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Summary:

It used to be iPhones at every turn, but now there are plenty of Android sightings. That makes sense since there are now 500 million Android devices activated since 2008. That’s more than total iOS devices, however, Google hasn’t yet monetized its broad Android base.

iOS vs Android

If nothing else, Google knows how to time an announcement. Later today, Apple is holding the event where it’s widely expected to announced the next iPhone — we’ll be live-blogging it here – and Google has preempted the news with an accomplishment of its own: 500 million Android devices have been activated since 2008. Andy Rubin, who oversees Google’s Android efforts, shared the data point on Tuesday evening:

The number of Android activations by itself is impressive. Sure we’d all like to see sales figures as opposed to activations, but that’s like asking Microsoft to share sales numbers for PCs: It can’t because it doesn’t sell computers. Likewise, Google’s hardware partners capture — but generally don’t report — sales figures, so it’s simply not possible for Google to report sales. Activations, or the number of devices that are “registered” with a Google account — and therefore, purchased — are the best proxy.

Android Jelly Bean logoThe half billion Android device family is growing as well: 1.3 million Android devices are reportedly activated per day. You can extrapolate the future growth if you want, but some analysts are already doing the math. Earlier this week, IHS iSuppli forecast that Android shipments will double again in 2013, exceeding the one billion mark next year. Whether you use Android or prefer a competing platform such as iOS, Windows Phone or BlackBerry, it’s difficult to suggest that Android adoption is unimpressive.

But does it matter? That’s the bigger question right now because when it comes to profits, application downloads or sales of individual devices, the answers are Apple, Apple and…. Apple. Take a brief historical look at the profit picture from Asymco as just one example:

Profits of handset makers

Early on in Android’s short lifespan, it seemed to me that subsidizing a free, open-source platform to make a land grab for mobile eyeballs was a good play. One that would pay off over time. Here we are, nearly four years later and there’s little data to suggest that the investment is paying off yet. In fact, there’s more data suggesting that Apple’s methodical approach is financially sound.

Knowing full well that I’m not in the mainstream audience for technology — I’m an early adopter of such products — let me share a personal observation as someone who uses both platforms with one caveat: For the past two years, my main phone is an Android device. I have an iPhone 4S, but use my Galaxy Nexus 90 percent or more of the time. And yet: Apple has made far more money from me than Google or anyone affiliated with the Android ecosystem.

I have yet to click an ad on any Android phone or tablet via Google search or in an app. Most, but not all, of the Android apps I have installed are free. If I had to estimate the total amount spent on Android apps since I started using the platform, I’d say it’s less than $100. Some recent content purchases on Google Play probably bring that total to $150.

On my iPhone and iPad, however, that figure is likely five times higher, even though I use the devices less. Google simply isn’t making any money off of me even though I’ve owned a dozen different Android devices. Heck, even Amazon has earned more from me thanks to the 100+ ebooks I’ve purchased through them and many of those I’ve read on Google devices!

Again, I’m not your typical consumer, but there’s a bigger point to be made here. With Android, Google has shown me no reason to spend money. It hasn’t convinced me as a consumer to vote for Android content with my wallet. Frankly, Apple and Amazon, have. That means my dollars to go them and therefore the profits do too. So if there are others like me in the 500 million device activation pool, how and when will Google see meaningful profit from its Android investment?

To be sure, the company is making improvements with its content store, exactly what I suggested was needed back in March. The revamped and renamed Google Play store now has a wider range of digital goods: More books, magazines, music, TV shows, and movies. Since I use a Google Chromebook daily and bought a Nexus 7 tablet, I opted to use Google Play to buy two seasons of Falling Skies as opposed to purchasing them from Apple or Amazon. But that was an exception from the past few years. And if Google doesn’t continue to expand its digital offerings, I’ll likely find what I need elsewhere.

Luckily, Google still makes boatloads of money as the top search provider on traditional computers — 86 percent globally in August 2012, per NetMarketShare.com — and therefore the top destination for targeted ads. That can help offset any lack of income from Android — for a time. As computer sales continue to flatten or even fall while mobile devices sales keep growing, it could become a problem, however. Android profits have to grow as consumers shift activities from PCs to tablets and smartphones.

