Google makes Android, but Samsung takes all of the money

“To quote Björk (back when she was with the Sugarcubes): ‘This wasn’t supposed to happen,'” Sam Grobart reports for Businessweek.

“According to Neil Mawston at Strategy Analytics, Samsung captured almost 95 percent of all Android profits in the first quarter of 2013,” Grobart reports. “It pulled in $5.1 billion, leaving only $200 million for LG, Motorola (which, let’s not forget, is owned by Google), HTC, Sony, Huawei, ZTE, and several others to fight over. Sidenote: If you look at the total smartphone market, across all operating systems, the profit situation is even more dramatic: Apple (AAPL) has 57 percent of all smartphone profits to Samsung’s 41 percent, according to Strategy Analytics. Every other smartphone maker—from Nokia to BlackBerry to Lenovo and so forth—has to divvy up the remaining 2 percent.”

Grobart reports, “This is obviously bad news to any Android maker not named Samsung. It is also troubling news for Google. When Google first started giving away Android to manufacturers, it was counting on a number of equally matched hardware companies to divide the market. No one would get too big, leaving Google in control. These numbers show that this scenario is far from the case.”

Read more in the full article here.

22 Comments

  1. Goohle underestimated how Samsung’s capability to be an underhanded slavish copiers that they are. Samsung is so low it can crawl under the belly of a pregnant ANT, so low, crawling under slug, they will still come out dry!

  2. Despite all the hullabaloo about Android, Google still makes 85% of its revenue and profit from desktop search. In fact Google makes more money from search originating from iOS devices than they do from Android. That’s a proven fact, as sworn depositions from the Apple vs. Samsung case in the San Jose District Court showed.

    Google derives about 60% of its mobile search revenues from Apple devices, despite Android ‘outselling’ iOS devices 2:1, supposedly. At the end of the day, what does all the ‘one billion activation numbers’ mean? More hot air blown by Google probably. They can’t let the mask slip that Android isn’t as profitable as they would like to lead you to believe, despite all the cheerleading they do for it at Google I/O and utterances coming from Eric Schmidt’s lying mouth.

    1. You’re right, Google isn’t stupid. Evil perhaps but not stupid. They profit from Apple and Apple devices. How is Apple profiting from anything that Google makes? Apple has failed miserably in their attempt at selling ads. Google quite the contrary. Google has a steady increasing revenue stream. Google does not depend on the success or failure of a new piece of hardware once or twice a year. Remember, it’s about what you’re going to do not what you have done. It’s about forward guidance. Apple needs to do better in areas besides hardware. Google will eventually monetize YouTube. That will be worth billions. It was a tremendous investment for Google. Apple should be able to monetize their Apple ID accounts at some point. I hope they don’t drop the ball there too. The fingerprint recognition function should enable that when it is finalized. Apple does not do services well. They need to hire more competent people for those areas. By now it’s clear that they just don’t have that talent in house. iAds is just one example. They have the only real ecosystem out there and they need to monetize it better. iPhones and iPads are not the future. Those are just a way to get people into the ecosystem. Margins will be compressed as time goes on. And they didn’t do any better under Steve jobs either.

      1. So you are saying that Apple is DOOMED DOOMED I SAY!!! Real analysis takes work. Look at profits and execution. How many of googles things ever last longer than 2 years or ever produce profits???

        just saying.

        1. Hmmmmmmmm, no I don’t believe I said that anywhere? Quit being such a childish fanboy and read my post again. You don’t have to agree with it. You don’t have to disagree with it. But don’t always lash out at every thing just because Apple doesn’t do everything perfectly. Try being objective just once in your life.

          1. Apple isn’t perfect and never was, all the way to becoming the most profitable company on earth. The point you are using to make is that Apple could get better at services which is not a revaluation, but Apple already is great at far more than hardware, and software.

            Saying that Google is a good model is where you fall down. Google was great at search at one time and are now dropping the ball there so they can become mediocre at a dozen other things most of which are unprofitable.

