Google Android – Number update.

Google has to address Gingerbread to make a difference.

• Radio Free Research has indicated that while Android utterly dominates the market for smartphones, its parent Google only has access to one third of them. (see Mobile Software – iRobot page 20)
• This calculation is based on the number of Android devices that are Google compliant and the number of devices that are running Android 4.0 or better.
• Radio Free Mobile believes that for Google to properly monetise a device (with its apps) it must be both Google Compliant and running Android 4.0 or better.
• In June this calculation led to the forecast that of 892m Android in the hands of users at the end of 2013, Google would have access to only 288m (32%).
• Following the Q2 reporting season and an update on developer.android.com these numbers have moved slightly in Google’s favour.
• Radio Free Mobile now forecasts that there will be 919m Android devices in the hands of users at the end of 2013.
• Google’s activation figures are much higher but don’t forget that Google has decided to ignore replacement sales and to focus just on gross activations.
• Android 4.0 has also made meaningful gains in the last 3 months with versions other than Gingerbread becoming almost non-existent.
• Android 4.0 now accounts for 63% of all Android devices up from 56% in May.
• This improves Google’s penetration of the Android user base from 32% to 34% and the number of devices from 288m to 313m.
• Take Home Messages:
  • The Google eco-system has made it past the key 300m user milestone that Radio Free Mobile has set for an ecosystem to be very successful and here to stay.
  • Gingerbread (2.3) remains a large portion (33.1%) of Google compliant devices and has shown no meaningful decline this year.
  • The vast majority of Android devices still generate no meaningful revenues for Google.
• The main problem that Google has is the fact that handset makers are still using Gingerbread to make Android devices.
• While it is possible to make a $50 device using Android 4.0 it is much easier to make one with Gingerbread.
• Hence the lesser skilled handset makers have stuck with Gingerbread.
• Android 5.0 is likely to be seen as a dull update but its real aim is to make it easier to make cheap devices.
• This could have the effect of starting to really erode the Gingerbread installed base and would be instrumental in pushing the number of devices that Google has access to towards 500m.
• This could have an unexpected and positive effect on mobile advertising revenues in 2014.
• While Yahoo! remains the most exciting stock to look at in the mobile internet space, Google could be ripe for a nice bounce as forecasts take into account this increase in addressable market.