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Even With Apple’s Successful Launch On Verizon, Google Continues To Increase It’s Lead In The Smarthphone Space

Reggie Middleton's picture





 

As one of the earliest proponents of Android’s chances
of taking over the smartphone space, I have received my fair share of
doubts and criticisms. Fast forward a year or so into the future, and
you will find evidence that Google may lock up the smartphone market
within a year! Any who proclaim that Android is not making money must not be looking very hard at the numbers.
Android is propelling its vendors sales, earnings and market share
through the stratosphere while at the same time cementing Google’s
control over the fastest growing and largest computing segment in
history. I am at a loss as to what is so difficult in seeing this. As
you read through the tally’s

Wikipedia on the Network Effect:

In economics and business, anetwork effect (also callednetwork externality or demand-side economies of scale) is the effect that one user of a  orservice has on the value of that product to other people. When network effect is present, the value of a product or service increases as more people use it.

The classic example is the telephone. The more people own telephones, the more valuable the telephone is to each owner. This creates a positive externalitybecause a user may purchase a telephone without intending to create value for other users, but does so in any case. Online social networks work in the same way, with sites like Twitter and Facebookbeing more useful the more users join.

below, keep in mind the power of the “network effect”  which exponentially increases the value of a service or product as more people use it, often creating universal standards where there were none.  This is how:

  1. Microsoft became the de facto desktop installation,
  2. how Google became the de facto search engine (people Google things, they don’t search for things)
  3. how the Apple iPod became the de facto portable media player platform,
  4. how Facebook became the de facto social netwowk, etc.

Google is on track to become the ’90s version of Microsoft on the
connected smartphone., basically the de facto standard of mobile
computing and communications, yet it is still valued as a search engine –
see Google’s Q1 2011 Review: Part 2 Of My Comments On The Gross Misvaluation of Google. Google’s innovative business models and outright acquisistive aggression haspositioned in well for the future. Microsoft, the king of capitalizing on network externalities, now feels sufficiently threatened not just on the mobile computing front, but the enterprise front (which has a significant amount of overlap, as well. Tom Rizzio, a higher up at Microsoft, obviously feels sufficiently threatened to go on the FUD rampage against Google’s Google Apps, which is to be expected since that is how the big tech companies operate. The caveat here is that Tom know acknowledges Google as both a signficant threat and a viable competitor in its most lucrative of lucrative franchises. As excerpted from his post on Microsft’s Technet blog and more importantly as carried on in the major tech newsrags:

On the surface, Google Apps may seem like acceptable replacements for enterprise-grade products such as Microsoft Exchange Server or Microsoft Office. But many IT organizations have found that Google Apps bring extra, hidden costs. Organizations that have evaluated Google Apps have found that the projected versus actual costs of switching to Google Apps greatly increase their total cost of ownership (TCO). In particular, these IT organizations have found that Google Apps are not enterprise-ready and are inadequate without costly add-on applications, even for most small- and medium-sized organizations. The three general areas where organizations feel the Google Tax most strongly are deployment, IT support costs and user training.

 

For those who do not subscribe to BoomBustBlog and have not read our forensic valuation of Google (63 pg Forensic Valuation, to plug in your own assumptions see Google Valuation Model (pro and institutional) I urge you to review A Realistic Look At The Success Of Google’s Investment History
to see the rate of return Google garners from its investments, for it’s
investing harder now than at anytime in its history and the market mistakenly takes it as a loss of control in expenses.

It is obvious that:

  1. Nokia (see Nokia/Microsoft Alliance & Android’s Commoditization Of The Mobile Computing Platform),
  2. RIM (see Blackberries Getting Blacked Out, Imitate Amateur Base Jumpers Sans Parachute!),
  3. Apple (Steve J,obs Calls End Of the PC, We Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof!)
  4. and Microsoft

fail to view Google as the market does. The reason is that these guys
know what time it is. Remember, the market is still valuing Google as a
search engine and advertising company. This is how Microsoft is looking
at Google and why Tom Rizzio is bitching in the excerpt above…

 

Google wins legal faceoff with Microsoft over key government contract

Google Inc. won a major victory in a lawsuit against the U.S. Interior Department this week when a federal judge ordered the federal agency to hold off on a request for a bid to upgrade its e-mail system after Google argued that the process favored rival Microsoft Inc.

