The great mobile irony: What Google and Apple do well and how they make money

Google's Android operating system had a phenomenal year of growth in 2013.  In the third quarter Android accounted for about 81% of smartphones and 67% of tablets shipped worldwide.  The press seems to concentrate on these Android and iPhone unit sales and market share, but there's another report that I find equally interesting:  Android vs iOS usage statistics.  A recent report analyzed the hourly usage and data consumption of various handsets in the US and Europe.  Unsurprisingly, the iPhone dominated.  I say unsurprisingly because every time one of these reports is released Apple comes out on top, and usually by a wide margin.  Another analysis shows how iPhone users shop more and spend more than Android users.  Obviously, there are plenty of tech-savvy Android users, but they make up a small portion of all Android users.

The great mobile irony

Apple makes most of its money, and I'd guess virtually all of its profits, off of device sales.  That is, they make money when we buy iPhones and iPads.  Google, however, gives away Android for free in the hopes that it will increase the number of mobile internet users and people using Google's services like search, Gmail, Maps, etc.  Google makes money when we click on ads in Google search results, or on websites that feature Google ads (like this one.)

The irony is that Google makes its money off of usage, which Apple dominates, and Apple makes its money off of device sales, which Google's Android partners dominate.

What does that mean for the mobile industry?

I believe Apple is trying hard to monetize all of that usage.  They not only want to make money off of device sales, but throughout their life as we use them every day.  Apple created its own mobile advertising network, and then diverted a lot of those resources to selling ads for the iTunes Radio music streaming service.  I'd expect more initiatives like that in the future.  I wouldn't be shocked if we saw Apple build or acquire a movie streaming service or try to monetize Podcasts.

Meanwhile, Google will continue making Android more intuitive and easy to use and working with its hardware partners on premium Android devices.  Part of the reason Android dominates market share figures is due to the low cost of Android handsets.

Another interesting note from the hourly usage figures was that after the three most recent iPhones and Samsung Galaxy phones, the next most used device was a Blackberry.  Maybe there's hope for them yet if they can make software apps for iPhone and Android and monetize their usage.