            Apple’s greatest threat isn’t Samsung or Microsoft or google but Apple itself. If they keep executing and showing that they still have world class design talent they will remain ahead of the competition and continue to grow their loyal customer base.

            1. I didn’t say that my observation on Apple’s poor execution of services was a revelation. But the fact that I brought it up seems to bother you so if that’s your attempt at venting your frustration, go for it.
              And I didn’t say that Google was a great platform to mimic. I simply stated that they are very successful and profitable with their ads. You can stick your head in the sand if you choose. That’s your choice
              Absolutely Apple is Apple’s biggest problem. That’s not a revelation on your part. Everyone can see that.
              And there’s a difference between revaluation and revelation.
              Just saying.

  3. Google opened the Samsung Pandora’s Box and are getting what they richly deserve. Did it ever occur to them this scenario might occur and they might even lose control of Android? It’s like they did all this just for Samsung’s benefit.

    1. I don’t think Google had any idea how far this could go. Or all the companies using underlying Android but not Google services like Amazon. Google is basically financing all their R&D and they just slap it on devices with an overlay.

  4. Samsung are very interested in Tinzen as an alternative operating system. It’s interesting to think about the implications for Google. If most or all Samsung products switched to Tinzen, then that would be an enormous number of handsets that aren’t Android. But as Google doesn’t make much profit from Android, how much would it matter to Google ?
    I suppose it all boils down to whether Samsung decides to link it’s Tinzen phones with a Samsung ecosystem. If they did that, then Google stands to lose out significantly.

    Google and Samsung are curious bedfellows. Both have proved to be untrustworthy in multiple ways and both of them have unbridled ambition. Either of them is likely to be treacherous towards the other. It’s not a matter of ‘if’, but ‘when’.

    1. Don’t forget about Apple having siri which skirts all of googles ads but still gets info from the system..

      So google is losing on both ends..

  5. Your kidding right!, Whats not to like about the s4. It s connectable with just about everything except apple, its 8 cores, 1080p, split screen, mostly free apps, its a bluray player, its a set of scales, its a mobile pc when connected to any tv with bluetooth mouse/key. Its a gps thats big and bright, The battery lasts ages, the download speeds on 4g are second to none. It follows your eyeballs, rotates screen to match your eyes, it has sound chipset to die for , it takes a 2 x 128 gig micro sd , it can run droid, windows, ubuntu, firefox and even the crappy IOS can be installed as a fifth boot option, not that any sane person would bother. Seriously, no ne would ever go back to iphone after using a s2 let alone a s3 or s4

    1. I haven’t seen the S4. But I have to admit the Samsung phones that I have seen, and that’s quite a few, seem to have very nice screens. The colors are very bright and the definition is great. I don’t know if it was the S2 or the S3 but the smaller of the two is a perfect size for me. And I would think most people would agree. And when Apple finally makes their iPhone that size it will really take off. Leaving the current size iPhone 5 and it’s successor the iPhone 5S in the dust. But unfortunately it looks as though that won’t come until at least next year. And Apple could use that phone now. I’m not about to switch from my current iPhone, the 4S, because I don’t want to get stuck with the iPhone 5S. It’s just not worth it.

  6. Not only google made android , most importantly , google makes the ecosystem which is big enough to compete with Apple .
    Without such ecosystem , there is no way Samsung can beat Apple .

    1. Very true. And until Google cleans their malware-ridden software store world up, Apple will continue to attract customers in hordes. Hopefully Google will figure out a way to clean things up as competition will help us all.

  7. You all fail to grasp what Android was intended for, i.e so that google can control the smartphone market-share, and not to make profits by selling smartphones. Google compels Android users to use all its products;the search engine,maps,youtube etc. This is where google gets most of its money it’s all a castle-moat affair where Android is just guarding google’s main business intrests. If google allowed iPhone to have all the market share what was to stop them from pushing customers away from google products. This has been very effective seeing as Android has almost 70% market share worldwide.

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