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Apple v. Google: The goliath deathmatch by the numbers in 2014

The challenge in analyzing the Apple v. Google rivalry is deciding which metrics to use. Here are four data points to get a grip on who's winning.

 

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 Image: Josh Long/CNET

The showdown between Apple and Google has evolved into the most heated rivalry in the business world and the tech industry. The moment Google announced its entry into the smartphone market in November 2007, tension began to brew between the two tech giants. As the companies engaged in PR and legal fisticuffs, hardcore users took their sides and began spewing venom.

While Apple was originally focused on hardware and Google was all about internet services, the two companies have increasingly infringed on each other's space. Apple beefed up its online services with iCloud and the iWork suite, while Google has refocused resources on smartphones and wearables. While some authors recommend "promiscuity" when it comes to ecosystems, the majority of fans take a hard stance for one or the other.

And, the battle rages on.

Apple and Google are often compared using a variety of metrics, without a clear understanding of what those metrics mean. Here, we will look at four metrics and how we can use them to draw conclusions about how these two companies really stack up.

Mountains of cash

AppleGoogleRevenue.png

One of the obvious choices for measuring the success of a company is how much money it is making. The chart above shows the quarterly revenue for Apple and Google from each throughout in 2012 and 2013. It should be noted that while Apple reports revenue on a traditional fiscal calendar (Q1 ending in December and reported in January), this chart reflects calendar year quarters, with Q1 ending in March.

The first thing to note is that while Apple tends to make between three and five times as much revenue as Google does, their revenue is far more volatile than Google's. The first thing that we can infer is Google's revenue strategy is still largely dependent on selling ads. Apple's revenue spikes wildly around the holiday season because of their retail operation, but Google's remains far more stable throughout the year. According to Frank Gillett, a principal analyst at Forrester Research, this is because their physical product offerings have yet to make up a substantial part of their revenue.

"They're not fundamentally a product-driven company. When you sell a physical good you are beholden to seasonal buying cycles," Gillett said.   

Even as Google positions itself to sell more hardware in the coming years, their revenue will probably never reach the level of volatility experienced by Apple. According to Gartner analyst Van Baker, Google is seeding the market with an OS to get more people to use their services, so it can sell more ads. So, it is likely that ad revenue will remain the foundation for Google's overall revenue moving forward.

The challenge for Apple is that it has long been rumored to be working on a television set and a smartwatch, but it hasn't entered a new product category since it released the iPad in 2010.

"The longer it goes without them launching a new product offering, the more people will question their ability to innovate," Baker said.  

Race to the top

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When it comes to understanding just how valuable a company really is, many people will turn to that company's stock price. Of course, stock prices are unstable. As I am writing this piece, Apple's stock (AAPL) is sitting at $528.39 and Google's stock (GOOG) is bringing a cool $1,200.93 per share.

But, the price of the stock alone doesn't tell you how valuable a company is. You have to take into account the total number of outstanding shares along with the price, which determines "market capitalization." Apple's market cap peaked most recently in Q3 of 2012 with the announcement of the iPhone 5, then fell quite dramatically over the next year, but it has started to rise again. Apple's run over the last few years has been unprecedented, but it's not clear if it can continue their momentum from the past decade.

"Apple has had such a dramatic run, there is skepticism as to whether or not they can sustain it." Gillett said.

Google, on the other hand, has seen a steady rise in their market cap over the last two years, despite coming under increased scrutiny for their privacy practices. Unlike Apple, whose ability to innovate has come into question in the post-Jobs era, projects like Glass, Tango, and Ara have shown Google's willingness to take risks.

"Google has certainly shown the ability to lead innovation efforts," Baker said.

Innovation is not dead at Apple, but is has yet to announce another breakthrough, revolutionary product like the iPod, iPhone, or iPad. Both companies have been regularly buying up new, young companies; hopefully to revitalize their product offerings.

Those product offerings will likely fuel the biggest fire between Google and Apple — the war for mobile customers. The battle for mobile OS users is the face of the Apple/Google rivalry, and the numbers behind it are largely misunderstood.

