Chris and David had an interesting discussion today on whether Android is going to dominate and take over the whole smartphone market like Microsoft did in the 80’s and 90’s to the PC market. Listen in as they share their opinions on this matter and what it means for app publishers and developers.
- Is Android going to be the default OS for smartphones?
- 85% of the global 300 million smartphones that were ship in Q2 were running on Android
- Microsoft and Blackberry are shrinking in terms of operating system market share
- Apple vs Google’s Android: who is the real winner?
- Launching apps on Android first before going to iOS or vise versa
- It doesn’t matter which OS monetizes better but on how many devices you can support
- Google’s deep linking feature within apps
- Is Apple losing innovation because of their review process?
- Android OEM’s fragmentation issue
- More brands are recognizing the value of advertising in mobile
- Focusing more on business to business apps
Resources and Links Mentioned in this Episode
Chris: Hi and welcome to another episode of the App Business Podcast. We’re gonna talk about “Is Android gonna dominate and take over this whole smartphone market?”. Like Microsoft essentially did in the 80’s and 90’s to the PC market. And we’re joined by David. What’s up David?
David: Hey Chris. Yeah it’s a really exciting topic actually. I mean we all knew that Android was underviewed and all but those numbers are amazing I think.
Chris: Yeah. So the specific article were talking about is something like TechCrunch. It was by Ingrid. Ingrid has contacted me a couple of times. She is writing on how the latest shipment numbers for Android devices are out and 85% of the global 300 million smartphones that were ship in Q2. This is shipped not sold. So this is like anticipation of sales. 85% of them were running Android. So that could be Amazon’s phones, it could be Samsung’s phones. A lot of them, right. Basically almost anything but an iPhone is using Android except for of course Blackberry and Windows. But well there’s others but it almost doesn’t matter because look 85% of them are Android. And we know that on a global revenue perspective, at least from ad networks and the stores, iPhone and Apple makes up 50% roughly of the revenue. So there’s just a lot of implications of Android dominating. But the big thing about Android dominating is are they going to do like Microsoft did to personal computing where they just become the default OS and Apple relegates itself like it did in the personal computing space to being the one that made it famous and popular and then garnering 5% of the market for the next 20 years which is basically what happened with PC market. Like the fact that we call it a PC, a personal computer and were referring to a Microsoft device shows you how bad Microsoft won that. And really the numbers have been like Apple gets 5% of this dekstop/notebook space over the last 20 years which is not the position I don’t think that Apple would want to forecast themselves over the next 20 years.
David: Yeah and to just state maybe the obvious first. This is what we expect is a two-horse race and fun enough the article is called a one-horse race. But you know maybe this is obvious but Microsoft and Blackberry are shrinking. And those are number 3 and 4 in those stats regarding system, operating system market share and operating system shipments. And I mean with Microsoft is actually a bit surprising that they lose market share. I think they were doing not that bad but apparently you know still losing and what is so surprising is how far had Android is now with the shipments in this month or this quarter. Well the real – the analogy with the PC market is so interesting because you would think that Apple has learned a lesson there with the PC market. But on the other hand, like how should a company like Apple where the controlled quality experience is sort of in there DNA. Like how should they do something different when that’s what they do best and that’s all they can do. How should they change that?
Chris: You know I’m sure Steve Jobs talked about this. I never read his biography but I’m sure he talked about what his perspective of the PC battle was. I think a lot of Apple fan boys would say – oh no Apple won, Apple won. It’s like dude, no they didn’t. No, they did not, right? I mean even in this article they’re talking about and Tim Cooks reference this often – hey we’re in the high end and were not competing at the low end and this is growth of the low end especially emerging countries, emerging economies and all this kind of stuff. So yeah were not gonna win in China and were not gonna win in Brazil and Russia and India. Like Google or Android’s partners go and win at the low end etc etc. Okay that’s great but were talking that while the device shipments both grew, you know Android and Apple operating system devices both grew. Quarter of a quarter, it’s year over year but comparing Q2 to Q2, 13 to 14. Android’s market share has grown, Apple’s has not. Apple is actually gone down for a global OS market share. Even if their devices are increasing just because everything’s growing so fast. But 85% is holy smokes I had no idea it was that significant. And even if it’s at the low-end does that mean Apple is repeating what we were just talking about in the PC space. And if they are, then they don’t become – they’re definitely not irrelevant. It just means they’re gonna lose again, right?
David: Well it really depends what you define as winning and losing I guess. Of course Apple is making tremendous money and who else is really making money on this is hard to say. So you know we know Samsung is profitable but nowhere near the amount of profit that Apple makes in their devices. And I don’t think any other Android device manufacturer is operating profitable at the moment. So they might take a giant market share but at a price so to speak.
Chris: Oh I don’t know. Amazon and Google are making money.