Susan Braden, a federal judge in Washington, issued a preliminary injunction that blocks the Interior Department from deciding to use Microsoft’s e-mail and other software for its 88,000 employees. The order was unsealed Tuesday.

The contract, worth up to $59 million, is part of the federal government’s migration to Web software. Google asked for the injuction, arguing that the bidding process was designed with Microsoft products in mind.

Braden ruled that Google had made a preliminary showing that the Interior Department violated rules covering competition in contracting and sent the matter back to the agency. Braden wrote that the injunction served the public interest and prevented “competitive harm” to Google. But she did not find any basis “to support Google’s allegations of bad faith.”

The Interior Department could appeal Braden’s decision or modify the bidding process. A spokeswoman from the agency declined to comment on “ongoing litigation.”

The ruling comes as Google and Microsoft compete to win business from federal, state and local governments in the lucrative arena of supplying online e-mail and other software. The Internet search giant is taking on Microsoft in the government market, which Microsoft has long dominated.

This is not Google’s only victory in large scale cloud installations against Microsoft. See Google’s ‘Gov Cloud’ Wins $7.2 Million Los Angeles Contract:

Having largely resolved concerns about privacy, cost, and security, the City of Los Angeles has 

The Los Angeles City Council on Tuesday voted unanimously to approve a $7.2 million deal with IT contractor Computer Sciences Corp. to replace the city’s existing Novell GroupWise e-mail system with Google Apps, Google’s suite of online communication and productivity programs. Microsoft Office licenses will be reduced but not eliminated, as select city workers will continue to use Microsoft’s software.

The hotly contested deal calls for shifting about 30,000 city workers over to Google Apps in the next year.

Part of the reason Google won the deal appears to be cost: The City Administrative Officer (CAO) expects “Going Google,” to borrow Google’s marketing catch-phrase, will cost the City an estimated $17.6 million over five years. Remaining with Novell, the CAO estimated, would cost $23 million.

Smartphones, tablets, de facto desktop search and the cloud combine to make a lethal combination to competitors. Witness the network effect in action and realize exactly how powerful a search engine can be when enough people use it.

The most recent tally from the metrics companies are out and as was expected, Apple’s Verizon launch did much in significantly boosting their numbers, but…

Comscore’s take:

… reporting key trends in the U.S. mobile phone industry during the three month average period ending January 2011. The study surveyed more than 30,000 U.S. mobile subscribers and found Samsung to be the top handset manufacturer overall with 24.9 percent market share. Google Android took the lead among smartphone platforms with 31.2 percent market share, after two short months in second place.

OEM Market Share

For the three month average period ending in January, 234 million Americans ages 13 and older used mobile devices. Device manufacturer Samsung ranked as the top OEM with 24.9 percent of U.S. mobile subscribers, up 0.7 percentage points from the three month period ending in October. LG ranked second with 20.8 percent share, followed by Motorola (16.5 percent), RIM (8.6 percent) and Apple (7.0 percent).


Top Mobile OEMs
3 Month Avg. Ending Jan. 2011 vs. 3 Month Avg. Ending Oct. 2010
 
Total U.S. Mobile Subscribers Ages 13+
 
Source: comScore MobiLens

Share (%) of Mobile Subscribers
Oct-10 Jan-11 Point Change
Total Mobile Subscribers 100.0% 100.0% N/A
Samsung (Android)
24.2% 24.9% 0.7
LG (Android)
21.0% 20.8% -0.2
Motorola (Android)
17.7% 16.5% -1.2
RIM 9.3% 8.6% -0.7
Apple 6.4% 7.0%

0.6

Smartphone Platform Market Share

65.8 million people in the U.S. owned smartphones during the three months ending in January 2011, up 8 percent from the preceding three-month period. Google Android captured the #1 ranking among smartphone platforms for the first time in January with 31.2 percent market share. RIM ranked second with 30.4 percent market share, followed by Apple with 24.7 percent. Microsoft (8.0 percent) and Palm (3.2 percent) rounded out the top five.