Misunderstanding the market share

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"The smartphone market is a basically two-horse race right now."

That's how Van Baker described Android's scrap with iOS in the mobile market. While many people try to equate the iOS/Android with Apple/Google, that is a misguided comparison as each mobile OS does not define its parent company's revenue stream. Still, mobile OS market share does help us to understand how each company is doing. Well, sort of.

The initial problem of measuring success by market share sales is that you are comparing Apple, which created the iOS software and accompanying hardware with Google, who created the Android platform, which is mostly distributed through third-party vendors like Samsung. Baker said that a more fitting comparison of market share by sales might be Apple v Samsung. According to Baker, "In some ways the battles with Samsung are a proxy for battles with Google." Even still, Google is dealing with a bigger issue than just iOS v Android.

"Whose operating system is on the device is not a very insightful metric for what the heck is going on," Gillett said.

If you look at the raw numbers for sales market share between Android and iOS devices, Google seems to be dominating the space. In Q4 2013, Gartner reported that Android had 77.8% worldwide market share while iOS had only 17.8% share. One quarter prior, Android had 81.9% and iOS took second place with 12.1%. It is worth noting that, according to ComScore, iOS market share in the lucrative US market is about 40%, while Android accounts for around 50% of US sales. The problem with these numbers is that the do not take into account the fragmentation that Google has allowed with the Android platform.

Gillett said that when you see these big Android market share numbers, it represents parties who have done one of two things. It represents a party that either grabbed the open source code and created a device that is nominally Android, with no access to the Google secret sauce; or, that is using the Google Play services to create a device that is fully integrated into the Google ecosystem.

Many of the low-end "Android" devices coming from the Asian market are of the open source variety, but even the branded orthodox Android devices have their own challenges. Devices like the Kindle Fire and some of the Lenovo tablets run a version of the Android OS, but push their own proprietary apps above the standard Android apps. For example, some of the Lenovo tablets might encourage a user to use their own proprietary mail client for the device instead of Gmail.

"I'm going to crudely assert that less than one third of Android devices are truly engaged deeply with Google's digital platform," Gillett said.

The fragmentation and confusion we see here are reason enough that we shouldn't be measuring success by sales number alone, but we should also look at how consumers are using these devices.

OS usage and engagement

iOS.Android.png

The chart above shows the percentage of total web traffic worldwide, across all platforms, that is taken up by Android and iOS. While Android's usage percentage is climbing, it only started to climb to a competitive level toward the end of 2013. Apple, on the other hand, has seen consistently higher usage than Android, despite capturing less of the fewer overall shares in 2012 and 2013.

These numbers assert that Apple has more engaged customers than Android does and it sees more mobile usage. While Google may be innovating more than Apple currently and working to make tech integration more seamless with services like Google Now, that's not yet selling point for average customers. The fact of the matter is that Apple has established itself as a trusted brand, it has created a product that is a status symbol to own, and it prides itself on the ease of use of its products.

Another measure of engagement, and possibly a measure of trust, is the number of credit cards that each company has on file. Forrester Research conducted a US survey that found Amazon had 91 million credit cards on file. In second place was Apple with 41 million cards on file, and Google came in a distant third with 22 million cards on file. So, Apple has nearly twice as many customers who trust them with their financial data as Google does.

Bottom line: More people are engaged with their Apple devices, and more people are spending money on their Apple devices.  

"The biggest opportunity for Apple is to dramatically expanding the capabilities and usage of their online services platform," Gillett said. "Google's opportunity is to figure out how to create more of a win-win between Google and the device makers who use Android today."

Google has built more momentum in innovation and product development, while Apple has maintained momentum building a more profitable business. Whether it is Apple or Google at the top of the heap, you cannot deny that they are both building platforms and business models that will shape the next decade in the tech industry.

Also see

About

Conner Forrest is a Staff Writer for TechRepublic. He covers Google and startups and is passionate about the convergence of technology and culture.

17 comments
sicommnend
sicommnend

Let's do a simple thought exercise.