David: Yeah but you know how much money is Google really making from Android yet? It’s more like a positioning game where nobody wants to be left in the dust. Nobody wants to miss this opportunity and I’m sure Google makes some money on their mobile advertising but they make the money on mobile advertising on iOS as well, right? So in terms of financial success, I mean I wouldn’t say Apple is losing or anything like that. But what this means for us publishers and developers is that while even before this quarter numbers here, you couldn’t ignore Android. I mean that time is long gone but maybe at least for some growing number of usecases you need to pay more attention to Android than iOS while currently it’s still the preferred or the usual way to do things is to start with iOS and to focus on iOS and then Android is getting more or less quality replicas of that.
Chris: Yeah there’s almost two schools of thought. It’s like you start with iOS because iOS monetizes better or you start with Android because you can update and optimize an app so much more easily on Android because it’s like instant submissions and approvals. But Android more closely replicates a website experience for a developer and publisher than Apple does with it’s review process. So there’s only two schools of thought there. I still publish everything first on iOS because it makes money first and I can test all that stuff whereas with Android it takes me too long to get significant amount of users to test my app so I can get significant data, la la la la la.
David: Let me give you a comment on that. So I think that’s right for the kind of apps that you’ve been doing but there’s a certain and I think it’s a lot of usecases where you launch an app and it’s a pretty big thing and it’s not like I launch 10 or 20 apps every month. So you know when a launch doesn’t work very well for one app, it’s not a big deal. For most people, it’s the opposite where they have one app, they worked on it for two years, it’s the team of five people or whatever and they need to make sure it works very well. Now you know so far most startups launch on iOS first. But I think increasing it might be a good strategy to first launch on Android maybe a little bit more quitely than something like a public beta where everbody is free to download it from the Android store, from Google Play. But you don’t advertise it that much or something like that. And then you can..
Chris: It’s like SuperCell launching in Canada first.
David: Yeah like that and you can iron out all the bugs, all the problems, optimize and monetization, all that kind of stuff then you launch on iOS with all the lessons learned from Google Play where you know it’s not going to be bad if you launch with a version that’s not a hundred percent polish because the launch doesn’t matter that much. And then you can launch on iOS where the launch does matter a lot.
Chris: Yeah. You know I’m realizing again I’m thinking in terms of consumer apps but I need to change my thinking because like for example OptinMobile, it almost doesn’t matter which OS monetizes better. It’s how many devices can you support? And if the clients of OptinMobile can reach their audience more. If more of their audience is on Android then we need to be on Android. They don’t care about how many people are buying in-app purchase because they’re not selling anything like that.
Chris: So it’s just reminding me like not only in Android pervasive and easier to work with, it’s dominating. And we just don’t think, I don’t think like that because I still look at revenues and where I’m making my money and all this kind of stuff. But it’s a – there’s so many things going for Android. I think there’s also deep linking. So hear me out on this and I’m just kinda let this ref out and see if it sounds right and tell me what you think. But if the existing model where everyone links to work inside of apps and they don’t like working just straight through internet browsers. So they don’t like using Chrome or Safari on their mobile device. They like accessing an app and interacting with the app via their device. If that’s the case, then the deep-linking is gonna become very important. Basically making your content inside of your app basically indexable or publicly searchable.
And who does better at providing relevant results for a search than Google. I mean Apple can even manage their own store and they have a close iTunes piece of software that they used. So I think if apps continue to be pervasive as opposed to the mobile web, and it can be mapped as delivered you know via html, right? If I’m saying this right. It doesn’t have to be native coded apps. It’s still an app though, right? It’s an icon that they click and open. And it has very specific , like it’s called an application very specific usecase for that. Then Google’s gonna win there too because they’re gonna do better at providing relevant results with indexed data with it’s deep linking thing that we talked about a little bit. But it’s a newer thing and not a lot of people are doing. They won there too, right?
David: Yes I think you’re right there. And I think that we have to understand that Google’s background is being a web company. Like that’s where there home is and that’s what they are good at is doing web stuff and web services. And Google is pushing on many fronts towards integrating the web in more devices and more scenarios where people actually wanna use it. But as you said you know right now most people still prefer to have an icon on their homescreen and they can tap it and interact with an app that has some native or native-like interface. Well Google is certainly trying to make that more like the web and the whole experience of navigating between apps and being able to link to a content within certain apps certainly starts to feel more like the web and maybe ultimately Google can fuse those together. But that’s certainly in the future. But I think what Google has going for them in that case it this network effect where not only is every app trying to market itself but by interlinking themselves they become way more valuable to the user and thus the entire network, i.e Google Play or Google controlled environment is becoming more valuable.
