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Google Earns $2 Per Handset; Apple, $575

timothy posted more than 2 years ago | from the rough-figures-and-harsh dept.

Android 366

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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Ads included? (5, Interesting)

Anonymous Coward | more than 2 years ago | (#39611755)

Do "Android revenues" include advertising, e.g. ads shown in apps?

Still, Apple does get to pick the cream of the crop.

Re:Ads included? (3, Interesting)

reub2000 (705806) | more than 2 years ago | (#39611767)

Or items sold through the market?

Re:Ads included? (3, Interesting)

BasilBrush (643681) | more than 2 years ago | (#39611887)

"Sold" through the market? Android apps are mostly free adware.

Re:Ads included? (-1, Redundant)

Anonymous Coward | more than 2 years ago | (#39611929)

Mod parent down. Why was this not marked "Troll", or "Idiot"?

No matter how they scream about persecution, like the christians who still dominate the U.S., Apple fanbois still rule /.

Re:Ads included? (1)

burne (686114) | more than 2 years ago | (#39611999)

Hardware, contract (Apple gets a kickback), Apps and services.

For what started out as a hippie-outfit they've become quite adept at the ways of the Capitalist.

(Lots of Apple gadgets around me so obviously I don't care about the success of others. Good for them, enjoy it to the most..)

Re:Ads included? (4, Informative)

poetmatt (793785) | more than 2 years ago | (#39611911)

Most notably android doesn't include what anyone else makes off the phones.

Android: "$2".
developers: $50

manufacturers: some amount.

Since apple is involved with all of the above, they're naturally including all of that. Which is not exactly an apples to apples comparison.

Re:Ads included? (5, Funny)

Anonymous Coward | more than 2 years ago | (#39612049)

Which is not exactly an apples to apples comparison.

Because this is an Apples to Androids comparison, ya insensitive clod!

Re:Ads included? (5, Interesting)

Karlt1 (231423) | more than 2 years ago | (#39612061)

Most notably android doesn't include what anyone else makes off the phones.

Android: "$2".
developers: $50

manufacturers: some amount.

Since apple is involved with all of the above, they're naturally including all of that. Which is not exactly an apples to apples comparison.

Android manufactures aren't exactly getting rich either....

http://www.tweaktown.com/news/23334/apple_and_samsung_make_up_95_of_all_handset_profits_in_q4_2011/index.html [tweaktown.com]

"A new study from Canaccord Genuity is claiming that Apple and Samsung account for a combined 95-percent of all handset profits in Q4 2011. Apple accounts for 80-percent of profits, while the company behind the GALAXY range of handsets, Samsung, takes 15-percent. The remaining 5-percent is left to all of the other manufacturers."

Re:Ads included? (1)

AmberBlackCat (829689) | more than 2 years ago | (#39611925)

There also needs to be some clarification of how the numbers can be compared since the apple numbers are for a three-year period and the Google numbers are "per year, per Android device".

Re:Ads included? (5, Informative)

SolemnLord (775377) | more than 2 years ago | (#39611975)

Do "Android revenues" include advertising, e.g. ads shown in apps?

Yes. That's where the gross majority of Google's revenue from Android comes from. The Asymco link breaks it down, and points out that Google also makes between four and five times that much per iDevice, since Google is the default search engine on iOS. Google's ad-based revenue lets it worry about revenue per smartphone [asymco.com] , not just per Android smartphone.

Re:Ads included? (5, Insightful)

errandum (2014454) | more than 2 years ago | (#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.

Re:Ads included? (-1)

Anonymous Coward | more than 2 years ago | (#39612143)

You'll use their mail, calendar, contacts, news, etc on mobile and even shift your PC habits to google.

ITYF those are the apps that most of those who root their phones delete first...

Re:Ads included? (2)

Nerdfest (867930) | more than 2 years ago | (#39612161)

You can quite easily use an Android phone with *any* Google applications, although few do as the Google apps are quite good. There are lots of third party replacements for all of the mentions apps. If you install a custom ROM you must actually download all the Google apps separately.

Re:Ads included? (5, Informative)

Karlt1 (231423) | more than 2 years ago | (#39612041)

Google claimed in front of a congressional hearing that 66% of all mobile searches come iOS devices. Google reported pays Apple $100 million a year for being the default engine on Apple devices.