Let's say Android and IOS fails, what is to become of Google and Apple? Do they have anything to fall back on? Where is their main revenue stream? Which one of the two is the most fragile?

olucksom
olucksom

Well have anyone seen or used android ui during its early stage, it was so hopeless and in bad state that after copying ui from iPhone they really started to gain the pace before that android was crap, and most of the android users even don't know that fact and they really brag about android, also I think that iPhone set a standard for each and every phone company with their design, user friendly and even retina display which android users brags about these days, iPhone revolutionize the phone we use today, thanks Steve...

FarmerKaine
FarmerKaine

I'd like to disagree with the "Web Usage" numbers.  And here's why:


I am part of a family share plan with Verizon that includes 2 Android phones (Samsung Note 2, LG G2) and 2 Apple phones (iPhone 5s, iPhone 5).  We were noticing that the Apple devices were using considerably more data than Android.  The people carrying the Ape devices are lighter phone users overall...  so we did our own non-scientific test.


I set a data monitor on the 5s and the Note 2.  We opened the identical set of web pages, and downloaded a few PDF files, and a few DOC files.  I then checked the data usage and the iPhone was 2.5x higher usage than the Android.  We reset data usage, We opened the Maps app and turned on GPS...  after browsing the maps in exactly the same area (again, non-scientific), the iPhone was using 2.3x more data  We reset data usage again, and opened a few apps that we know hit multiplayer servers (Homerun Battle 3D, Words with Friends, and Haypi Kingdom)...  The iPhone used 4.1x more data within these apps than the Note 2 did.


Why is the data usage so astoundingly different?  Perhaps its the same reason that Google is so much faster than other search engines...  They not only sell ads for revenue...  they know how to handle data efficiently.  This isn't a knock on Apple...  it's just what we saw.


It could make the carriers push iPhones more than they should, though, if they know that data usage is going to be significantly higher on the iPhone compared to an Android device.  With a different carrier setup overseas, Android dominates the market.  In the US, it's much closer to even.  Maybe it's not data-related...  but if I were Verizon or AT&T, I'd push iPhones if data usage will be 3x higher...  wouldn't you?

elderjlward
elderjlward

Note: Great and very informative article. Just one minor correction. Google did not create Android, they actually purchased the company that did and iterated the program thereafter. Again great read.

CarmieJo
CarmieJo

This is an interesting piece that gives some good numbers. However, I think that the conclusion about credit cards on file is erroneous. I don't have a credit card on file with Google not because I don't trust Google but because there is no need to. Everything I buy through Google Play is billed to my mobile carrier. 

georgedundon
georgedundon

This is a very US/European centric view. One of the critical issues surrounding the number of Android units to iOS units is the geographic disrtibution. Android is much more common in developing markets. As the infrastructure in these markets develop and bandwidth becomes more available, there is every likelihood that the internet usage will increase. This will in turn increase the amount of non english content which will in turn make the internet more interesting for those new markets leading to more use accelerating use. Google therefore holds a key position and without Apple changing soem of their policies it seems inevitable that Google will overtake them in all sectors.

Horus418
Horus418

What a load of American centric bullshizen. Who do you go to for a search engine, who makes the OS that the majority of phones and tablets run. When I see someone use a phone I see android not iOS, anywhere but the US is dominated by the Android. Apple is a little fellow that made it big about five years ago and is now going back to its base, a very loving base but not a world dominant product like Windows or Android. 


Let's face it since the great liar left this planet Apple has been left with only products not a religious fervour. I always like Apple for being the small guy fighting the big guy, but when they started to stop innovation via legal procedures for making a tablet rectangular, or using your finger to unlock a device, yet be more than happy to copy every little detail from their competitors they lost . 


Apple may be worth money to those silly enough to believe they are the most desirable products, but the real worth is in how they allow you to be productive or connected and as we have seen over and over again Apple fail on both of these. Apple has lost their security promise (like any OS can say it is 100% secure, BS), how many credit cards were stolen from them, how many socially networked hacks have been successful and how quick are Apple to fix these problems? 