Chris: I agree. And I wonder – haven’t heard a lot of this things but real big instances of this but I wonder when Apple’s review process is gonna come back and bite them so bad like where a SuperCell type company, well SuperCell wasn’t always SuperCell right? But let’s say a Clash of Clans comes out and they can’t get it through the App Store but Amazon accepts it. What point does Apple start losing innovative apps because their review process is so broken?
David: They already are. They’re not just losing big hit titles right now but they already are losing innovation. Just because certain things aren’t allowed on the App Store and there’s a number of categories of app event that you just cannot do.
Chris: Yeah. Like if you want an innovative app, you go to Android. It’s like a weird – you know I guess that’s kind of what happened with Apple computers too. Like if you didn’t understand , it’s why I have a Mac now. It’s because I don’t wanna deal with all of this stuff where I have to constantly maintain a Microsoft system you know coz it’s more open, you can do more with it. Lot of jobs are so establish I can do everything I want with my Mac. That wasn’t always the case. In fact if it weren’t for them kind of being so good with Adobe and that partnership thing is so strong it probably wouldn’t have won anywhere. So yeah I just wonder if that’s what’s gonna happen in apps. This is long term stuff.
David: Right now I think the reason why that doesn’t come through is because while Apple has a big problem with developers, Google has a very big problems with users. While on a latest Android device with – you know you buy today that’s innovative and you can get cool apps on there, all that kind of stuff. Well in 6 months, in 12 months, very likely not very innovative but outdated to the point that it looks ridiculous because you just cannot update it. And that’s the – this fragmentation where all this carriers or phone manufacturers OEM slap their own bullxxx on there with that custom UI and all that stuff. That’s what’s holding Google back and that’s what holding Android back. Huge hugely. If Google can make that, can fix that fragmentation, if they can somehow make the OEM stop doing this and just shipping vanilla Android experience, then that will certainly…
Chris: That’s gonna be hard
David: You know it’s entire market.
Chris: No one want’s to be just a hardware manufacturer coz then you’re literally just beating on price and execution and you’re just slinging things out – you’re commodity. But if you have a unique interface, oh people like Samsung coz the unique interface or whatever it is, right? So I think that’s a really hard one to win because everyone’s trying to differentiate their devices from other Android competition right? So that’s gonna be a really hard one for them to win plus it’s open source so there’s no how they are gonna decree – hey everyone use this baseline.
David: Well that’s not really true. I mean the whole open source discussion on Android is probably worth on some number of episodes on it’s own. It’s not an interesting discussion though but it’s something that is really complex and weird and not very open.
Chris: But you get what I’m saying with the user interface for other manufacturers. They’re not gonna agree to some baseline, stripdown..
David: Well sure they are interested in adding their own stuff there and customizing it and whatnot. But I think the real point here is you know if you’re selling 85% percent of the devices, you’re starting to have some more power compared to “oh we just shipped G1 phone and Apple has 100% market share where they had to cut those deals you know. They have to make confessions where now they have much more leverage where they can just go in and say hey you wanna use all those Google services and be part of this whatever handset alliance thing. We no longer allow you to customize that. You need to ship for an Android experience. You know I think in some point in the future that should be possible.
Chris: Yeah I’ll be curious to see. I don’t know enough about how their partnership are structured around Android but even this some things like auto updates or something. I mean every developer conference Tim Cook comes out and he goes, oh look we got 98% of every one on the latest OS. Tim Cook is like super fragmented. And it is, besides for all the different screen sizes and everything that you need to support, then trying to accommodate for four different OS versions is just added expense and all that kind of stuff. So but I wonder how much that’s really holding, how much did you think that holds app developers back? Like, okay so let’s just do it for the last two versions and we get 70% of the market and it’s the people that spend the money. Is that that big of a deal from your perspective?
David: Well the problem is – I don’t have the numbers on my head but it’s not that simple. It’s not like we just do the last three versions and were fine. And the other problem is that, well what Google is trying to do is like certain libraries, they just ship via the Play Store or make them installable on any version of Android. So for example Google Play Services, I think are compatible down to maybe five or six versions back. So you really cover a lot of ground when you use those things. And they’re pulling more and more out of the core of the operating system and make it in installable component so that you can get more people on newer frameworks and libraries although they might not be able to upgrade their operating system. So that’s some way for them to do it. But yeah other than that if the carriers, the device that are currently circulating where the carriers have the update process in their hands and they can decide to not release any version. That’s gonna be very hard to break and that very big problem for developers for the possible couple of months or so.
Chris: Yeah it’s interesting. You know I have to force myself to start thinking more business to business. And it’s just amazing to think that while – you know you got to remember that a lot of people aren’t selling things through in-app purchases and ads. Hopefully through OptinMobile they’re saying sign up for my newsletter and then buy my book for my newsletter or all sorts of different ways to interact with fans, prospects, clients etc through the mobile. It helps you sell something.