Top Smartphone Platforms
3 Month Avg. Ending Jan. 2011 vs. 3 Month Avg. Ending Oct. 2010
 
Total U.S. Smartphone Subscribers Ages 13+
 
Source: comScore MobiLens
Share (%) of Smartphone Subscribers
Oct-10 Jan-11 Point Change
Total Smartphone Subscribers 100.0% 100.0% N/A
Google (via Android)
23.5% 31.2% 7.7
RIM 35.8% 30.4% -5.4
Apple 24.6% 24.7% 0.1
Microsoft 9.7% 8.0% -1.7
Palm 3.9% 3.2% -0.7

Of course, these numbers from Comscore don’t take into consideration the full effect of Apple’s Verizon iPhone release, which made (by far) the biggest contribution to the best performance I have seen a large company produce, ever. So, let’s look at the numbers that do capture the full “free iPhone” effect…

IDC: smartphone market grows 80 percent year-on-year, Samsung shipments rise 350 percent


As you can see, Apple’s iPhone launch contributed heavily to a near
115% jump in shipments and a 3 percentage pop in market share. Those are
some heady numbers, that, when combined with the RIM’s fumbling places
then 2nd in smartphone shipments. But… those guys who have been pushing
Google’s Android have literally grown their shipments several multiples
of that of Apple. Samsung up 350%, HTC up 230%!!!
Apple’s big pop came from its introduction of the iPhone on the
nation’s second largest carrier. This is a stunt that cannot be
replicated for similar results. It does appear that Apple is prepping
iPhones for T-Mobile, and maybe even Sprint, but they will not get this
same effect. If the Android vendors repeat or increase this rate of
growth next quarter (which is the most probably scenarios since both
Samsung and HTC have produced phones which are mainly acknowledged to be the best there is by the media) while Nokia and RIM continue their slide (also quite probable – Blackberries Getting Blacked Out, Imitate Amateur Base Jumpers Sans Parachute!), then Samsung will capture the 1 or 2 spot by next quarter while HTC will be in the 2nd spot or 3rds spot just behind Apple.


Remember the power of the network effect. It turns externalities into
cold hard cash faster than many would be led to believe by Apple’s
marketing staff:

If you can’t see how Google will monetize Android yet, picture the
network effect as Android takes over and Google starts to charge ala
Microsoft, et. Windows!

 

 


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Sat, 05/07/2011 - 00:05 | Link to Comment williambanzai7
williambanzai7's picture

Reggie, I think you have driven this meme into the ground.

You know as well as I do that Apple's success is not an accident. I would go one step further. Jobs is the straw that stirred the drink. But I think the man has also done a much better job of instilling his vision into the culture of the company than he is given credit for. The balance between the engineering and aesthetic creative impulse is uncanny.

It is impossible for one man to do everything.

Fri, 05/06/2011 - 15:58 | Link to Comment mkkby
mkkby's picture

Why so many negative write ups about apple from this author?  Are we supposed to belive he's not talking his book, or is this just the only subject he obsesses about?

Fri, 05/06/2011 - 14:58 | Link to Comment williambanzai7
williambanzai7's picture

Reggie, I think you have one factor in your favor: There is no such thing as a perpetual empire. 

Unfortunately, you are trying to beat this Apple horse midway up a long and deserved upward trend line.

They beat the pants off the field and O' Benjos fiat shitting binge is really not something they can be rightfully blamed for.

One thing is certain. The people running APPL are not obsessed with the stock price like so many others are.

If they were, they never would have accomplished what they have accomplished to date.

 

Fri, 05/06/2011 - 15:09 | Link to Comment 3.7.77
3.7.77's picture

10,000 monkeys beating on typewriters will eventually type

Reggie Was Right!

Fri, 05/06/2011 - 15:29 | Link to Comment Dr. Acula
Dr. Acula's picture

So did you have an actual refutation to post, or have you just spent your 5 weeks at this site reducing signal-to-noise ratio?

