Why Google has already won the tablet race

by Don Reisinger

April 7 2013

TabTimes columnist Don Reisinger is a New York-based technology writer whose work has appeared in CNet, eWeek and other publications.

It’s official, game over: Google has won the tablet market. Apple, Microsoft, and every other company thinking seriously about breaking into the space, move on. It’s game over.

Some might read that and call me crazy. After all, they say, Apple shipped nearly 23 million iPads during the fourth quarter, alone, giving the company 43.6% market share, according to research firm IDC. Samsung came in second place with 15.1% market share. Amazon, another Android vendor, took the third spot with 11.5 percent share.

But wait, there’s more, those folks might say. Apple last year owned 51% of the tablet operating system market, meaning it still owns the space. And as if that wasn’t enough, those folks have perhaps the trump card: Apple’s tablet shipments are expected to rise in the coming years and could eventually hit nearly 100 million units in a single 12-month period.

But such an argument fails to see the forest for the trees. Sure, Apple is currently winning the tablet market when it comes to unit sales and market share, and those battles are important to win. But it’s Google – not Apple – that’s actually winning the war.

Let’s start first with the expectation of Android’s success in the coming years. In 2010, Android owned a little over 20% of the tablet market, according to IDC. In 2011, that figure jumped to 32.3%. By the end of this year, IDC believes that Android will own 48.8% of the tablet market. Apple’s iOS will come in at 46%, relinquishing control over the tablet space.

By the end of 2017, Android will hold strong with 46% market share, according to IDC, but iOS will drop to 43.5 percent.

Smartphone deja vu

If this sounds familiar, it’s because a similar scenario played out in the smartphone market. When Apple launched the iPhone in 2007, its iOS platfom was on top of the world. But now years after Android has gained in markets all over the world, iOS is a distant second. And if IDC’s data is to be believed, the distance between iOS and Android will only increase in the coming years.

But there’s perhaps more to this story than just shipments. Too often, the industry focuses on which company is sending out the most products to store shelves. And as we’ve heard ad nauseum over the years, Apple wins out in that category. But let’s not forget that the true future revenue giant for any mobile company is not going to be in the sale of products, but in the ability to generate boatloads of cash on services and advertising.

And it’s for that reason that Google has already won the war.

The mobile industry is becoming the next, important frontier for advertisers. Companies are increasingly discovering that their customers are finding out about them through smartphones and tablets, and they want to make sure they’re delivering the right experience to capitalize on that. A key component in that is the sales pitch.

Mobile ad sales explode

Perhaps that’s why mobile ad spending is expected to explode in the coming years. In 2010, according to research firm eMarketer, just $2.34 billion was spent on mobile ads. Last year, that figure rose to $8.41 billion. And by the end of 2016, total mobile ad spending will reach $36.87 billion.

Now, Google, of course, is not generating all of that cash through its Mobile Ads and AdWords campaigns. However, the company is expected to land a lion’s share of the spending.

In fact, last year, Google generated $2.2 billion of the $4.1 billion spent on mobile ads in the U.S. By 2015, that figure is expected to soar to $9.3 billion. That’s before we factor in the cash the company is generating on mobile ads overseas and before we tally just how much it’s making on its Google Play marketplace when it takes its cut of app sales.

Booming iPad sales, but ...

Apple, meanwhile, finds itself in a difficult position. Although the company will assuredly generate billions on iPad sales over the years, in the advertising space, it’s only expected to make $212.9 million this year on iAd. In 2015, that figure will jump to $622.8 million.

Oh, and here’s another issue for Apple: In 2015, mobile search ad revenue in the U.S., alone, will hit $7.8 billion. Google will generate $7.1 billion of that. So, in the U.S., alone, in 2015, Google can make $16 billion on mobile devices, and tablets will be a key piece of that.

So, maybe we’re all looking at things in the wrong way. Yes, Apple is successful and yes, Apple will continue to make billions of dollars.

But the company’s market share will fall behind that of Android, giving Google at least a leadership position in the tablet space. And when we consider the upside of all of the revenue Google will generate through advertising, search, and Google Play, it’s hard to see how Apple can be too happy with where it’s position the market is headed. 

