There have been some historic headlines in the past few days within the technology industry:
First is that Samsung became the first company to beat Apple in smartphone profits thanks to its Android based devices. Second is that Microsoft and Apple are now making more profit from Android sales than the owner of the Android OS: Google. Finally Google may dump Android due its low profits.
Confused? Here is what happened and what is likely to change the mobile scene quite dramatically in the future:
When Google took over the Android initiative in 2005, it had high hopes of making a profit. But it made $0.5 Billion in 8 years while Samsung made over $5 Billion just in the last quarter. Even Apple makes more money than Google via Android sales, thanks to the court ordering it a share of HTC and Samsung profits due to copyright infringements by them. And the funniest news: Microsoft now makes more money from Android sales due to similar court victories than it makes on sales of Windows phone.
What a situation for Google! Everyone is making money on a system it owns except itself.
This was anticipated by Google, and prompted it to buy Motorola hoping to make its mobile initiative profitable like Samsung. That did not work. The Motorola purchase has been consistently bringing in losses.
So now I think Google is going to slowly phase out Android (notice how Android store was renamed Google Play). This will be replaced with Google’s proprietary Chrome OS. Also notice how the new Google streaming device is named Chromecast and is stripped completely of Android compatibility. This would have been a huge deal for the Android users, but that is not in Google’s interests. It will be interesting to see how that plays out with Samsung which gets 95% of all profits being made by everyone from Android. Maybe it will buy it from Google? But it is not in Google’s interest to sell.
Meanwhile Apple needs to innovate and reduce costs to maintain its lead or else it will eventually go back to selling its products to a niche market like it did in the 80’s desktop market.
So while the future of Andorid under Google is not promising, Samsung will continue to profit from Android OS, innovation, cheap prices and stronger international presence. Apple will make another attempt in the future to reclaim its top position. Apple is known for coming back in a big way. But the Apple of today is without Steve Jobs.