Makes me glad (-1)

Anonymous Coward | more than 2 years ago | (#39611759)

I invested a lot more more money in AAPL than in GOOG a few years back.

Difference? (1)

Anonymous Coward | more than 2 years ago | (#39611761)

What explains such difference? Apple's hardware doesn't seem to be inferior? The device's prices seem to be comparable, as far as top tiers are concerned... Is the difference...Foxconn?

Re:Difference? (3, Insightful)

Quartus486 (935104) | more than 2 years ago | (#39611783)

It's the carriers subsidising...

Re:Difference? (5, Insightful)

palindrome (34830) | more than 2 years ago | (#39611817)

Or the fact Google doesn't sell phones?

Re:Difference? (0, Informative)

Anonymous Coward | more than 2 years ago | (#39611827)

They don't?

http://www.google.com/nexus/ [google.com]

Re:Difference? (4, Insightful)

GiMP (10923) | more than 2 years ago | (#39611859)

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

Re:Difference? (4, Informative)

palindrome (34830) | more than 2 years ago | (#39611881)

Let me rephrase...

Google do not manufacture devices. The moment an iPhone is sold Apple makes a good chunk of profit, when an Android phone is sold Google gets nothing.

Re:Difference? (2, Informative)

BasilBrush (643681) | more than 2 years ago | (#39611917)

No they don't. That's a Samung phone. Google don't manufacture it, contract it for manufacturing, handle it nor sell it. The only thing they make on it is the standard licensing fees for Android that they make from any other phone that carries the Android trademark.

Google just used it as a flagship for a particular version of Android. That's why it' singled out on the Google site.

Re:Difference? (1)

LordLucless (582312) | more than 2 years ago | (#39611985)

No, the Nexus lines are a bit more closely-related to Google than other phones. The Nexus devices have all been marketed by Google, have all had a vanilla Android installed on them, and have generally been well-supported by Google themselves in terms of updates. They're basically Google's reference implementation of Android hardware.

Re:Difference? (5, Informative)

realityimpaired (1668397) | more than 2 years ago | (#39612007)

I was going to moderate, but that's the second time you've posted flat-out wrong information on this thread...

The Google Nexus carries the Google name, because Google commissioned it, and set specific guidelines for how it's to be used/sold. It was manufactured by Samsung, and most of the profit goes to Samsung for it, but there are certain rules governing how that particular phone can be sold, and those are set by Google.

For one, the Nexus can't be sold with a network lock. It's sold as a "reference" device, and is unlocked to any network.
For two, it is not allowed to have any manufacturer-specific branding, and is sold with a stock unmodified Android.

There's other differences, but those are the big ones.

Re:Difference? (1)

Karlt1 (231423) | more than 2 years ago | (#39612067)

For one, the Nexus can't be sold with a network lock. It's sold as a "reference" device, and is unlocked to any network.
For two, it is not allowed to have any manufacturer-specific branding, and is sold with a stock unmodified Android.

http://www.geek.com/articles/mobile/pure-google-verizon-sneaks-two-bloatware-apps-onto-the-galaxy-nexus-20111117/galaxy-nexus-crapware-2/ [geek.com]

Re:Difference? (2)

nurb432 (527695) | more than 2 years ago | (#39611979)

That was my thought. They are comparing ( sorry about this ) apples to oranges..

Re:Difference? (-1)

Anonymous Coward | more than 2 years ago | (#39611853)

In a William Shatner as Denny Crane voice:

Proprietary == WINNER!

FOSS == LOSER!

Re:Difference? (1)

jellomizer (103300) | more than 2 years ago | (#39611907)

You buy an iPhone you buy a Device made by Apple with Apple Software. When you buy an Android phone you get a device made by some other company and the OS made by Google. Google is getting $2.00 per user for use of the OS.

Now if we had good Journalism how much profit is does hardware manufacturer make on their phones+ Google. This story reeks of Apple hater to me.

Re:Difference? (1)

Anonymous Coward | more than 2 years ago | (#39611941)

This story reeks of Apple hater to me.

