Google’s Eric Schmidt: Android ‘clearly’ winning war against Apple

“Google Inc.’s Android is extending its lead over Apple Inc. in the mobile-software market at a rate that compares with Microsoft Corp.’s expansion in desktop software in the 1990s, Google Chairman Eric Schmidt said,” Brian Womack reports for Bloomberg.

MacDailyNews Take: One not-so-minor difference, Microsoft retained control of and got paid for their software, Mole.

“Booming demand for Android-based smartphones is helping Google add share at the expense of other software providers, Schmidt said yesterday in an interview at Bloomberg’s headquarters in New York. Android snared 72 percent of the market in the third quarter, while Apple had 14 percent, according to Gartner Inc. Customers are activating more than 1.3 million Android devices a day, Schmidt said,” Womack reports. “‘This is a huge platform change; this is of the scale of 20 years ago — Microsoft versus Apple,’ he said. ‘We’re winning that war pretty clearly now.'”

MacDailyNews Take: Mole likely gets it, but he’s playing stupid.

Let’s stop focusing on market share without context and let’s start focusing on what matters. Market share does not necessarily equal profits. Market share does not necessarily equal platform. And in the long run (and in the short run too), market share that doesn’t ultimately lead to profits is meaningless. Anyone can get market share. All you have to do is give away your product at cost or, better yet, for free. But you can’t beat Apple’s iOS just by losing money. Somewhere, somehow, sometime you’ve got to make a profit. Let’s stop pretending that market share is the bottom line or the only thing that matters. Profit and platform matter. Let’s focus on them, instead.

There’s one little problem with the theory that market share matters most in a platform war. By every imaginable measure and in every way that conceivably matters, it is iOS – not Android – that is winning the platform wars. And it isn’t even close.John Kirk, TechPinions, November 29, 2012

And, BTW, Schmidt is counting everything with Android in it, including point-and-shoot cameras, watches, car computers, etc.

Womack reports, “The company avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenue into a Bermuda shell company, almost double the total from three years before, filings show. Governments in France, the U.K., Italy and Australia are probing Google’s tax avoidance as they seek to boost revenue. Schmidt said the company’s efforts around taxes are legal. ‘We pay lots of taxes; we pay them in the legally prescribed ways,’ he said. ‘I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.’ The company isn’t about to turn down big savings in taxes, he said. ‘It’s called capitalism,’ he said. ‘We are proudly capitalistic. I’m not confused about this.'”

MacDailyNews Take: Well, at least he got one thing right.

Read more in the full article here.

MacDailyNews Take: Schmidt’s love affair with market share (because that’s all he’s got) reminds us of a little story we usually use for Dell:

2012 Smartphone Profit Share, Apple vs. Samsung
Data source: Citi Research
Little Mikey had a lemonade stand. Okay, it was a kiosk. He sold 100 (8 oz.) cups yesterday for 10-cents each. He spent 11-cents per cup for artificial lemon flavoring, corn syrup, and the paper cups. He used tap water because it was free. Threw it all together in a big plastic pail. He’s out a buck for all of his trouble. Boy, that was a lot of work for less than nothing!

Around the block, little Steve runs a lemonade stand, too. It’s all blond wood and very clean. He sold 50 (24 oz.) glasses yesterday for 50-cents each. He spent 20-cents per glass on fresh-squeezed lemons, pure cane sugar, spring water (mixed with the utmost care), and some very nice glassware (he buys in bulk and gets a good price). He took home $15 yesterday. He’s currently building his newest stand right where Mikey’s used to be.MacDailyNews, April 23, 2009

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related articles:
Apple rakes in 71% of the world’s smartphone profits – September 8, 2012

58 Comments

    1. You might be delusional to call out Schmidt this way as the Google game plan is very different from Apple’s. No Google tax to speak of and flood the market with affordable devices that do one thing well and that is drive folks to the Google eco system.

      If the true measure of a business is sustainability then the Jury is still out on both Apple and Google. Let’s compare notes in a couple of years and see who had the best recipe to sustain itself as a major player. As is stands, Android might not be the profit making machine that Apple is but once again the goals for both companies are very different.

      1. Windows “clearly” won the war for the PC market a decade ago. Steve Jobs even said as much, or at least that the “war is over.” But look at that “war” now, years later, and focus on “sustainability” in the PC market. Which platform is stagnant and “commoditized”, although it is still has the largest market share by far. Its former champion (Dell) is struggling (“beleaguered”). Which platform is vibrant, with Mac sales and market share growing every year, and making most of the available profit in the market, with a much smaller market share.

        In the mobile market, the situation is even worse for Android in two key ways. First is profit. Microsoft makes a big profit on PC Windows. There will come a point (may have arrived already) when no one else (including Google) will be able to afford to compete with Apple directly. Notice how most of the tablet competition is no longer trying to compete head-to-head with iPad (because trying to do so has been a money losing proposition EVERY time). They are now going where where Apple will not go (the ultra low end and “convertible” tablets with keyboards).

        Second is fragmentation. Windows kept software “standard” in the PC market. The affect of Android is almost the opposite. Android is SO fragmented that is should not even be considered ONE platform.

        I think it is very clear where things are headed “in a couple of years.”

      2. Well the goal for Google is to drive search and of the millions of Android devices sold in China every month, Baidu is the default search engine and all other Google services are gutted. So by every measure, at least in China, Google is losing. In the U.S., iOS drives far more web traffic than Android despite being on less devices, so market share really is the only thing Google can tout.

    2. After Apple employees heard Schmidt’s speech, they all cleared their belongings out of Apple headquarters and all Apple retail stores closed down. They figured what’s the point of going to work anymore if Google was going to put them out of business (like Microsoft did).

      1.3 million Android device activations a day is a rather frightening number to hear despite Google not making even a penny from each activation. The only sad thing is that Wall Street seems to wholeheartedly believe Schmidt by giving Apple a P/E of 12 and Google a P/E of 21.

      1. Well, had he taken the appointment, I sure he wouldn’t have been able to make such ridiculous comments as reported above.

        Even though that is his job, there is no denying that.

        He is paid to spin for Google … Full stop.

        That aside, the guy is a total tosser.

      1. In the meantime, over in China, there’s a bunch of Android phones running Baidu instead of Google … eating Google’s normal lunch of Adstream revenues. Perhaps Schmidt can be so kind as to explain how Google profits from that marketshare without having any revenue stream.

        -hh

    1. How is it possible to activate 1.3 million phones per day?! that’s almost half a billion phones a year!
      I think the last I heard Apple might have been activating 500,000. That’s another 182,000,000.

    1. I was bothered by the “war” thing also. First of all Schmidt isn’t Google. He’s a glorified, hell what is his job these days? 2nd of all, what happened to all the condescending talk of Apple being a great company, etc. Now they’re at war?

  1. Apple intentionally went away from competing in smartphones global market.

    They thrown away their only change for much broader reach and sales, by cancelling cheap iPhone 3Gs devices.

    Before 21st September of this year, Apple sold iPhone 3Gs for $375 before taxes. With iPhone 5 release, they could lower iPhone 3Gs price to, say $275 and keep it selling at least for developing markets.

    This would dramatically change marketshare, but would lover average selling price (ASP), as well as margins. Apple did not want that, so they just cancelled iPhone 3Gs.

    So the fact that in global scale Apple profoundly loses smartphone marketshare is solely Apple’s own conscious decision not to compete, to only keep premium, high margin sector of the market.

    Apple does not sorry for that, nor they think they are wrong by ceding sales to Android.

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