[dejb]

This surprises me given that it seems pretty clear they are about to lose their projected dominance in the smartphone game to Android. I can't see how you can justify that sort of valuation without projecting them to be the dominant smartphone platform. The iPad seems to be doing well but it all hinges on the same OS as the iPhone. Is it possible that Jobs "reality distortion" field is now working on the market?

[jstevens85]

Why is it clear that they'll lose the #2 spot to Android? It certainly may happen, but it doesn't appear to be anywhere near certain. Notice that at Google I/O, they said that Android was #2 in the US. Why didn't they say in the world, or in the US and Canada, or in the US and Europe, or even in the US and Australia? Obviously it's because the US is the only major market where they've been able to beat Apple. If Apple announces a multiple carrier version of the iPhone at WWDC, I would say it's likely that Google would lose the #2 spot in the US.

[dejb]

Android is growing much faster than the iPhone. The rest of the world (where I come from) is a lot more varied. RIM doesn't do so well and Nokia dominates heavily in a lot of markets. The iPhone doesn't do so well outside of the US either.

[metachor]

Android might be growing faster than iPhone, but how does that directly benefit Google? Apple makes money for every iPhone sold, but Android phones are manufactured and sold by other companies than Google. I thought Google gave away the OS for free (unlike Microsoft's strategy of licensing their mobile OS at a cost). Can someone explain to me how Google makes money on Android phone sales?

Please don't say "future search ad revenue from having more internet connected devices in the hands of consumers."

Edit: In answer to my own question, if the only profit Google makes from Android sales is search ad revenue, then according to this article (http://aseidman.com/2010/05/65000-new-android-devices-ship-e...), Google makes only $8.63 per Android device sold over the entire lifetime of that device. Article was found via HN, but no one has commented on it yet.

So apart from this meager search ad revenue, how does Google benefit financially from Android sales? I just can't figure this one out.

[dejb]

I never said it helps Google only that it hurts Apple. The fact that google can hurt Apple so much without a large direct profit motive is pretty telling about Apple's weakness IMHO.