To me it seems more like Apple fan, since they generally like to brag about how much money Apple makes from its products in the mistaken belief that it's a selling point.

Re:Difference? (1)

medcalf (68293) | more than 2 years ago | (#39612021)

Don't know if Dediu is a fan of Apple or not, but what does that have to do (either way) with his abilities as a financial analyst?

Re:Difference? (0)

Anonymous Coward | more than 2 years ago | (#39612047)

The point is that Apple fans like to try to make Apple look good by highlighting statistics that don't actually matter, and certainly don't reflect in any way upon the quality of the respective products.

Re:Difference? (0)

Anonymous Coward | more than 2 years ago | (#39612059)

It's not really a selling point, it's more often than not brought up for the lulz factor. Freetards gets their panties in a bunch when shown that their pet company and pet OS is neither particularly profitable, nor as successful as they like to pretend.

Desktop market share is often brought up for the same reason: nobody particularly cares much one way or the other, but it's always fun to watch the freetards flail and squirm.

Juniper and Cisco get brought up for the same reason as well, whenever freetards get all uppity about Linux world domination because of that one Linksys model. Same for QNX, VxWorks and the Zilog Z-80 when they get all ZOMG ZOMG EMBEDDED!!!!1111two

Re:Difference? (0)

Anonymous Coward | more than 2 years ago | (#39612151)

Aren't you mistaken about something?

Lulz factor in this is how happy Apple fanbois are to point out "Just look how Apple's nickel-and-diming us on overpriced electronics! Pure genius!"

Re:Difference? (2)

peragrin (659227) | more than 2 years ago | (#39612017)

Considering that microsoft makes $5 per device on andriod google is getting screwed.

Also how is apple doubling their money on devices? Carrier subsidies shouldnt be paying that much to the manufactuerer.

Re:Difference? (-1)

Anonymous Coward | more than 2 years ago | (#39612133)

The parent post just reeks of apple fanboi to me.

Really kid, your side is winning, you're ultra hip, apple shiny makes you more attractive, what more do you want?

Let people point out how much coin apple is extracting from their captive base. What's the harm?

Re:Difference? (2)

jbolden (176878) | more than 2 years ago | (#39612159)

There have been lots of articles on that. It depends what you want to include. Apple spends a lot more on advertising because the manufacturers generally cobrand with the carriers. Apple spends much more on development. Apple is starting to subsidize manufacturers of parts, especially memory. Samsung uses its own manufacturing facilities and Motorola its own chips. Apple owns its own stores. Apple runs their warranty program at a loss while the Android carriers don't. Apple has crossover marketing opportunities that the other manufacturers don't so even comparing advertising costs is complex.

So it really isn't if you will excuse the pun, an apples to apples comparison. In general though, Apple's margins are higher. Gross margins of about 50% vs. 60% on high end phones. On lower end phones the margins fall for both of them. For example on the 3G Apple isn't just giving up the $200 in price but another $50+ (over 2 years) in subsidy. They aren't saving nearly $250 on cheaper parts and lower support costs. And this drives margins down to around 20-30%.

On the other hand Android OS costs are much higher than Apple's. Android allows for much greater carrier customization and much greater device diversity. On the upside Android costs are mostly born by the carriers as a way to upsell other features.

If you are interested Google, there is a lot out there on this. But easy comparisons are facile.

Still More Than Google Makes On Apple Devices (4, Interesting)

rtb61 (674572) | more than 2 years ago | (#39611765)

The whole idea of Android is provide Google with access to a market from which it would otherwise be excluded. So what Google makes on Android is still a whole lot more than what it makes on iPhones.

With Android now looking to expand across the whole computer spectrum including, shock horror, the desktop. That gives Google access to the whole market, regardless of the efforts of Apple and of course M$.

Re:Still More Than Google Makes On Apple Devices (2)

kthreadd (1558445) | more than 2 years ago | (#39611787)

All in the name of free and open source software.

Re:Still More Than Google Makes On Apple Devices (4, Insightful)

BasilBrush (643681) | more than 2 years ago | (#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.

Re:Still More Than Google Makes On Apple Devices (5, Informative)

Swampash (1131503) | more than 2 years ago | (#39612121)

there have been previous estimates that Google does indeed make more money per handset from iPhones than Android.

