Yesterday’s WSJ.com video “Tablet Wars: How Are People Using Tablets?” had a shocking statistic: 98% of the web traffic from tablets comes from Apple’s iPad. Further, most of mobile commerce is from Apple’s iPhone:
Translation: No matter what the sales figures for Android, people just aren’t using them. This is a far cry from the early days, when many thought that an army of Android mobile devices would slay Apple’s mighty iPhone:
Most importantly, if this is true, then Google’s Android strategy has failed.
Google’s strategy with Android is very similar to those of mobile phone companies: Give away a free phone, sign you up for a contract. In Google’s case, they gave the mobile operating system away in hopes of promoting traffic from mobile devices and then making money off that traffic through search and advertising. They probably also wanted to make sure that that traffic isn’t “owned” by a competitor like Apple through its Safari browser on the iPhone.
Hence, if Android devices don’t generate web traffic, then Google has nothing to show for it, no matter how many phones or tablets Samsung sells.
Even worse is Amazon’s “forking” of Android by using it to create the Kindle Fire, which has been customized extensively to work with Amazon’s digital content businesses. This is the worst of all possible scenarios for Google’s Android strategy. From Google’s perspective, the Kindle Fire is as much as a competitor as the iPad, because all the digital content is offered through Amazon instead of Google Play, and all the web traffic is still owned by a competitor’s browser, even if it’s called Silk instead of Safari. And it’s all made with Google’s own technology.
Android’s experience is the core dilemma of open source business models: The “Last Mile” reliance on third parties to deliver your product to end users. In Android’s case, the manufacturers are the “Last Mile,” and by making low-quality products with Android or competing with Google, they’ve not lived up to Google’s expectations.
Google is now trying to fix it with its own mobile devices, starting with the Nexus tablets, so they can deliver the complete Android experience at their standards and steer the low end of the tablet market away from Amazon’s Kindle Fire. Will it work? That would depend first and foremost on how well the Google-made Android devices sell.
If the Google tablets and phones sell well, should Google still keep Android open source? That would in turn depend on the relative strengths of Google and the other Android manufacturers. If the Google devices raises the bar for the others, who start making better phones and tablets of their own and delivering web traffic to Google, then of course they should keep providing those other manufacturers with a free operating system.
But if Google’s Android devices are the only ones delivering the traffic, while the other manufacturers make money off the devices but deliver no traffic, or worse use Android to compete with Google, then it should become a full-fledged manufacturer like Apple. It doesn’t mean that Google would “kill” Android, but it could make a “super-Android” which is not available to the other manufacturers.
PS Here’s something Android and iPhone users could all enjoy:
Si Chen’s assertion of Google’s failure in Android business model is totally misplaced, and probably based on wrong assumptions – especially since he/she does not have any intimate knowledge of Google’s internal business model.
While the model may not have been “as successful” as Google may have wanted, it is totally ludicrous to project failure since without the sales of tens or maybe maybe hundreds of millions of Android devices – from which Google can extract considerable services revenue, Apple’s domination would have completely locked out Google or any other mobile ecosystem to the vast revenue streams being engulfed.
If Amazon Silk is a fork of Google Safari then Google would have as much future access to Amazon as Amazon had of Google. Eventually it should all trickle down to FOSS developers everywhere, correct? Why would it be working for Amazon and not for Google? If it’s working for neither then they need to team up and cooperate on a plan that benefits both. If no one uses the devices, but owns them, then perhaps that means that the products don’t work as well as the consumer hoped. Consumers also need to coordinate with each other to sponsor universal hardware/software standards, then give business to the manufacturers of devices that don’t the consumer into their ebook or emusic store
Excuse me for not seeing any connection between Google’s sales numbers and whether or not the software that runs on their phones is proprietary.
Have you bothered to compare iPhone revenues with WinPhone, or any other proprietary-software using system?
It seems to me that you’re jumping to conclusions without considering all the variables involved. That’s the polite way to say it.
Well, they gave away a free operating system to monetize the web traffic, so if there is no web traffic, then it’s probably not a success?
A few factual corrections: Amazon Silk is not a fork of a Google product (and Safari is not a Google product) but based on Webkit, which is open source but under LGPL/BSD licenses. That, by the way, means that Amazon has very limited obligations to contribute back to the Webkit and “trickle down to FOSS developers.”
The “fork” I discussed here was not a fork of the browser, but rather Amazon using Android to build a device which then sold music, books, and videos through its own store and directed traffic to a browser it controlled, in this case Silk.
I guess we all have our own definitions of success and failure. From my limited knowledge, though, it appears that 1) taking the trouble to make an operating system and 2) getting no web traffic off that operating system and 3) having Amazon use that same operating system to make a competing device that could lock you out just as effectively Apple could … is not a success.
