Bill Gurley of Benchmark Capital foresaw Android's rise, and wrote an excellent essay about it in early 2011, "The Freight Train That Is Android."[1] His main point: Google is not trying to make a profit on Android; they're trying only to control the key layers between themselves and the consumer, by making these layers free or even less than free, which is a HUGE problem for Android's competitors, who must make a profit.
As he put it, "I don’t know if a large organized industry has ever faced this fierce a form of competition – someone who is not trying to 'win' in the classic sense. They want market share, but they don’t need economics. Imagine if Ford were faced with GM paying people to take Chevrolets? How many would they be able to sell? What if you received $0.10 for every free Pepsi you consumed? Would you still pay $1.50 for a Coke?"
I highly recommend you read (or re-read) Bill's prescient essay.
I'm really worried about Google's potential for an anti-trust lawsuit. Giving away free phones, destroying profit margins on competitors, and using those users to increase marketshare in other areas they dominate seems incredibly risky to me. Having a majority share of mobile phones for free or less than free, tied into Google's SaaS services that can be used for free and using them to increase reliance on Google services that are made profitable by their tight vertically integrated ad solutions worries me.
I like Google. I don't want to see them turn a late 90's Microsoft because they started to overreach. Dumping is not a good strategy for flying under the FTC's radar. Can anyone put my fears to rest?
Does anyone have insight into any of the following questions?
1. Which Chinese Android App marketplaces are the most popular? In other words, if I wanted to target Chinese Android users, which app stores should I focus on submitting my app to?
2. Are there any barriers to submitting to such app stores for north american developers? Specifically related to getting paid.
3. Which Android mobile ad networks are best (cpm/cpc) for China?
Would love to hear any personal experiences working with China's Android Market!
#1. For us, the top 3 are GoAPK (anzhi.com), GFan (apk.gfan.com) and Tencent App Center (http://android.myapp.com). Between them, they're >90% of Chinese 3rd-party app store downloads.
#2. The biggest hurdle is that everything is in Chinese. I'm not sure how hard it would be to get paid if you're not in China, but as athgeo says, Chinese users really don't like to buy paid apps - even in the iOS app store our free-to-paid ratio for China is literally 10 times worse than the US, and Android is even worse because the users are less likely to have money. So it's probably best to concentrate on ad-supported apps.
#3. If anyone has good advice on this, I'd like to hear it.
A cursory search turned up this thread CSDN => http://bbs.csdn.net/topics/370249613 (CSDN being a popular IT forum in China - another one that you may want to research is iteye.com).
According to the author, paid apps are hard to make money off. It appears advertising is the easiest way to monetize apps. Post '#2' has a list of ad networks. Post '#28' enumerates popular Android markets.
As for your second question, it is probably no problem. You just need to sign up with one of the many Chinese equivalents of Paypal. I'm sure there are then ways you can get the funds transferred to your account.
I think it's the people saying that Android is not the Windows of smartphones that will be considered crazy at this point (unlike before when it was the one saying it who who were considered that).
I don't think it's a helpful comparison to make. The only similarity between the two is the market share - android being open source changes quite a lot.
Not that much. Most people don't install an OS on their phone other than the one the carrier puts on it. The big differentiator for Windows was that it was an open ecosystem. Anyone could make an app. Anyone could install any app they wanted. Anyone could make a PC, even individuals. And Windows was just the glue holding the ecosystem together. Android seems to be slotting into a similar role for smartphones today.
It will never be a good analogy because there's nothing equivalent to the effect corporate buyers had in locking in the windows monopoly for decades.
If Apple wants to start selling $100/$200 phones (they dont) there's no "compatibility" barrier stopping people from buying them.
If a new free licensed OS comes out based on some radically innovative tech (mind control? whatever...) those factories won't blink at switching over.
If the Chinese government decides to outlaw Android because the nephew of the Premier runs a competing company/whatever... well some people will complain but most will just buy whatever the next best option is.
Now there's no scenario for Android tanking that seems very likely to happen to me so ... yes I'd expect Android to dominate market share going forward. But that's a huge difference from Windows, a monopoly that didn't care what anyone expected to happen. Resistance was futile.
Actually the most popular distribution I've seen in China is not vanilla Android but a version called MIUI[1]. So in the sense that Android can be forked, it seems more analogous to Linux than Windows.
And Samsung is making a huge amount of money selling Android with their phones, and those numbers continue to skyrocket.
Google doesn't sell Android of course - they ride it. It's a completely different business model that can't be compared to the business model of selling packaged retail software.
Samsung sells phones. This is like saying Dell makes money selling Windows with their PCs.
What Android does, by spreading development costs across the whole market (and beyond - since Android is Linux it leverages resources spent on refining it for uses other than mobile devices), is allowing device manufacturers to build good phones in shorter cycles for prices lower than they would otherwise be possible.
Much like any self-respecting mob boss makes money protecting every store in their neighborhood. "It's a nice OS you have there. It would be a shame if someone sued you out of existence..."