Not estimates, it's in Eric Schmidt's testimony before Congress. Fully two thirds of Google's revenue from mobile comes from Apple devices.

Re:Still More Than Google Makes On Apple Devices (1)

SerpentMage (13390) | more than 2 years ago | (#39611877)

Wrong...

The problem here is that Google is doing a garbage job of making sure that the experience of Android remains good. As a result, IMO Android will become a phone for the cheap and those that do very little. Thus there is little ad revenue to be gained as well. Android IMO is opening the door to getting trumped by Microsoft and Nokia. Once people start making the decision between iPhone or Windows Phone, Android is completely clustered effed...

Right now I would not be betting for Android to keep winning! BTW look at the stats for Windows Phone in Europe, not amazing, but not disheartening either...

Re:Still More Than Google Makes On Apple Devices (4, Insightful)

BasilBrush (643681) | more than 2 years ago | (#39611939)

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

Re:Still More Than Google Makes On Apple Devices (2, Insightful)

recoiledsnake (879048) | more than 2 years ago | (#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).

Re:Still More Than Google Makes On Apple Devices (0)

Anonymous Coward | more than 2 years ago | (#39612181)

It's already sold way more then all of those combined. You need to look up actual sales figures.

Re:Still More Than Google Makes On Apple Devices (1)

jbolden (176878) | more than 2 years ago | (#39612173)

. As a result, IMO Android will become a phone for the cheap and those that do very little.

You are forgetting a 3rd demographic those that want hardware diversity. For example Androids with large screen are really popular with women who carry their phone in their purse and want a mini tablet experience. Cheap was the first demographic (i.e. people wanted low end hardware).

The real interesting issue is whether hardware diversity will be a positive enough experience to compensate for the lack of quality in the total experience. I suspect not, but I wouldn't bet a lot of money on it.

Re:Still More Than Google Makes On Apple Devices (1)

jo_ham (604554) | more than 2 years ago | (#39611955)

What are you talking about? Apple's "efforts" to exclude Google? By using Google as the built in search engine, shipping a dedicated Google Maps app that comes built in, and a built in YouTube application since the introduction of the iPhone and on every version of iOS since before it was even called that?

I guess "competing with Google" = "trying to exclude them".

Re:Still More Than Google Makes On Apple Devices (1, Insightful)

openfrog (897716) | more than 2 years ago | (#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.

Re:Still More Than Google Makes On Apple Devices (1)

zippthorne (748122) | more than 2 years ago | (#39612053)

For now, they're both good choices. Because we need Apple and Google to protect us from the whims of the liquid bell-inator.

Re:Still More Than Google Makes On Apple Devices (2)

Flytrap (939609) | more than 2 years ago | (#39612199)

The whole idea of Android is provide Google with access to a market from which it would otherwise be excluded. So what Google makes on Android is still a whole lot more than what it makes on iPhones.

With Android now looking to expand across the whole computer spectrum including, shock horror, the desktop. That gives Google access to the whole market, regardless of the efforts of Apple and of course M$.

I am not sure which hole you have been burrowed under over the last few weeks, but the statement that "...what Google makes on Android is still a whole lot more than what it makes on iPhones." is completely false... On the contrary. Google makes 4 time more revenue on iOS than it does on Android (Google's Android has generated just $550m since 2008 [guardian.co.uk] ) and that is before one even takes into account the cost of developing, maintaining and supporting Android.

there is no post-PC computing paradigm (3, Informative)

Anonymous Coward | more than 2 years ago | (#39611781)

Most work which is done on a PC, still needs to be done on something resembling a PC form factor.

Just because you can e-mail, IRC and browse the web on a mobile phone it doesn't mean you can reasonably produce a substantial document, piece of art or CAD work. Yes, you /could/ do it, just as you could tap out a representation of anything with a single Morse key, but you'd be working so inefficiently and with so much punishment to your upper limbs that no business would consider it.

Re:there is no post-PC computing paradigm (1)

ewanm89 (1052822) | more than 2 years ago | (#39611937)

Morse is still the most reliable modulation. Especially through interference. It's also the simplest to build a transmitter/receiver for. As a such it's great in emergency situations which is why Morse operators are still somewhat sought after.

no wonder (0)

Anonymous Coward | more than 2 years ago | (#39611791)

carriers screw the customers.. their profits go straight to apple.

