Blog Post

Android data-thirst impacts operator bottom line

Android(s goog), as we’ve reported before, is a bit of a data hog. Its users consume more data per handset than any other smartphone platform, according to a Nielsen survey (see chart below)(s NLSN).

Now while we’ve known that, it’s been hard to understand what that means for carriers. But Sprint(s s) is giving us a good look at the effects of Android’s data usage by talking about the positive impact of the iPhone(s aapl). On its quarterly earnings call, Sprint CEO Dan Hesse said iPhone users would provide at least 50 percent more lifetime value than other smartphone users because of network efficiency and less churn. A slide provided by Sprint shows that the biggest improvement comes from network efficiency, which improves user life-time profitability by 50 percent while reduced churn can help by about 10 percent.

Here’s what Hesse had to say:

There is a misperception that our launch of the iPhone will increase the load on Sprint 3G network and require us to spend more 3G capital. The reverse is true. IPhone users are expected to use significantly less data than the typical user of a dual-mode, 3G-4G device. Even adjusting for more total new customers being added to the network, we believe it will put less load on our 3G network than they would have if we did not carry the iPhone.

I talked with Joe Euteneuer, Sprint’s CFO Wednesday, and he said iPhones consume less data than Android devices, though a Sprint representative said iPhones trail the BlackBerry(s rimm). By shifting over 3G smartphone users over to an iPhone, it actually helps Sprint recoup capacity and help with traffic issues, he said.

The Sprint data shows that Android can be a bit of a double-edged sword for carriers. It’s a huge seller, no doubt, and it has helped Sprint hit 62 percent smartphone penetration on its CDMA network, following a robust third quarter in which four of every five phones was a smartphone. But the data thirst of those device can add to the strain of keeping up with demand. The fact that Sprint can expect to see such a big savings by introducing an iPhone might be some optimistic justification for taking on the big costs for the iPhone. And 50 percent savings seems a little high. But I do believe Sprint is speaking the truth about a real tangible effect in network efficiency with the iPhone.

This hasn’t hurt Android with operators yet and it really hasn’t helped RIM, which is plugging the data-sipping qualities of BlackBerry devices. But this could be more of a consideration for carriers if the disparity doesn’t go down over time. There’s an explosion of data on mobile devices, and operators are looking at whatever they can do to help stay ahead of demand. Carriers like Sprint are already talking to Android manufacturers about how to get the phones more efficient, but the devices are still leading the pack in consumption.

I think it makes sense for the platform holders to start worrying about being more data-efficient in order to help out the operators. Google, for its part, has addressed that in its upcoming Android update Ice Cream Sandwich with new data meters and the ability to set of alarms to help consumers manage their data use. There are still inherent issues with Android and the way it supports data-consuming widgets and apps that update regularly that still make it pretty data intensive. But the latest Ice Cream Sandwich improvements show Google understands that it’s not a good idea to be seen as a data hog on a network.

Again, this probably won’t affect Android short-term or the willingness of carriers to sell those devices but as we’re seeing with the iPhone 4S on Sprint, it’s not like these carriers don’t notice the burden Android is putting on their network.

19 Responses to “Android data-thirst impacts operator bottom line”

  1. bill garrett

    It wouldn’t be such a bad idea to take a closer look at things from the user end, too. Most operators are making smartphone buyers purchase a 2GB/month data package, but the average (not average user, which may be even less data) is less than 600MB no matter what phone is used. So they want to continue charging for data packages 3-4 times what most users need, but worry about phone efficiency? It’s a little hypocritical.

  2. Oscar Castrillon

    3G uses less data and costs less to operate than 4G (that half of all Android phones are already on)? Shocking. The question should be (if you’re a journalist) is Android usage even high on the list of rising costs at Sprint? Many articles have been written pointing out that the average cell phone user is not using anywhere close to their monthly limit and that the cost of this data has been FALLING while prices have been rising. In other words you get more for your money with 4G. In other news water is wet.

  3. Its probably because most iphone users use apps that simulate beer being poured out or the odd game which does not use that much data. whereas android users use apps like navigation, video streaming, or picture search like google goggles.

  4. More tail wagging the dog… Apple says jump, Sprint says how high? This has nothing to do with Apple being more efficient. Android “does more”. News widgets, music streaming, weather apps, the carrier commercials show everyone what an(Droid) is capable of, then the carriers cap data limits and screams foul! BS!!

  5. Jason Goedde

    What I find interesting as soon as a network provider gets iPhone, the unlimited data stops soon after. ATT had to because of the 5000% increase in data consumption. Verizon gets iPhone, and almost immediately kills unlimited. Sprint gets Phone, and for now, kills unlimited on tablets and you can not be grand-fathered in. These carriers had Android and did not have a problem with data usage. So how can iPhone be efficient?

    • Well look at it like this fandroids….if we didn’t have soooooo many pretend iPhones crowding the market AFTER the iPhone was introduced, then we wouldn’t have this problem now, would we??? As purchasers of pretend iPhones you only have yourselves to blame….lol

  6. savagemike

    They keep using the term ‘network efficiency’ but I think they are using it in a somewhat warped way.
    Is the iPhone actually somehow more efficient or are they just saying iPhone users use less data?
    What I am getting is that for the jacked up prices they charge for data plans they like iPhone users better because they pay up but don’t use the data.
    The analysis seems very faulty.
    They seem to be saying iPhones won’t impact the network because they forecast them using less data than if the same people had Android.
    But they are the same people – expecting their behavior to shift due to generic numbers you have of differences in those population just because they switch devices seems nuts to me.

  7. Lue at the crux

    How exactly does android consume more data? Does the app request more data? Does the app request more often? How does app X on ios consume more data than the same app on android? Anyone can make numbers and graphs show what they want it to show.

  8. I don’t think there is a problem with the way android consumes and uses data. You can’t stop innovations because the carriers can’t keep up with the capacity of the demands. The future is data driven with streaming movies, music, apps and everything else. The carriers need to improve their own network efficiencies and keep up with the pace of technology. I mean they charge us enough for them to improve.

  9. Maybe it’s all the people on Android phones streaming their music collections using Google Music Beta and Amazon MP3. I know my usage went from 1GB/month to 4+GB/month since I started streaming my music collection.

  10. These statistics can’t take in the impact of ios5 being cloud connected. What will this mean for iPhone data use. In the past apps installed on the iPhone were downloaded on a computer and the transferred to the phone, but now (like Android) these will be downloaded direct to the phone. I suspect were about to find out ios5 I’d quite data hungry given reports of larger apps and knowledge that Apple isn’t great at keeping file sizes small.

  11. Brian Ward

    Kills Android battery life too… I am not a developer, but I think Apple must have a ‘push’ server that content makers use that efficiently sends information to handsets whereas Google apps tend to be the polling type… where they go out on a schedule and check for updates.