It’s about Profit, Stupid

Unless you follow tech news, you probably don’t know about the Apple vs. Android debate raging over who is really winning the smartphone wars. Android fans claim that Google, with over 50 percent of the market, is the clear winner; while Apple proponents point out that comparing the two is comparing apples (no pun intended) to oranges because the iPhone is a hardware device and Android is software—an operating system installed on multiple third-party devices.

But both sides of the debate are apparently moot, because it turns out that Apple only needs 4.2 percent of the market share to win.

That’s because Google doesn’t make anything when an Android phone is sold—they didn’t make the device and the OS is open source, meaning free. Apple, on the other hand, makes a hefty profit on each iPhone.

So while Android has captured over 50 percent of the smartphone market, Apple has captured over 50 percent of the smartphone profits.

Measuring business and marketing metrics is important. But knowing what to measure is equally important. Market share is a lot like website visits. My competitor may get 25,000 visits each month compared to my 5,000. But if 10 percent of my visitors buy, and only 1 percent of my competitor’s vistors buy, I’m the clear winner, aren’t I?

It’s like the man who visited the bank looking for funding for his new business venture. After reviewing his marketing plan, the bank executive noticed that he couldn’t produce his product for less than he could sell it. When asked how he was going to solve that, the would-be business owner enthusiastically replied, “I plan to sell in volume!” Math was not my best subject, but even I can figure out that the more you sell at a loss, the more money you lose, not make.

There’s a lesson to be learned here, and it’s not that we should all gush over how wonderful Apple is, but to remember that, when it’s all said and done, it’s not what you make, it’s what you get to keep.

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