Comparing Apple (NASDAQ:AAPL) and Google‘s (NASDAQ:GOOG) smartphone businesses is like — pun intended — comparing apples and oranges. That’s why headlines about Google Android phones recently outselling iPhones by 2 to 1, according to a Tuesday study from research group Nielsen, are besides the point. Apple makes phones. Google touts an operating system.
That 56% of smartphone consumers in the U.S. bought an Android-based phone in the past three months, while only 28% bought an iPhone using Apple’s iOS operating system in the same time period, isn’t reflective of the shape of the smartphone market or of how much money those companies are making in that market.
That’s all going to change, of course, once Google completes its planned acquisition of Motorola Mobility (NYSE:MMI) and joins the fray as a manufacturer of phones rather than just a software sales company. Even then, while Android’s footprint might grow even bigger when Google itself is making and selling smartphones, it likely won’t match Apple for revenue. Here’s why.
Apple is the biggest smartphone company in the world in terms of revenue, surpassing even longtime mobile market tyrant Nokia (NYSE:NOK) in recent quarters. During the second quarter of 2011, Apple sold more than 20 million iPhones — premium-priced machines that brought in a total of $13.3 billion in revenue. Nokia sold just less than 17 million smartphones, only bringing in approximately $3.4 billion in revenue. Google, meanwhile, reported a total of more than $8.5 billion in revenue for the second quarter across the entire company, even while it touted 500,000 daily Android phone activations around the world. Finally, Motorola sold just more than 4 million smartphones during the same period, with the Mobile Devices segment turning in $2.4 billion in revenue.
Unless the shape of the market changes dramatically between now and the time Google takes ownership of Motorola, Google simply won’t be able to match Apple’s take. Android doesn’t earn enough as a licensed platform split among the many smartphone manufacturers of the world, like Samsung (PINK:SSNLF) and HTC, and the added revenue of Motorola’s smartphones won’t tip the scale.
There is at least one scenario that could change Google’s fate in the market and transform Android’s commanding lead in worldwide operating system marketshare into a lead in revenue from actual smartphone sales — and it’s actually Finland’s prodigal son that provides the road map.