle off numbers. Does activations include just phones, or phones and tablets and ereaders? Does activations include "Android", "Android with Google", Android open source-based phones like OPhone, etc? Does activations include any re-activations (i.e., phone resold)? Does the number indicate a peak number or an average number per day?

  • MattF

    The separation between iOS and Android is getting rather interesting and rather complex. Geography, profitability, 'openness', integration, forking,…

  • John Booger

    "This was already confirmed by the data published here this morning."

    Oh my god. Seriously, your ignorance is absolutely unparalleled.

    • r.d

      perhaps you could start a blog then we shall see
      how your ignorance stock up against GWB.

      Bring it.

    • You actually make a good technical point despite yourself. More correctly put, it would be…

      "This report is a convenient addendum to my analysis earlier this morning."

  • Given Google's vast Add revenue from China and India, Android should really help, especially combined with Android's licensing revenue to Google.

    • FalKirk

      I think you're kind of missing the point. If Google Search and other Google proprietary services are stripped from Android before distribution in profits. To paraphrase (the character of) Ben Franklin, saying that a stripped version of Android benefits Google is like calling a cow a bull. He's thankful for the honor, but he'd much rather have restored what's rightfully his.

      • Iphoned

        I guess my sarcasm was too subtle?

  • I guess we should also watch Baidu search revenue – it should be accellerating if Android's China numbers are to be believed.

  • AlleyGator

    You know what's fun? Asking android geeks who their favorite Android manufacturer is.

    Is it:
    Motorola, who uses eFuse technology to thwart rooters
    Samsung, who offers a weak UI vs. stock Android, sometimes reviled as being an "iPhone-like" UI
    HTC, who has attracted enmity for failing to comply with the GPL for software they've modified
    LG, who made the… Well, I'm not sure what they've made, but the upcoming new Dual-Core "Star" phone looks promising!
    Dell, who made the Streak

    I don't have much of an opinion, but boy THEY sure do.

  • WaltFrench

    The "open" Android ecosystem notwithstanding, it's easy to imagine that in 5 years we'd look at today's Android with the same disinterest we now view Windows Mobile. “Yeah, maybe it was good for its time, but…”. Or, more apropos, how we would've sniffed at the clumsy Android Inc OS of 2005/6, before Google's out-of-nowhere revelation that smartphones could be touchscreen, pinch-to-zoom, not-keyboard-driven, mobile devices with installable apps and a visible OS.

    I mean, if an ad agency can have that type of vision in the past, what's to stop them from even more incredible insights and modes of business in the future?

    So I see no reason why Google should worry about monetizing Android in the future. Nothing to preclude them from leaving it forked and abandoned; the Koreans, Chinese, Malaysians, whoever will have a rapidly-depreciating code base unless they have evolved a complete, competitive software capability comparable to whatever we'll be doing then.

    Because it's obvious that Google, like all other businesses operating (successfully) in the space asymco follows, wants to be the dominant toll collector at the portal to whatever people want to do, while ensuring that everything else is generic and interchangeable.

    Yesterday, eyeballs; today, software in a cheap cloud; tomorrow, hardware; whatever.

  • Besides Google losing revenue from Android phones being loaded with Bidu, Yahoo and Bing, Google is also losing app sales as some of these phones also have locked down apps and/or are connected to private app stores. Some cheap Android phones and tablets in Asia aren't designed to run a lot of apps anyways.

    Also I wonder about page-views: if somebody is using Google on their mobile device they are probably not also simultaneously looking at Google on their Desktop so increasing mobile share might again not directly result in symmetrical increase in page-views (and revenue).

    Interestingly Google is the default search for all Apple devices (OsX and iOS). Google pays for the privilege but I wonder as phones are getting Bidu etc whether Google is making equal or more money from Apple.