The (very) short list of who's making money from Android
For all its joys, there’s something that Android is really bad at: making money. While Apple hoovers up as much as 92 percent of the smartphone industry’s profits, many players in the Android ecosystem are finding it increasingly hard to make a living. Where does Android generate money, and who’s making most of it? Let’s find out.
How much money is Google making from Android?
We don’t know for sure, but we know it isn’t much: unlike traditional operating systems such as Windows, where manufacturers were charged a fee for every copy they installed, Google gives Android away for free.
The intention is to make that back from advertising, but a report from Goldman Sachs analysts in April found that 75 percent of the US$11.8 billion that Google made in mobile search revenue in 2014 was from iOS devices. That means Android accounted for US$3 billion, tops. That’s a lot to you or me, but it’s pocket change for Google; by comparison, Facebook bills over US$2.5 billion in mobile ads per quarter.
How much money is Microsoft making from Android?
As we reported last year, Microsoft makes almost as much money from Android as Google does: informed estimates suggests that manufacturers pay Microsoft between US$5 and US$15 for each Android handset they make. That’s at least US$2 billion a year, and half of that’s just from Samsung.
The reason? Patents. Microsoft owns multiple patents that Android may infringe, and manufacturers pay royalties so that Microsoft won’t sue.
How much money are Samsung, Sony and LG making from Android?
It’s hard to believe we know, but some of our favorite firms aren’t making money from Android. In a frightening analysis by UK tech expert (and Android fan) Charles Arthur, we can see that while Samsung may be making up to U$33.33 profit on each handset, HTC is losing US$36.89. Other losers are Sony (losing $26.10 per handset) and Lenovo/Motorola (which loses US$18.02 per handset) while some manufacturers struggle to make even a dime per device: LG is apparently making just US$0.016 per handset.
By comparison Apple’s profit margin appears to be US$184 per smartphone. Still, it could be worse: Microsoft’s losing 72 bucks on each smartphone it sells.
How much money are case makers making from Android?
It sounds crazy, but making cases for LG phones is probably more profitable than making LG phones. As this article in Entrepreneur.com explains, the margins on Android phone cases can be as much as 50 percent if you do your homework and target the right phones with the right features. It’s not without its risks, though; get the details wrong or make too many and you’ll end up paying for inventory you’ll never shift.
How much money are app developers making from Android?
Android users are famously more tight-fisted than Apple ones, partly because Android sells to people of all incomes and not just people in black polo-necks with more money than sense. That and the Play store’s well-documented problems with piracy and impersonation mean that Android developers don’t make as much as iOS ones: while more than 25 percent of iOS developers earn over US$5,000 per month, only 16 percent of Android developer make that much.
That money is more concentrated than with iOS, too. Android sees most of the money made by a handful of big hits, while the iOS money is a little more spread out. The real money is in enterprise apps, which is a market Apple is aggressively targeting.
How much money are criminals making from Android?
We don’t know, but the numbers are likely to be big. When malware can infect hundreds of thousands of devices globally the spoils can be significant. For example, one Android malware app that used premium rate SMS messages was estimated to rake in US$6-24 million for its creators, and large botnets have the potential to generate millions of dollars for their operators. Such malware is particularly prevalent in Asia, particularly China.
There are other, legitimate organizations making money too: intermediaries such as eBay and PayPal, subscription services such as Netflix, and firms using forked Android, such as Amazon. But it’s clear that for manufacturers and app developers, Android isn’t exactly a license to print money.
Have we missed anybody making it big, or do you think we should take some of the numbers with a pinch of salt? Let us know in the comments below.
I have bought Samsung phones ever since the Note3, but after they took away everything sd slot,removable battery,etc. Then they want to down size on screen size. Time to jump shipand say bye Android,Hello Apple
you're jumping from a phone that USED to have a feature to one that NEVER had that same feature? ? ?
. . . 'K
Apple made 94% of last qtr's smartphone profits not 92% .
"Android users are famously more tight-fisted than Apple ones, partly because Android sells to people of all incomes and not just people in black polo-necks with more money than sense." No.... not biased comment at all... whats the matter Gary, someone didn't get any nice presents for the holiday? How about you report impartially like a good boy and leave your chip at the door thank you.
If android users had sense they too would jump ship... and those that DO have sense... don't install ANYTHING for fear of malware. Right.... so much better. Before you say anything to further our opinion of your ignorance... Im no fanboy. In fact Im partial to Microsofts platform, unfortunately they don't have the apps and so the next best this is iPhone (from a security standpoint) with Android being relegated to hackers, has beens..... and disgruntled bloggers ;)
So you're saying Google isn't making money from Apple ????!!!!
Ummmmmmmmm.....
Google search ..... YouTube......Google maps .....
All exist on every iPhone ....
And I'm sure Apple pays Microsoft in royalties as well...
End of story !