Only wanna input on few general things, The website layout is perfect, the articles is rattling superb : D.
One may also argue that the 98% number looks utterly contrived. It just does not make any sense. I would not at all be surprised to learn that whomever made that study used a logic like:
if user-agent contains “Safari” then count 1 for iPAD
else if user-agent contains “Chrome” then count 1 for Android\
Number don’t lie (unless you got them wrong…)
This article is making very confusing assumptions and conclusions based on a single WSJ article.
First of all you’re conflating a statistic that deals specifically with tablet traffic, and secondly you are using that tablet traffic statistic to declare Android a failed Google strategy in terms of mobile devices generally. You confuse things further by stating that Android was to “slay Apple’s mighty iPhone.” Seems like a good point to share some market share information for smartphones, no? The rest of the article seems to be speculation based upon poorly conceived and forgone conclusions.
Android is a mobile operating system, furthermore, mobile device traffic is not exclusively from tablet computers. In fact, smartphones account for 70% of all mobile devices in the U.S. Android enjoys a 75% smartphone market share worldwide and 54% in the U.S.
Google’s dominance in the software and advertising arena is what has allowed them to make the leap to hardware. How one can conflate this as a failed “mobile devices” open source strategy while citing a single statistic on tablet traffic alone boggles the mind.
Please do not presume to be an expert on open source strategies if you can’t even distinguish mobile device usage numbers.
Sure, if you have other numbers please share them with us.
Yes, Android has always had impressive market share numbers, but if they aren’t generating web traffic, then they aren’t making Google money. This is the really important idea: the key for Google is web traffic, not handset market share. A business strategy which costs Google to develop Android but only makes money for Samsung (handsets), AT&T (service contracts), not to mention competitors like Amazon, is a failure.
Okay, here’s a number: $8 billion. That’s Google’s mobile ad revenue so far this year. Last year at this time it was $2.5 billion.
How about another number: $50 million. That’s how much Google payed to acquire Android, Inc. in 2005. Do we need more numbers still?
How about $20 billion. That’s how much ad revenue Google has brought in worldwide this year so far, more than the entire US print media combined.
And one final number: 51%. Do you know what that number is for? The percentage of mobile phone web traffic that is driven by Android.
Let’s review shall we? And I’ll even give you some absurd assumptions to help out. We’ll assume that while Google paid $50 million for Android, it was a black hole of money and Android cost them another $450 million in further costs to bring out, even though there is absolutely no evidence of this whatsoever (much like your claims of Google not generating web traffic!)
Total Android development cost: $500 million
Total Google mobile ad revenue in 2012: $8 billion
This is all of course acknowledging that Google mobile ad revenue is not coming just from Android devices, something you didn’t address at all. Apple doesn’t “own” traffic, even traffic that goes through Safari. What search engine do you think everyone is using on their iPhones and iPads? Last time I checked Apple makes exactly ZERO dollars through web traffic so how you are possibly construing web traffic and advertising numbers to be a losing game for Google but a winning game for Apple (who isn’t even in that business) is beyond the realm of understanding of what was clearly many people who read this post.
Getting into hardware manufacturing has always been Google’s goal, it’s not some last desperate measure they have taken because Android hasn’t worked out so far for them. Its success is one of many factors that allowed them to acquire Motorola Mobility for $12.5 billion.
I like this post, enjoyed this one thanks for posting .
Thank you for taking the time to do all this research and share it with us.
While the overall mobile search numbers are very high, there is definitely evidence that the Android users use the web less than iPhone/iPad users, especially to shop and otherwise generate revenue. See http://visual.ly/mobile-traffic-statistics for example. And Google should not be complacent that so much of its mobile search traffic is coming from major competitors like Apple or Amazon.
Please remember I’m not saying that “Google has failed.” The question I ask is “Has Google Android’s open source business model failed?” We’ll have to see over time, most importantly by what Google does with Android vs the other hardware makers.
Thanks again for the feedback.
Surur: You are entitled to your opnoiin but not your ad hominem comments. OEMs are not a customer. They are partners. Although it may be different in some parts of the world, purchases of mobile phones directly from the manufacturer without a mobile phone contract in the US is virtually non-existent (small single digit percentage if that large). I agree with your point that most people buy WiMo phones as individuals. And, this is Microsoft’s current problem. They do not consider these customers at all with regard to design. Look at Windows Mobile 6 and 6.1. The significant changes only mattered to people connecting to Exchange Servers. The other changes were minor. WiMo 6 was essentially Windows Mobile 5 Second Edition (and should have been named as such).Take a look around you. And, listen to non-techies ask questions of and make comments about phones. They invariably talk about Blackberrys and iPhones. There is no talk or visible purchase of Windows Mobile phones by non-techie consumers who want either a specific function to work well (push email) or ease of use.