 

Fri, 05/06/2011 - 13:33 | Link to Comment Pez
Pez's picture

When the SPOOKS do your books, and you keep pumping out personal information, even your the CEO's excriment will smell like roses.

Fri, 05/06/2011 - 13:13 | Link to Comment Zero Govt
Zero Govt's picture


..Google will monetize Android... the network effect as Android takes over and Google starts to charge ala Microsoft Windows!

You mean users will run decade old XP and reject all the bug-ridden, virus attracting shambolic Microshite new Windows products (rehashes) because they're unstable and un-useable? It's the single biggest, longest ongoing farce in computing history (the incompetence of monopolists and not having a free market).

You probably didn't mean that Reggie but i couldn't resist the MS dig, sorry!

Anyway i like your summation: everybody (Apple, RIM, Nokia, Motorola et al) are also-rans, Google Android is going to 'Win Big'.

Are you enjoying working for/at Google Reggy?

Fri, 05/06/2011 - 13:49 | Link to Comment Dr. Acula
Dr. Acula's picture

>bug-ridden, virus attracting shambolic Microshite new Windows

Nah, Windows 7 64-bit is fantastic. Big security improvements, great stability (Ctrl-Alt-Del, Task Manager never fails to kill a haywire program unlike Ubuntu OS which hangs on me frequently), and you can plop in a new motherboard and Windows 7 spends like 2 seconds downloading and updating drivers. Plus, I dare you to try running XP with 8+ logical cores, 16+ GB RAM and 2+ TB drives.

>the incompetence of monopolists and not having a free market

I'm not sure why Microsoft would be a monopoly. Mono = one, and last time I checked there are multiple OS's on the market. Plus, even if they were a monopoly, monopolies formed through voluntary exchanges are compatible with free markets. However, the monopolists face a couple of economic problems: 1) new challengers entering the field, attracted by profit opportunity; and 2) loss of ability to operate rationally and perform economic calculation involving the exchanges of goods and services between internal divisions of the company - this is caused by a growing absence of the pricing information normally provided by the market process.

I do agree with you in that it's not a free market. Not when the DoJ anti-trust regulators and patent enforcers (who are actual monopolists) agress against Microsoft, Google, and others.

 

Fri, 05/06/2011 - 17:54 | Link to Comment Zero Govt
Zero Govt's picture

Dr Acula

Yes, yes i understand your 1st paragraph. Let me repeat and hope you get the facts (from an end-user representative) a 2nd time round: "bug-ridden, virus attracting shambolic Microshite". Hope we're crystal clear on the facts not your 64bits

"I'm not sure why Microsoft would be a monopoly. Mono = on"

90% of the software market, to the worlds utter frusttation! A monopoly in UK legal terms is deemed anyone with a 20% market share for your information

"last time I checked there are multiple OS's on the market"

Go into a local computer superstore or retailer. See how many OS you can find (ie, check). Microshite have monopolised the retail channels. This is the problem with consumers being suckered into big national retailers, it leaves them vulnerable to other big brands monpolising those big channels, like Microshite. 

"DoJ anti-trust regulators and patent enforcers (who are actual monopolists) agress against Microsoft"

Yes we agree the regulators are shite and we agree patent agents are merely agents of monopolists. There should be no patents or regulators, both are protection rackets against the free market (competition)

Fri, 05/06/2011 - 14:15 | Link to Comment tgatliff
tgatliff's picture

You might want to add "paid for by Microsoft" item on the bottom...  Anywhere you see "Windows" and "fantastic" in the same sentence generally is a MS commercial.  Also, denying everything and putting up annoying UAC messages does not constitute as "Big security improvments". Finally, stability???  Umm... What again is the great stability enhancements since Windows XP??   Let me answer that for you... NONE....

Finally... Comparing Windows to Linux and/or OSX/iOS (especially on stability) is laughable...

Fri, 05/06/2011 - 14:32 | Link to Comment Dr. Acula
Dr. Acula's picture

>Comparing Windows to Linux and/or OSX/iOS (especially on stability) is laughable...

Where's your proof? I'm not an OS marketer and I don't care to refute your FUD; I will only give you anecdotes. Ubuntu 64-bit has crashed on me frequently. Android locks up sometimes. But Windows 7 64-bit has NEVER crashed on me (except when I undervolted my CPU).

