Google – Method in the madness

iOS still makes more money for Google than Android does.

• Android may dominate the statistics when it comes to unit shipments and number of users, but iOS remains critical to Google’s revenues from mobile.
• This is why it will continue to ensure that the user experience of its apps on iOS is as good as it can make it.
• The latest is the announcement by Google of iOS sync which is part of its efforts to provide companies who use Google to run their companies, with an enterprise grade service.
• This obviously flies right in the face of Android for work which is Google’s strategy to reform Android into an enterprise class platform for companies but there is method in the madness.
• iOS sync allows companies to control the Google apps on iOS and to make document storage on Google drive seamless and secure.
• This is all part of Google’s strategy to ensure that its ecosystem works just as well on iOS as it does on Android.
• Of the 58 apps that currently make up the Google ecosystem, at least 17 are available for iOS and these are the main apps that make up its Digital Life offering.
• Google has a love / hate relationship with iOS.
• On the one hand it derives 52% (2014E) of its mobile advertising revenues from iOS devices but on the other it knows that Apple will wipe it from its devices as soon as it can afford to do so.
• This is the biggest threat to Google’s current growth in my view as losing revenues from iOS would bring medium-term revenue growth to well below 10%.
• All it can do is to ensure that Apple can never afford to remove it from its devices for fear of annoying its users and seeing them defect.
• This is why Google will continue to develop its Digital Life service for iOS to the best of its ability.
• If Apple can develop its own services to a point where users are happy to switch over, then it will be in a position to remove Google from its ecosystem but not before.
• This is a very long way from happening but importantly Google is not resting on its laurels and continues developing to stay ahead.
• Consequently, Google offers one of the securest growth stories among the ecosystem players and with Yahoo! and Microsoft, it remains top of my list.