The author never said that, please reread the article, it clearly states that Google makes more money from iOS than from its own Android ecosystem. Microsoft and Apple have a cross patent agreement signed in 1997 or 1998
I am Android user since 2011. Does the above finding matter to me in anyway over the years? No. I can buy the greatest Android smartphones I never had imagined. I get all the apps and entertaining content for my Android smpartphone. All together having this great experience is much cheaper for me than for an i-sheep. So there are nothing to complain as user. So why always write articles like 'look Apple' is doing better than'. It does simply not matter in our world.
We can read (but don't) such articles every day on Apple sites. So how an Android site comes to the idea at all to write such an article. Android lovers and authors should write about all the nice and fantastic things of Android. Android lovers and authors should encourage other people to join the open world of Android, instead of complaining here and there.
You should care because if your favorite OEM doesn't make money then they cannot compete over the long run.
This defies logic honestly. First off, we have no idea how much money Google makes off Android, as Google does not release detailed financial statements. Second, there are more ways to monetize Android than search. For example, Google Play paid out $7 billion to developers in 2014. Now recall that Google gets a 30% cut of every transaction, so from that we can infer that Google Play had $10 billion in app revenue in 2014, with $3 billion of that going to Google. And then there is sales/rental of movies, music and books through Google Play. Though technically Google Play is multi-platform (i.e. on Windows, iOS, Mac OS X, even Linux and Roku) not only are most Google Play purchases made through Android, but even the ones on other platforms are via accounts that people created for Android but use on other devices. (To put it another way: how many people who do not have Android devices listen to Google Play Music on Windows or rent/buy movies from Google Play on Apple TV or Roku, and if these people exist why do they do so?) There is also YouTube-related revenue that comes from Android devices. And speaking of devices, while Google obviously is no Apple, Samsung etc. they do make SOME money off the sale of Nexus devices, enough to where their problems with the Nexus 6 last year (shortages at launch followed by poor sales generally) and the Nexus 9 (a completely failed commercial product that was too expensive for casual use but too small for productivity) was enough for Google to note it in their financial statements and respond by bringing back the Nexus 5, making the Nexus 6 2.0 smaller, making both devices far cheaper and not coming out with a tablet at all (and rumor has it that the Nexus tablet this year will be another cheap Nexus 7 consumption device made by Huawei). Put it all together, and when we finally get the first detailed picture of Android revenue due to the Alphabet reorganization, that will end the nonsense about how Google makes only $3 billion a year on Android or how Microsoft makes almost as much from Android as Google does.
From the manufacturer side, the Sachs and other surveys are hogwash. First off, if so many companies are losing so much money on Android, how come we don't see companies abandon the business? Granted, we did see Dell stop making phones (no carrier agreements) as well as Motorola and HTC stop making tablets. We have also seen some smaller players like HP, Toshiba, Philips and Pyle stop making devices (more accurately tablets, and even Philips now makes Android TV devices). But not only are the rest still making devices, but more and more companies enter the Android device market with new phones (and to a lesser extent tablets) each year, and some companies are increasing their investment in such devices by bringing them to more markets. Also, does Sachs really include Asian companies in their analysis? Do they have any idea how much Chinese manufacturers such as Huawei, Xiaomi, ZTE, Asus, LeTV etc. are making? I bet their analysis of the Chinese market begins and ends with Lenovo and Xiaomi, the latter of which sells devices at cost so they can make money on services (which is also LeTV's strategy). There are also device makers in India: does Sachs analyze how much Karbonn, Micromax and Lava are making? If Android was losing so much money for so many people, most of these companies would have thrown in the towel in favor of the very lucrative and low risk market of making cases and bluetooth speakers for iPhones years ago. Instead, even if they are breaking even on Android phones but making a mint on their accessories (like the article's own LG example) then that is money that they would not have if they weren't selling Android phones so that should be factored in.
Excellent comment. I joined just to give this a "thumbs up." The article fell apart and descended into rhetoric for me after it implied $3billion made by Google through services on Android was insignificant. A writer needs a reality check when he/she thinks $3 billion in revenue is nothing to write home about. Imagine that..."Let's abandon Android because we only made $3 billion this year."
on the other hand...
at least one of last year's flagship android devices can be had at less than 50% of its original rrp
IMO the article is not saying that the Android is worthless but at such a large user base (almost 85% smartphone market share across the world) the parties involved in Android ecosystem are making very less money if we compare it to iOS ecosystem and this is really a point of concern.
16% of Android developers make more then $5,000 a month from Android. While this article tries to make that sound pitiful, that's actually a very large number of developers. Some are big, others small indy shops with one or two people. Android is a money earner for those developers and if that monthly amount was lowered to $2500 a month, the number would probably exceed 50%. Many of those developers live in places where $2500 a month is a living wage. The iOS numbers are nice too and when one considers that many Android developers also have an iOS version (and vice versa), the app developer ecosystem is alive and doing well. I guess the point of the article was to make it seem like Android is worthless but really, it's far from that. It's a gold mine for those that can develop useful and interesting applications.