Google Android Skyrockets To the Top

Google cornered the market on internet search and now they are doing the same on smartphone operating systems. In research conducted by Gartner it was speculated that by the end of the year the Google Android system will have surpassed the operating systems of the Apple iPhone, RIM BlackBerry and Microsoft Windows phones when it comes to preferences among users. The Android is well on its way to battling Nokia for the world’s most popular mobile OS.

According to the forecast, Google will achieve 17.7 percent of all sales worldwide by the end of 2010 which is a drastic jump from the 3.9 it held at the end of 2009. And the growth continues according to Google who claim a couple of hundred thousand phones are activated daily.

Many of the popular, and cost effective, brands of phones will offer an Android version this season which will skyrocket Google towards the goal of doubling the share of the market currently held by iOS, Apple’s iPhone operating system.

The rise of the Droid has happened much faster than Gartner had predicted last year. Roberta Cozza, principal research analyst at Gartner, says the success is all about the mainstream appeal of the Android phones. While phones like iPhone remain something specifically for the high end user, the growth of the Android will rely on cheaper smartphones and a more mainstream customer base.

Gartnet predicts that 2014 will see Android and Nokia’s Symbian accounting for 30 percent of the market each followed by Apple’s iOS with 15 percent. BlackBerry will be close behind in fourth with 12 percent.

Research firm IDC has also predicted that Android will see a high growth but their predictions were not quite as high as Gartner. They see Android with 24.9 percent in 2014 tailing Symbian’s 32.9.

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Google’s Mobile Business To Hit $1 Billion This Year

For several years now search giant Google has been saying that mobile is one of their most important areas for growth.

In their most recent quarterly financial report, Google announced that they expect their mobile business to reach $1 billion in revenue this year.

Just over two years ago, Google CEO Eric Schmidt was interviewed on CNBC’s Mad Money with Jim Cramer, and he stated that eventually Google can make more money from mobile than it does on the desktop.

Eric Schmidt

“We can make more money in mobile than we do in the desktop eventually… and the reason is the mobile computer is more targeted. Think about it: you carry your phone, and your phone knows all about you… we can do a very, very targeted ad. Over time we will make more money from mobile advertising… not now, but over time.”

In their Q3 2010 financial report, Google reported quarterly revenue totaling $7.29bn, up 23% year-on-year (excluding traffic acquisition costs paid to partners, Q3 revenue was $5.48 billion). Profit jumped 32% to $2.17 billion.

However, Google was keen to point out that it has been growing outside of its traditional search area, with SVP Product Management Jonathan Rosenberg, telling financial analysts that Google has reached three key milestones:

it is on track to generate $1 billion a year in revenue from mobile devices,
it expects to gain $2.5 billion a year in revenue from display ads, and
it’s monetizing 2 billion views of YouTube videos a week.

CEO Eric Schmidt commented, “Our core business grew very well and our newer businesses, particularly display and mobile, continued to show significant momentum.”

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Apple’s booming iPhone sales have been fueled by the more than 200,000 items in the company’s App Store.

The Android Marketplace is the closest competitor to Apple’s App Store, but it is only has one quarter of the number of applications as the Apple App Store. However, that total is rising rapidly, allowing Android to close the gap with its more established rival.

Google’s Android operating system is tipped to prevail in a key battleground in the smartphone wireless wars with Apple, with Android’s share of the smartphone market forecast to surpass that of Apple’s iPhone iOS.

Tech industry analyst iSuppli predicts that Android will be used phones by 75 million smart phones by 2012, up from 5 million in 2009.

Meanwhile, iOS usage will amount to 62 million in 2012, up from 25 million in 2009.

This will give Android a 19.4pc of the global market for smart phone operating systems in 2012, up from 2.7pc in 2009. Apple’s iOS for the iPhone will see its share rise to 15.9pc in 2012, up from 13.8pc in 2009. In 2014, Android’s share of global smart phone OS usage will rise to 22.8pc, while iOS will decline to 15.3pc.

“Android is taking the smart phone market by storm,” said Tina Teng, senior analyst, wireless communications, for iSuppli.

“The OS started with entry level models in 2008, but the flexibility Android offers for hardware designs and its appealing business model in terms of revenue sharing have attracted vigorous support from all nodes in the value chain, including makers of high-end smart phone models.

“Cell phone OEMs representing all tiers of the industry have committed to support Android, including Motorola, Samsung, Sony Ericsson, LG, Huawei, AsusTek and ZTE. This broad industry support will allow the Android OS’s usage and market share to exceed that of its chief rival—iOS—in 2012, just five years after its introduction.”

While Apple’s family of iPhone products continues to be the standard by which all other smart phones are measured, the proprietary nature of the iOS and Apple’s closed system business model will limit the number of smart phones with the operating system.

The attached figure presents iSuppli’s forecast of global usage for the Android and iOS operating systems in smart phones.

War over wireless hegemony

Google and Apple are engaged in a fierce battle for control of the wireless market, which represents the most lucrative growth opportunity in the technology world today. Both companies have their eyes on the huge revenue growth expected in wireless data.

iSuppli predicts that global carrier revenue for wireless data services, excluding messaging but including data access fees, will grow to approximately US$250 billion by 2014, up from US$108.6 billion in 2009.

However, the size of the over-the-top mobile broadband revenue from premium content, services, applications and advertising, a market that is in its infancy today, could exceed US$100 billion in 2014. This is the area that players like Apple and Google are attempting to target.

But both these companies are adopting very different business models to unlock value in the mobile broadband value chain, according to Jagdish Rebello PhD, senior director and principal analyst at iSuppli.

“While Google is trying hard to capture market share in the smart phone market, Apple’s strategy is aimed at making its products highly desirable but not necessarily affordable for the mass market,” Rebello said.

“Apple has been successful in doing this with its friendly User Interface (UI), its slick OS and its well developed ecosystem of apps and content providers.”

Battle for the planet of the apps

The Google/Apple wireless battle extends from the smart phone sales race between the iPhone and Droid lines, to the applications front with Apple’s App Store and Google’s Apps Marketplace, to the advertising battle between Apple’s iAd and Google’s AdMob and to a range of location based services that both are trying hard to develop and monetize. The market share competition between Android and iOS represents a central front in this fight.

In the smart phone industry, mobile applications, multimedia content and sleek user interfaces are the key attributes driving device sales. Apple’s mastery of these items allowed its share of global smart phones to rapidly rise to double-digitpcages.