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.
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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.