They can't afford iphones-5,000yuan(it will be stolen).
Not true. I can see a Samsung Note and an iPhone from where I'm standing in a Shanghai metro carriage. All bar one of the Chinese teachers I work with have an iPhone and they make about a third of what I do per month.
Actually that's only at my M-F job. But iPhones are a majority among the Chinese teachers I work with.
And China, or at least Shanghai, is very, very safe. If you're unlucky you may be pickpocketed but you will not be mugged.
My experience in china was the same as the 2 commenters above... 2 most popular phones you see in Shanghai or Beijing are Galaxy Note (because you can enter chinese signs directly via pen!?) and iPhones!
Sure about that? You can buy feature-phones for ~$20 from China via Aliexpress.com that mimic iPhone 4's look very closely (including directly copying the UI), as well as a bunch of low end Android phones that also look like iPhone's at slightly higher price.
It also doesn't mesh with income levels, unless you're only walking around in very affluent areas, which is why anecdotes are pretty useless to establish popularity.
We can tell the shanzhai phones from the real ones. I concur with parent, iPhones are ubiquitous in Beijing. Keep in mind that most people there are middle class/rich. You have to travel outside the core...maybe 5th ring road before you get to poorer sections. But ya, the migrant worker on the street probably has a xiaomi, if that.
> I concur with parent, iPhones are ubiquitous in Beijing
Or you just notice them more because the people who can afford them like to show off their wealth.
> Keep in mind that most people there are middle class/rich.
According to People's Daily, average salary in Beijing last year was ca. 66000 yuan in non-private companies. It does not give clear numbers for employees of incorporated companies, other than saying it is about 1.2 times the national average. Lets be generous and round it up to 80000 yuan. That's still less than $13,000. And the distribution is extremely uneven - e.g. a lot of restaurant workers and other low level labour in Beijing still live in employer provided dormitories with salaries that wouldn't cover other accommodation.
The Beijing average is certainly well above the average for China, but I still take issue with the original claim that "In Beijing every second person you walk past is casually using an iPhone".
That there's a lot of them, I can buy. But seeing a lot of them in a densely populated city does not mean they actually make up a high percentage.
> But ya, the migrant worker on the street probably has a xiaomi, if that.
Given that Xiaomi phones start at around 3-4 times the low end of the Android market, I'd go for the "if that" for most of them... Amusingly just today Aliexpress has been showing off Xiami Phone 2 ($425-$525 for a quad core dual booting Android and MIUI phone) vs. Samsung Galaxy SIII
People's Daily doesn't include black/gray income, and for public-owned companies, this is huge where almost everyone is getting income/benefits under the table. They don't need to buy their own iPhone, someone will just "gift" it to them for guanxi reasons.
Finally, any middle class kid working for a private company making more than 6K RMB/month (72K/year) is going to have a iPhone most of the time. And this is why they are so pervasive here.
You'll see lots of iPhones in second tier cities, kunming, chengdu, Changsha....not to mention anywhere in jiangsu/zhejiang. Only in the third tier cities or countryside do iPhones become rare.
Bejing, is a subset of China, so it's not a good representation of total population. I bet most of China's population is (still) in rural areas (migrating occasionally to the city).
> What does Google get out of this huge market share?
A larger ecosystem. People writing android programs for the Chinese market will probably also upload them to Google's stores.
I'm sure lots of the programs will be junk and/or uninteresting in other countries, but the better programs will probably be able to afford localization.
>A larger ecosystem. People writing android programs for the Chinese market will probably also upload them to Google's stores.
Don't bet on it. Most of those will be highly localized, and those people, mainly Chinese, would have to jump through hoops to get them on Google stores for not much benefit.
In fact, Google does not make much, if anything at all from the whole Android thing, Samsung makes a killing though.
What does it cost them? There is no marginal cost for each Android phone shipped. When people upgrade from a cheap non-brand phone to a Samsung or Huawei they will start making money.
I wonder what the total marketshare that corresponds to is? From what I've read, smartphones are still in a niche in china and they primarily use dumbphones and featurephones.
Google is at same position as Microsoft, both of them are not earning any money from this large market share. Not to mention about rampant piracy of applications there.
Let's have some perspective here. Google earns about $40 bil a year, mostly from ads. Microsoft's Windows division still earns $18 billion a year. That part of their business may be in extreme danger at the moment but the only place where $18 billion is a rounding error is the government.
As he put it, "I don’t know if a large organized industry has ever faced this fierce a form of competition – someone who is not trying to 'win' in the classic sense. They want market share, but they don’t need economics. Imagine if Ford were faced with GM paying people to take Chevrolets? How many would they be able to sell? What if you received $0.10 for every free Pepsi you consumed? Would you still pay $1.50 for a Coke?"
I highly recommend you read (or re-read) Bill's prescient essay.
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[1] http://abovethecrowd.com/2011/03/24/freight-train-that-is-an...