All we’ve heard for the past year-plus is how Android is killing it. The phones are taking over the world. And that’s true — from a unit perspective. But from an actual business perspective, things are decidedly murkier. Google says they’re making a good amount of money as a result of Android, but it’s clearly nothing compared to their main business. The carriers are doing well too — but carriers always do well. Being overly greedy tends to have this effect. As for the OEMs… well, that’s a different story.
The three largest Android OEMs are Samsung, HTC, and Motorola. Samsung just posted record quarterly profit. So far so good. But HTC just reported its first profit drop in two years. And Motorola just warned that its 4th quarter sales were going to miss as well. When you have to warn ahead of actual earnings, that’s a very bad sign.
So one of the three top Android OEMs is doing well. The other two are doing poorly. This matters because of what it means for the future.
If OEMs aren’t actually making much money as a result of Android, why would they keep using it? Well one reason is if Google buys you, as is happening with Motorola. But what about HTC? You can bet they’re asking themselves this question.
Every OEM in the industry is looking at Apple and drooling when it comes to profits. (Making money is what matters at the end of the day for a company after all.) That includes Samsung. If you actually read the story about their record profits, you’ll note that a large part of those profits is a one-time gain from selling their hard-disk drive business. The phone business may be doing very well, but you can bet those profits are not Apple-level profits.
And what’s to stop Samsung’s profits from falling in a few quarters if say, Motorola, gets the next Android flagship device? Nothing.
That’s why Bloomberg’s headline is ridiculous: Samsung Quarterly Profit Rises as Galaxy Phones Lure Consumers From Apple. Does the article offer any proof that Samsung is doing well because they stole customers from Apple? No. Is there any proof? I doubt it. Unless you believe that the 30+ million iPhones sold last quarter (yet to be announced) should have been more like 40 million or 50 million — which would be double (or way more than double) the most amount of iPhones Apple has ever sold.
Samsung did so well first and foremost due to a one-time sale. To a lesser extent, they did well because they’re the most popular Android OEM — the most popular Android OEM that lured would-be Android buyers from other Android OEMs. HTC and Motorola. Who both ate shit last quarter as a result.
It’s not exactly a zero-sum game, but it’s not completely not one either.