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Google made only $550 million from Android between 2008 and 2011 according to figures from the Oracle trial (http://www.guardian.co.uk/technology/2012/mar/29/google-earn...), compared to $38 billion in total revenues for 2011. While half a billion over three years is not trivial, it is rather insignificant compared to $38 billion over one year for search advertising. Trefis analysis of Google's stock price estimates the value of non-Motorola Google Phone properties at 2.38% of their total stock value (http://www.trefis.com/company?hm=GOOG.trefis#/GOOG/n-1336?fr...). To use Warren Buffet terms (as per an analysis by Bill Gurley via Erick Schonfeld), Android is not Google's castle, it's their moat. (http://techcrunch.com/2011/03/25/search-googles-castle-moat). The point of Android (and to a lesser extent, Chrome OS) isn't to generate revenue itself but to protect search revenue (if, for example, iOS were to switch to Bing by default). Given that Apple CFO Peter Oppenheimer had stated in 2010, that iOS's App Store ran at about the breakeven point, and was therefore not a significant source of revenue for Apple, (http://appleinsider.com/articles/10/01/26/app_store_wildly_s...) it is not wholly unbelievable that Google Play would also be an insignificant source of revenue for Google (especially given the ratio of free apps to paid apps is higher on Google Play than on the App Store). As for HTC: "HTC Corp. said Friday its unaudited second-quarter net profit fell 58% from a year earlier, as the Taiwanese smartphone maker struggles to compete with industry leaders Apple Inc. and Samsung Electronics Co. HTC said in a statement its unaudited net profit for the three months ended June 30 was $7.40 billion New Taiwan dollars ($247 million), down from NT$17.52 billion a year earlier. Its revenue dropped 27% to NT$91.0 billion from NT$124.40 billion." (http://online.wsj.com/article/SB1000142405270230414120457751...). You are also incorrect about HTC manufacturing the reference devices. While they did make the Google Nexus One, the Google Nexus S was Samsung, the Google Galaxy Nexus was Samsung, the Motorola Xoom was technically the Honeycomb reference device (read as: Nexus), and the Google Nexus 7 is Asus. In other words, HTC has manufactured only one of the five Nexus devices (out of six if you count the Nexus Q). To assert that HTC is generating profit "because they manufacture the reference devices" is inaccurate given that the Nexus One was released in 2010 and no longer sold through first party sources such as Google Play (the devices available for purchase at the time of this writing are the Galaxy Nexus, the Nexus 7, and the Nexus Q). There is, however, someone making a profit off of Android: Samsung. From the same article: "In stark contrast to HTC's weak earnings, Samsung said earlier Friday that it will likely post a record quarterly operating profit for the second quarter that ended June 30. The South Korean electronics giant, which is due to release audited results later this month, expects an operating profit of between 6.5 trillion won ($5.7 billion) and 6.9 trillion won for the quarter, compared with 3.75 trillion won a year earlier." (http://online.wsj.com/article/SB1000142405270230414120457751...) TLDR: The assertion that Google and HTC are (significantly) profiting from Android is incorrect and instead should assert that Samsung is the only one making (significant) profits from Android. |
However those numbers are not everything. What counts is whether customers buy products or not. There are plenty of examples of successful mass products that were sold too cheap. For instance Microsoft's X-Box, they sold it much under price. You might list that under marketing costs. Their strategy however paied off, now they are a big player in the game device market.
Of course Google spend lots of money into Android, we don't want to imagine what all this patent crap and marketing costs. Android is however the predominant mobile platform and HTC its biggest vendor. (With reference devices I mean the actual devices that were supposed to be used by developers.)
Samsung is without question in a nice position but they are replacable, they are a big brand and they have a lot to loose. HTC appeared out of nowhere and is now one of the biggest players in the smartphone market. Just ask yourself who the real profit makers are.
Samsung is doing short-term profit. You know why? Because people don't by Samsung devices, they buy Android devices. It's not Apple vs Samsung vs HTC, it's iOS vs Android.
Going back to the actual topic: who cares what processor is inside an Android? Only the CPU manufacturers. The customers and the assemblers just care about software support and performance.