"defining the post-PC computing paradigm" (3, Insightful)

Vinegar Joe (998110) | more than 2 years ago | (#39611793)

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

Re:"defining the post-PC computing paradigm" (-1, Flamebait)

BasilBrush (643681) | more than 2 years ago | (#39611883)

Do you need a dictionary? That phrase has a meaning, and a meaning that's pretty economically put forward by that phrase.

Or are we at the level of arbitrary likes and dislikes of individual words? At which level you might as well say you like pink and not blue.

Re:"defining the post-PC computing paradigm" (0)

Anonymous Coward | more than 2 years ago | (#39611913)

Me too.

I'll always use a PC and will never use a mobile phone or tablet or whatever else it is that I'm supposed to have...

And I'm supposed to do serious work and study on a tablet? hahahahahahahahahahahahahahahahahaha

Re:"defining the post-PC computing paradigm" (2, Informative)

jo_ham (604554) | more than 2 years ago | (#39611969)

Me too.

I'll always use a PC and will never use a mobile phone or tablet or whatever else it is that I'm supposed to have...

And I'm supposed to do serious work and study on a tablet? hahahahahahahahahahahahahahahahahaha

No, obviously not, but it's clear you don't do much "study" either way.

The phrase talks about the computing landscape as a whole, not on an individual basis. A large potion of the computing population have found that tablets and phones work very well for them for almost all of their daily computing needs. This is what's meant by that phrase "Post-PC computing".

It does not mean that PCs are going away.

Re:"defining the post-PC computing paradigm" (0)

Anonymous Coward | more than 2 years ago | (#39611995)

It's almost midnight and I've been at it for 12 hours today and felt like a little break by listening to some music and reading some articles here. It's clear that you're a fucking moron. Way to make a massive assumption and look like a fool! :)

I have absolutely no problem with others using other devices. The thing is that it's often spread around technology blogs and sites that PCs will disappear soon. Ignorant but it's been said numerous times.

Re:"defining the post-PC computing paradigm" (0)

Anonymous Coward | more than 2 years ago | (#39612087)

Nice way to hide your identity, BasilBitch. Go fuck yourself hard in the ass.

Re:"defining the post-PC computing paradigm" (1, Interesting)

stevelinton (4044) | more than 2 years ago | (#39612039)

Me too.

And I'm supposed to do serious work and study on a tablet? hahahahahahahahahahahahahahahahahaha

Why not exactly? I was thinking about this now -- my iPad has more pixels of screen (albeit a bit smaller) than my MacBookPro. It can talk to a bluetooth keyboard and to an external monitor. I don't know about an external mouse, I never had occasion to try. My MBP has a lot more CPU power and a development environment, and much more storage, but I can perfectly well connect the iPad to a server for that sort of thing. Why should I carry it around with me, or even have it cluttering up my office. I have a decent SSH client on it.

There are still reasons, of course. The iPad is a much more closed environment -- there is software I want to run (with GUI so I want to run it locally) that apple might not approve of. On the other hand more and more software is running in Javascript in a browser (and/or on the server side), so this is likely to be less of a restriction. I can see the laptop and desktop effectively disappearing. You put your phone/pad down on or near your desk and the keyboard and screen(s) on your desk are now extensions of your phone/pad environment. There might well be a CPU in the back of the screen, so that things run faster at your desk, and storage in the room or building to provide a fast cache of your cloud storage, but as far as the user is concerned, it's phone/pad all the way.

Re:"defining the post-PC computing paradigm" (1)

dnaumov (453672) | more than 2 years ago | (#39612149)

Me too.

I'll always use a PC and will never use a mobile phone or tablet or whatever else it is that I'm supposed to have...

And I'm supposed to do serious work and study on a tablet? hahahahahahahahahahahahahahahahahaha

You need to understand that 90% or more of home PC users don't DO "serious work" in the first place, hence, why smartphones and tablets are exploding in popularity.

