Fortune: ‘iPhone as a business is nearly twice the size of Google’s entire operation’

The platform wars are raging on, and Android versus iPhone market share articles are being churned out by the dozen seemingly every week. However, one Fortune writer believes that these articles and the market share comparison itself are inconsequential. Why is that?

According to Andy M. Zaky at Fortune:

For example, suppose Research in Motion (RIMM) decided it wanted to offer the Android operating system on all of its phones starting on December 31, 2010.

Even if Blackberry sales declined in 2011 for the first time ever, Android growth would skyrocket because every single Blackberry device sold would carry the Android operating system. Suppose the reason for the drop in Blackberry sales is later attributed to the fact that customers disliked the Android operating system and decided to go elsewhere.

This is true. As new manufacturers begin adopting Android each year, the actual platform market share numbers go up even if device sales are stagnant or declining.

But what does this say about the iPhone? Are the increasing numbers of Android users giving Apple investors a reason to worry? Probably not:

Interestingly enough, iPhone sales continue to far outpace the growth in the global smartphone market. In the December quarter, for example, while the global smartphone market grew at a pace of 70% year-over-year, Apple’s iPhone grew by 87%. This point right here should end all discussion.

In an article published at Business Insider a few weeks ago, Henry Blodget said that Android is eating up everything and that Apple is dead in the water. Clearly, Blodget was working with a very limited data set, and one that only applied to U.S. figures, not worldwide numbers. But his trolling worked — the sensational headline and outlandish story has gotten nearly 300,000 views since, and he also published another article defending it, too.

Perhaps this is the most salient point in the Fortune article, the emphasis is mine:

Google will probably report about $6.5 billion in total revenue when it releases its first quarter results later this week. Apple’s iPhone alone will very likely eclipse $11 billion for the March quarter. For 2011, Google is expected to report about $27 billion on the top line compared to the iPhone’s expected $48.2 billion in revenue. The iPhone as a business is nearly twice the size of Google’s entire operation. This is a financial reality rarely illuminated in these so-called “platform market share” articles where Apple investors are supposed to be “deathly afraid” of the Android operating system that doesn’t even create a fraction of the revenue Apple generates from the iPhone.

Whether you’re an iPhone or Android fanboy doesn’t matter — you can’t argue figures like these. Anyone who tries is really in blind denial. That’s the honest opinion of a tech geek who owns both an iPhone and several Android handsets.

[Via: Fortune]

  • Fx

    Double the entire Google’s operation? I dont think thats truth,really, there is no point in that

    • Anonymous

      “For 2011, Google is expected to report about $27 billion on the top line compared to the iPhone’s expected $48.2 billion in revenue.”

      What’s to think? Those are estimated forecasts.

      • If you are comparing like for like, you should also include Android handset manufacturer’s profits/revenue in the Android figure, not just Google’s

        • Shinto

          That makes as much sense as adding another company’s total revenue with someone else’s and compairing it with Apple.

  • Tyagss

    Google does not sell the OS..they make money in ads…..but APPLE sells every inch of the product at a premium……why is this basic fact not considered while publishing such articles…….yet another Apple fan boy

    • Anonymous

      No kidding?!

  • SaK

    Those numbers would be fine and dandy if we were comparing apples to apples (no pun intended).

    Every iOS device directly nets Apple a lot of money, because Apple controls the iOS devices every step of the way. While Android is, technically, free to OEM’s. Comparing the two in this sense doesn’t make any…

  • B0B

    This is just an example of a narrow-minded article complaining about other narrow-minded articles. All articles from either side of the spectrum are completely valid, but you have to know what audience the article is intended for.

    An article which discusses the size of the iOS market share versus the Android market share only has two types of audiences it is intended to inform.

    Developers who write applications for mobile devices.
    Consumers who buy phones.

    Developers who write applications for mobile devices will want to know which OS they should write their app for to get it in front of as many eyeballs as possible. Web developers don’t care whether the visitors to their website are using Dell computers or HP computers or Apple computers or Asus computers… their only concern is BROWSER. IE happens to be the most used browser, so web developers develop for IE first… then Firefox next… etc…

    Consumers who buy phones will likely have an interest in knowing which OS developers are going to pay attention to next, because that will be the OS which will get certain apps first… or possibly at all.

    Do investors who are concerned about hardware sales care? Not likely. If that were the case, they’d put most of their eggs into the iPhone basket and be done with it.

    As for this article, it’s all about company revenue. Consumers don’t care about company revenue unless it paints a possible picture of a company going out of business. Neither Apple nor Google are going out of business anytime soon. Developers don’t care about company revenue unless it is their own company’s revenue.

    So, again, this writer of this article compares apples to oranges (no pun intended) in an attempt to look like he “gets it” when others clearly don’t The only person that doesn’t “get it” is the one who doesn’t see the difference.

    • Anonymous

      Your long-winded comment also shows that you don’t “get it.”

      Here’s what you say: “Consumers don’t care about company revenue [. . .]”

      Yeah, well consumers don’t care about market share, either. Those are the two types of articles in question: market share articles and revenue/earnings/profits articles. Guess who they’re both targeting?

      • ironfist

        Hey dumbass, customers DO care about market share. And why is that, you ask? Because customers want to buy into a platform that they feel will deliver what they expect out of the device. Symbian has a pretty small market share. Customers know that, and as a result it will affect their decision to buy into it. They will consider the fact that there probably won’t be much support for apps in comparison to phones running on Android or iOS. Clearly you know nothing of business, economics, consumers, or just plain common sense. Unfortunately Marc, the only person who doesn’t “get it” is you.

  • pjtmgt

    Hey, if you don’t believe the numbers? Just look them up in the SEC annual reports. It sucks to make zero; but that’s what Google’s making from Android so far. At the current rate, Apple’s going to make more from iTunes & Apps than Google makes from search! No kidding.

  • Lanjian45

    check the revenue of GM, to see how many time its business size larger than Apple.

  • Drtrusa

    Google’s operations do not, practically, involve any hardware manufacturing costs.
    An iPhone costs a lot to make and distribute.
    This article lacks the chain of logical integrity.

  • Jason

    Every time someone joins the smartphone world with an Android, Google wins. When they decide to go with an iPhone instead? Google still wins. They only care about more people getting online and searching on and that’s all this is about for them. They really don’t care about Android market share as much as the rest of us do.

  • Martijn Brouns

    Fair is fair.. Figures don’t lie and Apple is clearly ahead of most competition. Main reason: they are true innovators. With iPods, iPhones and iPads they redefined the device AND data services market. But wasn’t that also the case for todays “turkeys” Microsoft and Nokia one day? As innovator they also have the phylosophy to make end-to-end integrated solutions that span 80% of the value chain.

    PRO – they get a major part of the early market revenue. Something they are doing better than in the old macintosh PC days

    CON – they again seem to be blinded by this succes and forget the strategic consequence of keeping it all for themselves: they ultimately cannot compete against the rest of the world (device makers, social networks, music stores, payment providers, OS builders, etc)

    Their future relies on one thing: inventing new product categories and redefining businesses. I admire their abilities in this field over the past 10 years… But we shouldn’t forget that a sudden slowdown in this field,.. as seen in the nineties can be extremely dangerous / almost lethal.

Back to top ▴