I thought that Android would be raking money in the market at large, but it hasn’t. Heck, it hasn’t even happened in my own house and I’m an Android-centric device owner who uses a Chrome OS laptop as my main computer. If it hasn’t happened by now, I’m starting to wonder when — and how — it will.

So should Google be proud of 500 million Android activations from late 2008 to present day? Absolutely? But is Android truly successful for Google? I’m a definite maybe on that one.

  1. I’ve read that google makes $10 per device that runs android per year. If there’s 500million android devices that means that google is potentially making 5 billion dollars a year.

    I call that impressive

    Also can your site add google accounts as an option to sign in or openid? Really don’t feel like making a new account

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    1. Jason, does Google actually MAKE $10 per Android device or does it HOPE to (or use that figure as an example)? All evidence I’ve seen is the latter; if you have a link suggesting otherwise, can you share? The closest data I’ve seen for Android revenue is the $550 million Google made from 2008 to 2011 in total on Android, per the Oracle v. Google case. Even if we rounded that out a little and included 2012 sales figures, that’s roughly $1 per Android device ever sold.

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      1. Oh wait you’re right, google’s goal is $10/year sorry. According to asymco it seems as if google earns roughly $1.70 per device.

        http://www.asymco.com/2012/04/02/android-economics/

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        1. That sounds about right then…. probably more than $1 per device, but not yet $2. Thanks!

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      2. You know that Asymco data relies on The Guardian data that is only an educated guess about two figures in a trial

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        1. I understand that. If there’s better data out there, I have yet to see it.

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    2. I read Microsoft makes $10 per Android device.

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  2. I kind of disagree. I think Android has been an overwhelming success. It’s not a success in the monetary way iOS is, but rather a success in it’s ability to apply pressure to Apple and to keep the mobile race honest.

    It kind of seems like truly monetizing Android only occurred to Google recently. We’ve seen a strong push towards content acquisition and consumer facing design that just wasn’t originally part of Google’s plan. I’m pretty sure the overwhelming success of Android has lead Google to try to monetize it, and I’m sure that the profits will follow now that they are serious about that goal.

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    1. I completely agree with you on the ability to apply pressure on the part of Apple (and others, even) in the mobile space.

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  3. Google Now will be the key to their success, both offensively and defensively. If they handle it well.

    On offense it will provide the most logical, er, nexus for offers and advertising, and revenue-bearing Google services. On defense, it will siphon off some of the anxious updates addiction that now drives Facebook, and provide a choke point to drive better terms with a range of service providers. If they handle it well.

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    1. I like that thought, Paul. And you’re right, “if they handle it well”. There’s seems to be some opportunity there…

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  4. I have to wonder, to the “regular” consumer if the 500 million really matters? I can’t point to anything but my own limited observation here in down Toronto, but the majority of non-geek friends and associates that have Android phones, use it as… a phone. Very limited in their “smartphone use”. I’ve purposefully check 20 android phone over the last year and all of them are on Gingerbread 2.3 or lower. That’s including two new less than $50 purchases from Rogers and Telus. When my friends talk about apps, they pull out an iPod Touch or tell me about their iPad at home. Again, I’m a slice of the 500 million snap shot but I don’t think I’m alone. Oh and all of my iPhone/iOS friends are updated to the most recent version of the OS and with a few of us owning AppleTV, Apple is just sucking money out of our pockets…and we aren’t complaining. Just my two cents, great article.

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  5. Whether they’re making money out of the platform is somewhat academic to the average user, although profitable platforms are generally going to be well supported and thrive. The availability of non-app content is IMHO what matters at this stage (they’ve got the device and apps part down) — particularly in the tablet space. Google seems to be trying of to fix this, but the biggest question I expect from anybody I recommend a smartphone or tablet to is, “how do I get music/books/magazines/films/TV shows onto the device?” When Google Music isn’t even available outside the U.S., that’s a tough question to answer to a non-techie. And although Movies and Books have spread their wings, the books are more expensive than Kindle and the movies still don’t allow purchase, just (expensive) rental.

    For my money, smartphones are small tablets, and they won’t continue to succeed in phones unless they crack tablets. And that means cutting those deals with the content industry, or buying existing players to get the licenses in place.

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  6. Well, if the users could get cheap content (or even free), Google at the same time get some money from it (not a lot), then it’s a win-win, right? Google is not desperate to make money anyway, it will not be cool anymore if it tries to

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