Re:"defining the post-PC computing paradigm" (0)

Anonymous Coward | more than 2 years ago | (#39611915)

Well it seems a pretty clear phrase to me: the giants want to implement the post-pc paradigm. PC means personal, post-PC then will be not personal. collective, centralized, whatever. Just forget about the computer being YOURS.

Any wonder?

Re:"defining the post-PC computing paradigm" (0)

Anonymous Coward | more than 2 years ago | (#39611965)

I think that's conspiratorial nonsense.

Instead, I believe they want it to be even more personal and individual.

How many people share phones? How long do they last?

How many people share PCs? How long do they last?

Let's not forget the fact that they are targeting teens and young adults most heavily with phones. (New phone every few months? Certainly the norm).

I'd say that there's more profit in them.

$575? Seriously? (4, Insightful)

Zibodiz (2160038) | more than 2 years ago | (#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.

Re:$575? Seriously? (2, Insightful)

Swampash (1131503) | more than 2 years ago | (#39611835)

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

QED

Re:$575? Seriously? (1)

Anonymous Coward | more than 2 years ago | (#39611921)

I'm sorry, are you trying to make some sort of point here?

Re:$575? Seriously? (2)

medcalf (68293) | more than 2 years ago | (#39612051)

You are demonstrating one of the reasons why Google's revenue per handset is lower.

Re:$575? Seriously? (0)

Anonymous Coward | more than 2 years ago | (#39612127)

Google's revenue per handset is lower because I expect Slashdot posts to have a point? I didn't realise I had that much power, shame it only manifests in such a bizarre way.

Re:$575? Seriously? (0, Troll)

Zaldarr (2469168) | more than 2 years ago | (#39611837)

Not to mention they gouge the vast majority of the profit- and they can do this because people want a bit of fruit on the back of their devices so they can say that they're better than you.

Re:$575? Seriously? (0)

garcia (6573) | more than 2 years ago | (#39611885)

The average person is insane: I own an iPhone 4 and I'm always 1/2 to 1 full version behind the newest (although this will change as my wife will be taking my 4 and I will upgrade to the 5 when it comes out) to save myself money. I got my iPhone4 for $75 (and two year contract extension) and I spent about $2 on the USB car charger which has two ports and doubles as my hand-held GPS charger as well.

While I have spent some money on apps (I like Words With Friends and would have bought it on the Android platform as well), there is no way that I would have spent $600 on everything combined.

However, I'm not the norm just like you aren't either. Move along.

Re:$575? Seriously? (1)

jez9999 (618189) | more than 2 years ago | (#39611983)

Yes yes, you're not the norm says you, posting from your exclusive mass-market Apple device.

Re:$575? Seriously? (0)

Anonymous Coward | more than 2 years ago | (#39612119)

You do realize words w friends as well as many other full games are actually free under android.

Re:$575? Seriously? (5, Interesting)

arkhan_jg (618674) | more than 2 years ago | (#39611927)

What I'm incredulous about is the fact that Apple users spend an average of more than $600 on apps & markup.

They don't. Well, not in that way, anyway. The $800+ comes from two things; AT&T paying $18 per month per phone to Apple for the privilege of being an iPhone carrier (presumably why they had an exclusive for so long), and the cost of the phone itself, at $399. That ignores that Apple does actually have to pay for manufacture, shipping hardware, labour etc to make the things. Though most of that is parts; they only pay $8 to foxconn for labour per phone. That, plus ruthless pressure on suppliers to cut costs that makes Walmart look slack, is why they have a ~40% profit margin on the hardware.

Google of course, doesn't make the phones - even the google branded nexus line are made by OEMs. Samsung make the Galaxy Nexus, for example, and samsung have been making out like bandits on the galaxy line - they sell more android galaxy smartphones than apples does iphones by quite a big margin, even though they make them mostly in Korea at considerably lower margin than Apple gets from China. This may all change once google finish acquiring Motorola of course; they might start seeing some of that hardware profit for themselves.

Bear in mind, google makes quite a chunk of money from iOS users, because Google licence google maps etc to Apple, and get paid for that. They don't get to charge the same licence fees to themselves for shipping google maps on android!

So android is not a very profitable OS in and of itself for google. It may even operate at a loss, once you include all the costs of updating it, working with carriers and OEMs for all their custom versions, having the market cope with all the different versions out there etc etc.