 

Fri, 05/06/2011 - 15:09 | Link to Comment 3.7.77
3.7.77's picture

The proof is in the usage.

Guess your stuck with the blue screen of death model.

lol

Fri, 05/06/2011 - 15:38 | Link to Comment Dejean Splicer
Dejean Splicer's picture

We all hate the BSOD especially when Team Tyler sends it your way. DOSzap'ed.

MS for those that really don't give a shit. For those that do, roll your own bitchez. http://www.kernel.org

I know, I know, the google skynet takeover http://skynet.kernel.org (CIA). Just keep your lean and mean kernels from days past. I think they will soon have great value.

Fri, 05/06/2011 - 16:31 | Link to Comment SwingForce
SwingForce's picture

BSOD is an underpowered INTEL system, I have NEVER had a BSOD using AMD Athlons and plenty of ram (2 gigs) XP Pro. Anyway, Reggie's article points to the cross-platformization of Google Docs from the desk to the phone, and yet there is no CHROMEIUM operating system for desktops (yet). Still waiting. 

Fri, 05/06/2011 - 15:26 | Link to Comment Dr. Acula
Dr. Acula's picture

Have you even tried Windows 7?

With Windows 7 I have great experiences, especially with gaming.

Hope you enjoy spending all day in vi/emacs editing etc config files or Makefiles or whatever it is you do with your OS.

Fri, 05/06/2011 - 13:17 | Link to Comment Reggie Middleton
Reggie Middleton's picture

You need to put your likes and dislikes aside and look at the facts. Microsoft products have the most viruses becuase Microsoft products have the most market share. If Apple OS X makes it to 90% market share, you can bet your ass every little hacker will spend their time writing worms and associate critters for that OS instead. Which would you target your efforts at as a hacker, 905 market share to get known, or 13% market share just for the kicks. 

As you probably know, Apple's notebooks and desktops are gaining share, and guess what will happen next. You guys are sorely mistaken if you think ANY system is virus or hack proof. It's your security procedures (ex. how you act on said machine/system/network and care for it) that protect your system, not the brand name attached to it! Be aware, I hacked my iPad in under 60 seconds by clicking a graphic on a web page.

 

Why malware for Macs is on its way

 

Fri, 05/06/2011 - 17:27 | Link to Comment Zero Govt
Zero Govt's picture

Reggie

"You need to put your likes and dislikes aside and look at the facts."

Yes I'll put aside my 30 years of suffering endless Microshite bug-ridden garbage and 3 years smooth running on Apple, look past my facts and do my best looking at your facts

"Microsoft products have the most viruses becuase... the most market share"

Do Toyota have the most breakdowns because they produce the most cars? Nope, nonsense. Microshite admitted a few years ago Linux bugs and virus were fixed 16 times faster than MS's own slothful usually inept fixes. The difference is one is open source, the other is a corporate monopoly with protected source code.

All monopolies have consistent themes; they produce garbage products, they are unresponsive/slow at every level, the system is insecure. The reason MS attracts viruses is a product of its 90% software monpoply, a dinosaur is an easy target compared to the moving target of 100 ants (operating systems) that a free market would offer.

The Microshite monopolists have got what they built themselves into, a slow moving big fat target, a diseased dinosaur (and a deserved extinct one very soon too) 

"Apple's notebooks and desktops are gaining share, and guess what will happen next."

i've got both but no i've no idea what will happen next! I think one virus appeared for the iPhone out in Australia and was quashed within a month. A stark contrast to Microshite security being totally inept, their fixes not working, theipartners like McFee bogging the entire system down to a snails pace, costing a fortune and not working the list goes on and on.

Last 2 Microshite laptops i had were bug-ridden within 2 weeks and lasted barely a year needing constant servicing to keep the diseased buggers alive another month! Gates and Bulmer should be in fuking jail for flogging garbage across the planet not rolling in Billions for selliing absolute shit for decades

Fri, 05/06/2011 - 14:31 | Link to Comment Dejean Splicer
Dejean Splicer's picture

You do realize that when you have as many developers as MS has exploits to your OS are a function of your indebtedness to your lizard overlords.

