Android Profits Plummet – What next?


Apple might be smarting from its legal battles with Ericsson, but it’s not the only mobile provider suffering setbacks. Google’s Android mobile operating system continues to find it difficult to turn popularity into profits for its hardware marketers. In Q4 2014, Android only claimed 11.3 percent of the smartphone profits. That’s less than half its 29.5 percent share in the same period of the prior year. Worse for Android, Apple was up, from 70.5 percent to 88.7 percent. So, to find the market share it lost, Android only need look at its chief competitor.

There’s no doubt that Android rules the marketplace. Android owns more than 76 percent of the world smartphone market. Apple has less than 20 percent. Yet Apple continues to outperform Android where it matters most – in profits. And it may only get worse. With smartphone business growing upwards of 31 percent, Android is not only dropping profit share, it is leaving a tremendous amount of money out there for its competitors, including Apple, to grab.

The reasons for Android’s lack of profitability are fairly clear. In an effort to compete with Apple, Android flooded the market with availability to handsets of all types and price points. Many can be had for free while the cheapest iPhone will run you about $200. For all intents and purposes, Android is competing with itself even more than it is competing with Apple. Samsung’s Galaxy line might generate tremendous profit numbers – hint, even they are struggling – but the competition for free and cheap handsets, particularly overseas, drives profit margins way down.

Instead of focusing on making a premium product and going head to head with Apple, Android chose to go head to head with everyone; including themselves. This sort of brand dilution creates an interesting set of problems. The solutions to these problems all have an interesting PR dynamic. It will be interesting to watch how Android attempts to integrate that solution into its next steps.