Apple made an iPod, thanks apple, you did not invent smartphones Nokia did, they did not invent tablets, microsoft did, they did make the worlds worst browser, lose their head designer and create the most bizarre returns policy ever seen by man or beast and sell products that are bellow par on every scale imaginable. 


 Not an Apple hater, but they really are nothing to shout about. I do not see anything special coming from apple for another twenty-thirty years. They already have a customer base they can steal from with impunity, no need to innovate when you can steal from the sheeple. 

Henry3Dogg
Henry3Dogg

And then there is profit share.


Last quarter Apple made 87.4% of the net total profits make by all handset manufacturers, up from 77.8% the year before.  Samsung took 32.3%.  The rest of the industry combined lost 19.6% bringing the total to 100%.


And then there is the economic relevance of the market bases.


Far more ecommerce is done on iOS devices than Android.  This is partly because iOS users are more engaged, but also because iOS users have more spending power.  As a result, the value of the iOS user base as an advertising target actually exceeds that of the Android user base.   


And while Android's base has been growing faster, it's the bottom end on the spectrum where the growth is fastest.  Apple has not been losing market share in the more valuable high end of the market which is the only part that it occupies.  


So while Android's user base has been growing, the economic value of that growth to an advertising machine, like Google, is minimal.







Horus418
Horus418

What a load of Ameican centric data bullshizen. Google has hammered Apple, what search engine do you use, what smartphones do you see more of, what tablets sell better. Sorry the world picture says ANDROID all over it. Still good to see Apple trying to pull another BS win out of a total fail. 


Not an Apple hater, just see more Android in the UK than Apple by a country mile.

T3CHN0M4NC3R
T3CHN0M4NC3R

Any metrics that shows Apple is dominating the market is the right metric to measure market share huh?

mjwdejong
mjwdejong

Interesting article. 

When I look at it I would not jump to the bottom line as easily as the writer does. What I am missing are elements like When ever you buy an Apple device you "need" a credit card to activate is (this is the standard setting and can be neglected). Android offers the possibility.

Since Android is widespread on devices you may need to add the creditcard numbers of the device manufacturers/sellers in order to get a comparable number.

And how many people have different credit card entries at the mentioned companies (double counting)


And since the market approach of both companies is so different (open vs closed) the bottom line is very debatable


Wilmer de Jong


mikeyboy12345
mikeyboy12345

I just don't believe the Web usage stats. How is it determined? By the browser User Agent string? If so, that would produce completely inaccurate results.

Saud Hassan Kazia
Saud Hassan Kazia

Anyone thinking apple is winning has not seen the market share, specs and features of android phones. Yes they win by fanboism, restrictedness, limitedness, priceyness and profit margin, but those are hardly positive traits

Matthew D. Jones
Matthew D. Jones

If you're so invested in your technology that you need your brand to have more usage, more market share or more profits to feel good about your choice then you are the loser.

sternrulez
sternrulez

@FarmerKaine Wow...well done!  You've added additional insight into this article, but now it makes me question the validity of the other points made. Congrats on taking the initiative to perform such as test...perhaps you should sign on as a correspondent for Tech Republic? :)


I completely agree with you on the marketing aspect as well.  I'm fortunate enough to still be grandfathered in to the "unlimited data plan" with AT&T at $30/mo., and they're going to have to pry that out of my cold dead hands before I give it up....not that they haven't tried, mind you.  I've already learned that in order to set up my Galaxy S4 as a wifi hotspot I'd have to "switch to a different data plan", but I'm certainly not going to bite on that one.  They probably really hate me, but as long as I have it, I can still enjoy Pandora and other data usage apps worry-free while I'm away from my home network.  You'd think that as data usage grows (threefold in the case of your test), they'd be more agreeable to providing larger data caps at lower rates in order to obtain customers, but that's never the case.  Once again, thank you for providing the test data for comparison.  I'd be curious to see how that same test works for streaming apps such as Pandora and Netflix too. I don't own an Apple product (and never will after the terrible experiences I had with the 3G years ago), or I'd try the test myself.

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