The success of Android merely shows up Google’s weaknesses

Written by on April 5, 2017 in Guest Blog with 0 Comments

Benny Marty /

Android’s success shows up Google’s deficiencies. Android has surpassed Windows as the No.1 platform for accessing the Internet globally, highlighting just how bad Google is at monetising Android as it remains only a small percentage of total revenues.

I think that this could be a growth opportunity if Google can fix the many problems that exist within the system that it created and in many cases controls. According to StatCounter, Android devices now make up 37.93% of all Internet access devices very slightly ahead of Microsoft Windows at 37.91% with iOS a distant third at around 13%.

  • Furthermore, with most users spending more time on smartphones and tablets than PCs, it is clear that the PC is rapidly becoming a device used in the enterprise and by content creators.
  • This is a major reason why RFM does not consider PC usage as a contributor to Digital Life when assessing the addressable market for a digital consumer ecosystem.
  • Consequently, it would be natural to assume that Android is a big part of Google’s revenues but in reality, it is not.
  • RFM estimates that in 2016 just 19% of advertising revenues came from these devices compared to PCs and Macs which generated 60% of advertising revenues.
  • A further 19% of revenues came from iOS devices despite the fact that there are 2.9 Android devices for every 1 iOS device.
  • This tells me that the PC is a much better platform for advertising monetisation but it is also a clear indication that Google is doing something very wrong when it comes to making money from it.
  • I have long argued that while demographics plays a role, the endemic fragmentation of Android and Google’s inability to update software on its own devices severely hinders the usage of and loyalty to, the Android platform (see here).
  • I believe that this is a major reason why an Android device generates less than half the revenues that an iOS device does which is also meaningfully less than a PC or Mac.
  • While this is a real black eye for Google, I also see it as an opportunity.
  • RFM estimates that in Q4 16A each iOS user delivered $3.37 in revenues for Google compared to $1.47 on Android.
  • If Google could fix the problems with Android, then I think that there could be meaningful upside to this number.
  • For example, if Google was able to increase monetisation of its own Android devices to $2.00 per user per month, this would increase revenues by $6.4bn on an annualised basis.
  • As smartphone user growth and usage both slows, Google will need to look for growth elsewhere and I see this as an obvious place to start.
  • I am hoping to see signs of this at Google i/o (in May) but in the preview of Android O (see here), I was disappointed.
  • Without these kinds of actions I think that Alphabet remains fully valued and would prefer the shares of Microsoft, Tencent and Baidu.

This article was first published on RadioFreeMobile.

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Richard Windsor

About the Author

About the Author: Dr Richard Windsor is the founder of Radio Free Mobile which is an independent research provider. The research helps clients to understand and evaluate the players in the digital ecosystem and presents a unique perspective on how all the pieces fit together in an easy to read and digest way. The product is available on a subscription basis and counts members of the handset, telecom carrier, Internet, semiconductor and financial industries as its subscribers. RFM is the land of the one man band meaning that Dr. W. also makes the tea. .


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