Is Android a Means to an Advertising End for Google?

11 May 2010 by Graham Lyons - News Android, iPhone 1 Comment »

Now that the stats are in, it’s pretty apparent that Google’s flagship mobile operating system is making huge dents in Apple's aspirations. At least it is in the U.S. as new figures released by NPD (a market research group) reveal that in a pretty startling trend, the Android has surged ahead of the iPhone operating system (OS X) in Smartphone unit share trends. Starting with a meteoric rise since the third quarter of last year. But stats are merely stats at the end of the day, so what does this actually mean for Apple and Google?

Trend Factors

Image Courtesy of NPD Group (Click to Enlarge)

Well, there is one factor which is no doubt playing a major part in these trends. The iPhone is tied exclusively to one network (AT&T) and as they only release one phone a year they have a pretty steady revenue stream which no doubt gives them some level of consistency in sales. Much of the Androids major incline can be put down to the far wider variety of phones and networks available to their system. From Samsung to HTC and even their self-designed Nexus One, there’s a substantial variety of phones hosting the OS. Furthermore, if the U.S. networks hosting Android reflects the array that they do in Britain, (including T-Mobile and Vodaphone) then there are a far greater array of avenues through which Google can peddle their wares.

Rivalry

But what does this all mean for the Google/ Apple rivalry? The most interesting thing to note is that Apple generate all revenue through ownership of all of their phones sold. Google are in a sense sub-letting their system to a variety of other phone developers for free and with their Nexus One only released early this year it probably isn’t, as yet, factored into the unit share stats. This may drastically reduce Google’s revenue from the phone market, shouldn’t it?

Google's Endgame

Interestingly, phone sales aren’t Google’s top priority. They’re playing an entirely different game to Apple as Google’s main source of revenue remains to be about advertising. This has been a major part of their chrome browser and Android OS releases as their most important mission is to get more people online. More people online means more potential revenue from their multi-billion dollar advertising setup. It’s also interesting to note that in recent years Google have been putting together the building blocks for mobile advertising to go skywards. Back in 2008 Google procured AdMob the world’s leading mobile phone advertising company and has surely taken thing forward in the interim.

With entirely different revenue streams, Apple and Google will have very different market directions. While Apple can proclaim that their entire revenue and market share comes from one phone setup, this won’t really matter to Google. Many phone developers may have already or will in the future decide against developing their own OS and opt to take the far easier option of adapting for Android. As a result Google are getting greater exposure and advertising potential at minimal cost to themselves with every Android phone sold. With the blossoming popularity of the Android platform and a plethora of phones hosting it, expect this surge to continue and mobile internet advertising to take off in a big way.