You stupid fucking moron. If you have never developed your own OS than you should not talk as if you have.

Please call Ileane(the other worthless contributor) and have a mass suicide(car exhaust).

Fri, 05/06/2011 - 16:14 | Link to Comment nufio
nufio's picture

most of the hacks in windows are not in core kernel but kernel drivers.

The security model of the kernels for most of the operating systems are similar.

I must admit I dont know much about mac os but all i know is that its a unix based kernel.

I am guessing they dont have many drivers, or dont allow apps to install drivers, which reduces the attack surface also reduces the number of useful apps written for the platform.

All this stuff about better programmers/technical knowhow at certain companies is all bullshit. Most of the kernel/driver developers have experience in a lot of OS platforms. They dont have this fanboism that the mac/android/pc users do.

And yeah about all the programmers that complain about outsourcing. I just see it as a global wage arbitrage. If you are for protectionism then u are also for isolationism. Either way standard of living in the US is going to go down. You cant have cheap imports and high wages. Its one OR the other.

Fri, 05/06/2011 - 14:17 | Link to Comment tgatliff
tgatliff's picture

Reggie... WOW... I didnt realize you hadnt updated your iPad from the original 1.0.1 firmware.... The root exploit no longer exists, but the way... Also, one of the main reasons for the "App Store" was security based.  Meaning, no you wont see anymore viruses like you like in the old Windows XP days...  I mean do you know of any iPod/iPhone/iPad viruses in over the 100 million sold??? Hmm.... Neither do it...

Comparing MS products to anything else in reference to security is laughable.   The very design of the Windows OS is one giant hack.... Instead of rewriting Windows and risking loosing market share, they just lumped on more fundamentally flawed ideas like UAC.  Add to the fact they "outsource" most of the development to foreign countries, and you are left with not only worthless products, but also a company that can no longer produce anything...

And finally yes... There are many Unix/linux server systems that are "hack/virus" proof.  In banking where SE Linux implementations are the standard, it is laughable to can "hack" these systems.  Even if an app exploit exists (and there are several), it doesnt really buy you very much...

Fri, 05/06/2011 - 14:23 | Link to Comment Dr. Acula
Dr. Acula's picture

>The very design of the Windows OS is one giant hack

It is far worse with Unix, which has not one but TWO different file locking mechanisms, neither of which are actually enforced but are only "advisory". Wow, great design there.

Fri, 05/06/2011 - 13:02 | Link to Comment KingPin 999
KingPin 999's picture

Leaving Google aside you do realize that Apples makes

close to 100% of all profits from portable music devices

50% of all profits in the cell phone industry

30% of all profits in the computer market

75% of all profits in the digital music business

You bashing Apple is the height of stupidity.

Fri, 05/06/2011 - 12:32 | Link to Comment mr.glitch
mr.glitch's picture

I want a smarthphone

Fri, 05/06/2011 - 12:26 | Link to Comment Zero Govt
Zero Govt's picture

still flogging a dead horse Reggie?

...not long now for it to be sent to the Goo, sorry glue factory!

Fri, 05/06/2011 - 16:06 | Link to Comment Popo
Popo's picture

Microsoft should be far more worried about OpenOffice.   Google Apps?  LOL.  OpenOffice is 100% free, runs faster than MSFT products and has about 100x the features of Google Apps.  

 

Fri, 05/06/2011 - 16:46 | Link to Comment Zero Govt
Zero Govt's picture

Dejean

i like to dig Reggie now he's on the (paid) staff at Goofball but don't mistake that with disrespect as i have much admiration for Reggies work... as for Dim Cramer he isn't fit to clean Reggies dishes

Fri, 05/06/2011 - 14:21 | Link to Comment Dejean Splicer
Dejean Splicer's picture

Lolz. The name is Creggie. A hybrid of Cramer and Reggie the Clown.

Time to open a pizza restaurant for kids called Creggie's:

http://oi56.tinypic.com/seww7n.jpg

~D'jean Splicer

Do NOT follow this link or you will be banned from the site!