Google’s Mobile Strategy Fails while Android Succeeds

by techsnarkblog

Android activations speak volumes for the platform: it is currently outselling Apple’s iOS devices by 50% (more or less) and they’re up to one million activations per day. Apple reported 365 million total devices sold back on June 11th, and Google announced 400 million devices activated at the end of June. When you consider Apple’s head-start, Android, as a platform, is succeeding.

The mobile browsing numbers complete the picture, though not in positive light for Google. The latest numbers show that iOS mobile browsing has grown to 65% of the market (from 53% in August 2011) while Google has increased their market share to 20% (from 16%). Google, by most estimates, makes between 3 to 5 times more money in advertising on an iOS device than they do from Android devices.

This means the majority of Android activations are of little benefit to Google. Consider that for a moment. While Android is out-selling iOS, Apple maintains a sizeable lead in mobile browser statistics and as a source of advertising revenue for Google.

Unlike gmail, Google+, and various other Google strategies, Android is costing Google real money. When you consider Google’s 12.5 billion dollar purchase of Motorola the rest might seem like a rounding error. This strategy is by no-means a profitable for Google thus far.

Meanwhile, other companies are also paying for this strategy. Microsoft currently collects between $5 and $15 from the majority of Android hardware manufacturers in patent licensing. Products like Nexus 7, which is being sold at-cost, has no royalty agreement to Nokia in seemingly sloppy execution. Even Apple is paying Nokia royalties.

Google will continue to push money at the problem, but I think they have been aiming at the wrong target until recently. By owning the platform, they felt they would own the advertising revenue. Instead, they’re needing to expand the platform to key services (like Google Now and Google Play) to remain relevant and competitive.