Don't great me wrong, Apple's iPad business is going to continue to be huge, but sorry Apple fans, in the bigger scheme of things, Google has already won the tablet race. 

TabTimes columnist Don Reisinger is a New York-based technology writer whose work has appeared in CNet, eWeek and other publications.

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  • ugartabtimes
    1 year 7 months ago

    I agree with the general sentiment of the other comments. First off, Google hasn't won anything. Android and Google are not synonymous. Android is an open source OS and plenty of people are forking their own versions. I've encountered quite a few device manufacturers using Android as an OS for their device/platform, not officially Google approved (i.e. not officially "Android"). My favorite news recently has been Facebook Home, adding a skin on top of Android. Others will follow with their own launchers after Facebook has shown how it should be done. Ergo the success of Android does not equate to the success of Google, especially if you consider that Google is scared/worried of Samsung now because of its prowess. Samsung is supporting work on another OS and Google is treading a fineline of friendship and enemy.

    What I see many analysts failing to realize is that Apple is making big headways into enterprise customers with iPads. Sure Samsung and the Google Nexus tablets are here, but they are here after Apple has been working with trial deployments for the last two years that are beginning to take fruition in major deployments this year. I can see Apple's quarters this year blowing estimates as more enterprises deploy iPads.

    To remain on top, Apple's future is in its own hands; they have to make the right investments and grow the right features. Currently, they might have to do it at a more accelerated pace than before without missteps like Apple Maps. I've also read grumblings about the reliability of iCloud for developers.

    Microsoft has a good concept on their hands that they need to execute on. Their marketing/product launch planning is deplorable both in planning and execution which doesn't do them justice for what they have. This just doesn't make sense to me...

    IMHO, success of future marketshare will also be based on developer support and value. Whomever provides the best ROI, opportunities, respect and ease will gain an upper hand. This includes providing easy and powerful APIs, developer tools, and a great ecosystem to take advantage of different devices (phone, tablet, PC/laptop, TV?, game/media consoles) and peripherals.

  • Integr8
    1 year 7 months ago

    I use Windows, Android, iPad, MacOS. IOS on ipad is a much smoother, easier user experience that I try to avoid using my Nexus 7 even though the 7 inch factor is more convenient. Anyone who has experience with both IOS 6 and Jelly Bean on a tablet and needs to do real work, will learn quickly enough to avoid Android on tablets. Comparied to IOS 6 Android is a productivity kill not an enhancement. Sad.

  • jeparsons
    1 year 7 months ago

    I second focher's and gkantz's remarks. Linking ad revenue and device sales is naive and simplistic, to put it kindly. It's also annoying to read the writer's many CYA remarks about Apple. (They'll be "huge," even though they're going to lose. Really? Take a position, dude!) The only way Apple will lose on tablets is the way they lost on PCs during the Scully era -- by creating bland, uninspired products. That risk exists today, but I have yet to see it. I own a Google Nexus tablet, which is adequate for reading and occasional video streaming, but hardly leading edge. Given the choice, I often borrow my wife's iPad, or even use my iPhone! Corporate arrogance, greed, and hubris aside, Apple's products still resonate with consumers, and tend to outperform the field.

  • gkantz
    1 year 7 months ago

    I'll believe it when I see it. Everywhere I go I see iPads out there. I see very few Android tablets being used, so I have trouble believing this article. Developers would rather write for iOS and considering the number of decent apps out there, more are available for iOS than any other platform.

  • focher
    1 year 7 months ago

    This is the dumbest article I've read in awhile about Apple - and that's saying a lot. First, not exactly sure what ad revenue has to do with tablet sales. Even if they were linked, any ad sales that Google gets come almost exclusively from iOS devices. Second, the link has long been broken between "Android tablet sales" and Google. Samsung's tablet numbers have been proven to be totally bogus. The only "Android tablet" that's selling in any numbers is Amazon's, and they forked Android. Samsung's going to do the same thing. Linking Google's success with Android is getting more tentative every day.

    By the way, where are all these Android tablets? I sure don't see them in the wild.

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