David: Really its like all we’ve been doing so far in the industry is circulating money inside the industry. So you know part of the industry are of course the producers, which would be the publishers and the studios and indie developers. You know anybody who can publish something. And the users, the customers who buy you’re in-app purchases and when you’re really honest about it, most of the ad revenue is also coming from inside the industry where other apps like Clash of Clans….
Chris: Candy Crush or all advertising.
David: They are providing the advertising money so in the end that’s coming from users finding in-app purchase in those apps.
Chris: That’s a really good insight. Yeah so as we get to the point where brands pay more than Apple pay for an install, or how the math works there right? The brands are starting to pay more and their access to inventory is become more streamlined and easy for them to work with. And as businesses especially at the enterprise level are able to them leverage mobile more to help them either improve their workflow and all sorts of things. It starts bringing in more than just, like you said like in this mobile circle that the mind just keeps spinning around and around and around. That’s a really good insight that I’ve never really thought of but maybe that’s kind of where were at now where more and more businesses are recognizing the need to get into mobile. More brands are recognizing the value of advertising there. Were starting to bring in this none mobile entities into this space. And maybe that’s where all that advertising world comes from like we’ve talked about where there’s this huge gap in mobile advertising.
David: I think that’s what explains that. Yeah it’s like okay you know we’ve been circulating money in this ecosystem for sometime now but other industries haven’t really brought money into the industry and once that happens, then the advertising will jump up to the level where it should be.
Chris: Well and if it’s that the case then were in a great spot with OptinMobile. Like I already understood the reasons why OptinMobile is a great solution and an important thing to bring. But if that’s really kind of the forefront of businesses taking their basic business to mobile, gosh we’re gonna be stoked.
David: I hope so yeah.
Chris: That’s why were doing it, right? But yeah the more and more I think about it, the more that’s a viable opportunity. I mean a huge opportunity and the more I recognize that boy we need to put Android higher up on our list because holy smokes is it pervasive. I mean it’s growing so much faster than everything else. I mean it’s by a percentage it’s the only one ruling.
David: Absolutely, yeah. It’s the one horse race or however they called that.
Chris: Yeah the one horse race.
David: It’s true man. And I think, I want to thank the people in the Facebook group who’ve pointed out that we should talk more about B2B and that absolutely is important and we might not have gotten to those insights if they hadn’t given us this feedbacks. So thank you very much and yeah if you want to be in the forefront of that, you know join the Facebook group. It’s a pleasure to be in there with all those people who are in this industry and trying to make money and sense of the industry.
Chris: Yeah. I think part of the reason we kind of hesitate on some of the business stuff with business to business stuff is were kind of still figuring it out. So we can’t speak so authoritatively about, oh this is how you this and this is how you do that coz I don’t have a hundred business to business apps. Whereas I have a hundred or I have developed a hundred or published a hundred consumer apps. So yeah I think we just need to keep challenging ourselves to share some of our experiences there because apparently we are kind of on the forefront of this thing. And you know maybe we can, well just having a conversation I’m sure. It helps us and then I’m sure the listeners will. If they’re at all interested in this space which means you don’t have to build quiz apps and camera apps and you can move to something that you know obviously has tons and tons of room to grow. It’s definitely the business facing apps.
David: Yes and also when we started this podcast I think I said to you that as much as we wanted to share some stuff, we were pretty opinionated about and certain about. It’s also about sharing the journey and letting people know why we are going somewhere and with an unexpected outcome or with an uncertain outcome. And that’s one of those things where were sharing, were doing this with OptinMobile and that’s the idea and all. But we really have no numbers yet. We cannot tell you, know we made this much money the last year because it’s not been around for a year, etc.
Chris: We made this change and have effected this thing like we don’t know.
David: Yeah but we can share the journey. We can share what we are thinking right now and exchange thoughts and opinions with the community and that’s what I love about the podcast and more specifically about the Facebook group as well where you can just share this things.
Chris: If you don’t know what were talking about, I think we took off the ads on the podcast right? Like we have no intro or outro. That’s right.
David: Yeah that’s right.
Chris: Yeah go to appbusinesspodcast.com and there’s a Facebook button, click there or you can type in App Business Podcast to Facebook and you should see our group. It’s not a page, we have a page too. But there’s a group and it’s private so you have to ask for access. But that’s what were talking about. Love to see you there. We have some decent conversations in there and then yeah it’s a good reminder of like what folks are interested in and what we should be talking about. I would say that from the last two episodes we recorded, the last kind of epiphany was look be in the forefront of supporting larger screens because there seems to be a correlation with larger screens and more money, more revenue. And then this one is get behind Android. Support Android because it’s winning.
David: Always create revenue.
Chris: Yeah thanks David. That was good. I think we got some good insights and then yeah thanks for listening guys and we’ll catch you on the next App Business Podcast.