However, it does provide google an excellent platform for their webapps - google maps, google mail, google search - where they DO make an excellent amount of money from advertising. Apple could yank googlemaps from iOS at any time, and I've heard they're looking at doing just that. Look at the fun google had getting google+ on iOS, and google voice. Even if android makes no profit at all, having their own open source wide spread competitor to iOS and windows phone* gives them a huge opportunity to support their other services, and avoid iCloud etc eating their lunch in their core market.

* ok, windows phone might be a minnow now, but they owned the pda/smartphone market once and destroyed palm and psion in the process. Blackberry used to be a big player, and look what's happening to them. Apple and Google can't assume microsoft aren't willing to buy their way back into the mobile market, just as they did going from 0 to big player in the console market. Hell, microsoft are willing to toss most desktop and server users under a bus with windows 8 in order to get developers to make metro apps which will then be usable on tablet/phone, and that's a big gamble even with their massive cash pile.

Re:$575? Seriously? (1)

nine-times (778537) | more than 2 years ago | (#39612013)

I'm pretty sure the ~$600 number they quote includes the hardware purchase, which is subsidized by the purchase of a 2 year contract, so the consumer only pays $0-$300 up-front, depending on the model.

The same is probably true of your $150 Android phone, which means it also cost somewhere around $500. It's just that Google doesn't make that money, since they're not the phone manufacturer. I didn't RTFA, so it's hard to know exactly what that $2 represents.

Re:$575? Seriously? (3, Insightful)

Kjella (173770) | more than 2 years ago | (#39612139)

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.

WHAAAT? (0)

Anonymous Coward | more than 2 years ago | (#39611813)

I thought an iPhone cost $399. How can they make a profit of $575 per unit?

Re:WHAAAT? (1)

chrispix (624431) | more than 2 years ago | (#39611839)

Carriers subsidize the difference

Re:WHAAAT? (0)

Anonymous Coward | more than 2 years ago | (#39611879)

It's an oversimplistic and somewhat wrong implication. If you compare iPhone vs. high-end Android smartphone subsidies, they are similar. The difference, though, is that for Android devices, most of the subsidy goes to the phone maker who isn't Google, but Samsung or HTC or whoever, although it may change a bit since they bought Motorola's handset division. The other way Apple makes money that Google is bad at is by applications and media. Amazon's content store makes more money than Google's. Apple users apparently do more online searching, so even when Apple users are earning Google money, they're doing it more frequently Android users.

So, if I get this correctly... (5, Insightful)

Gobelet (892738) | more than 2 years ago | (#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:So, if I get this correctly... (0)

Anonymous Coward | more than 2 years ago | (#39611897)

Yes, it's like comparing apples and oranges!

Re:So, if I get this correctly... (1)

Anonymous Coward | more than 2 years ago | (#39611973)

That joke would really work if they were being compared to Orange, the mobile phone network. :-)

Re:So, if I get this correctly... (4, Insightful)

stms (1132653) | more than 2 years ago | (#39612027)

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

Typical article shilling Apple (1)

jsimon12 (207119) | more than 2 years ago | (#39612189)

The authors stance is how can I make Apple look better so facts be damned. This is the typical Apple puff piece designed to get people to buy more Apple stock. How else do you think Apple's stock is going to hit the target of $900/share.

We already know this about Google. (1)

toddmbloom (1625689) | more than 2 years ago | (#39611847)

They make their money off from ads and data collection - not from devices.

It's the reason Google pushed so hard for their new privacy policy which was supposedly supposed to be "better for the consumer" and the reason that they're forcing everyone into Google+ when they sign up for a Google account.

So much for the importance of "market share" (4, Funny)

rainer_d (115765) | more than 2 years ago | (#39611849)

Google just needs its licensees to sell.... about 288 times as much Android phones combined as Apple sells iPhones and bingo: profit ;-)

According to wikipedia, Apple sold 72 300 000 iPhones in 2011.

That leaves two possibilities for now:

  1. Sell Android devices also to other species (rodents for example)
  2. Search for alien lifeforms to sell the devices to

Re:So much for the importance of "market share" (0)

Anonymous Coward | more than 2 years ago | (#39611895)

Right, because the only reason people point out market share is to brag about how much profit the operating system developer is making.

Re:So much for the importance of "market share" (1)

LordLucless (582312) | more than 2 years ago | (#39612005)

Actually, Google just needs to sell one Android phone to make a profit.
They only need to sell 288 times as many Android phones to make as much profit per phone as Apple.

Re:So much for the importance of "market share" (0)

Anonymous Coward | more than 2 years ago | (#39612135)

To be pedantic:

They only need to sell 288 times as many Android phones to make as much profit per phone as Apple.

No, the profit per phone won't increase by selling more, and they (google) don't need to sell them. What you actually mean is that 288 times as many android licensed handsets need to be sold for google to make the same profit out of it. The phone and app makers presumably making huge amounts more than that.

As supplier of the OS, the balance is quite possibly correct, I seem to recall the so called M$ tax whereby the copies of windows were very expensive compared to the hardware cost, if google were taking huge amounts more then someone would be complaining of a google tax?

The numbers you pull out of your butt... (0)

Anonymous Coward | more than 2 years ago | (#39611851)

This guy makes some pretty amazing leaps here. Based on the proposed settlement for one patent (under the condition that infringement is actually proven), he assumes that the offered $2.8m must clearly scale by the offered royalty rate (again on one patent, again on the condition of infringement being proven) to overall Android revenues. I don't see any indication that this must actually be the case, but it sure is a fun way to make up some numbers.

Conclusions. (0, Troll)

Anonymous Coward | more than 2 years ago | (#39611861)

M$ probably makes more money on Android than Google itself; that alone tells a lot about M$, Google, Apple and patent laws (specially USA laws).

- Apple achieved such a degree of market domination, other h/w makers are forced to adopt Google's Android;
- M$ is so low as to go for the money, only; I mean low not only in an ethical level, but also regarding lack of strategic vision on their part;
- Google is not only a good corporate guy, protecting capitalism from monopolies, it also set a standard for corporate greed -- even without any previous regulations... very good!
- patent laws are stupid because they exist to protect the tycoons not the poor inventor, therefore they must be killed -- to foster innovation and to lift the stone that protect the vermin which live off useful corporations.

Also, on an indirect note, all that was made possible by the GPL.

If we have hopes of taming such uncontrolled control by few corporations and enable healthy competition, GNU (& Linux) are our only remedy to outrun even ultra-competent organizations like Apple and greedy weasels like M$. Though RMS might be originally worried about the developer ecosystem, such economic healing consequences are certainly a more than welcome bonus from his ideas.

So, hang on... (5, Insightful)

itsdapead (734413) | more than 2 years ago | (#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.

Really, anyone surprised? (1)

lattyware (934246) | more than 2 years ago | (#39611903)

This is just like chrome - Google are not doing it to make money, they are doing it to ensure they have a good position for their core products. Sure, it'd be nice to get some money on the side, but making sure phones continue to evolve and push the boundaries benefits Google a lot, just as browsers doing so did too.

Google are protecting against a monopoly where the market stagnates, because as a big player, it can push innovation. Which also happens to be awesome for the consumer.

Re:Really, anyone surprised? (1)

Swampash (1131503) | more than 2 years ago | (#39612115)

This is just like Internet Explorer 4

Fixed that for you

Mobile OS Vs (Mobile OS + Hardware) (1)

notb666 (1863678) | more than 2 years ago | (#39611905)

Isn't it obvious who will earn more?

Google using Dr. Evil's plan (1)

Dishwasha (125561) | more than 2 years ago | (#39611981)

Why make BILLIONS when you can make...millions!?!? Bwa-ha-ha-ha-ha!

Google revenue streams (0)

Anonymous Coward | more than 2 years ago | (#39612073)

Google doesn't make money from handsets. They could give those away for free.

Google makes money from: app sales, advertising revenue, selling behavioural information, selling private information, etc. They'll probably make the $575 off you in a year.

Google's positioning as a panopticon is very strategic. They had help going where they are now.

Nothing But Clickbait (5, Insightful)

macs4all (973270) | more than 2 years ago | (#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.
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