Iterations: Silicon Valley Slowly Awakens To Android

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Editors Note: Semil Shah is a contributor to TechCrunch. You can follow him on Twitter at @semil.
When the iPhone launched in 2007, Jobs proclaimed when it came to phones, Apple was likely, at that time, five years ahead of the competition. Well, those five years are up, and all of a sudden, as if on cue, many of the Valleys smartest technology minds and observers have begun to slowly split up their attention between their primary mobile devices (iPhones) and the most recent Samsung lines of Android phones. How will the growth of Android affect the priorities of developers, which mobile platforms they chose to launch on, and the monetization formula for hardware (with Samsungs ability to capture value) and software (apps) in a state of flux?
Theres so much great analysis out there as to Why? and How? Android is gaining steam, so I wont regurgitate all of that here. Either way you slice it, the typically iPhone-centric and iPhone-obsessed Valley is starting to pay more attention to the new Samsung Androids, everything from the tactile design to app performance and all things in between, include Androids growth rate and projections. This isnt to imply Android is on even par with iOS, but being good enough may be all that it needs given Googles strategy so far.
To date, most mobile app-first successes have been born on the iPhone, the most notable including the likes of new media darlings Instagram, new marketplaces such as Uber, and apps with freemium business models such as Angry Birds. All of these apps were launched a few years ago and enjoyed tremendous growth as the iPhone improved with each new version. Then, at a point when these apps felt the core product was solidified (and after raising serious venture capital), the companies applied resources to build for Android and dramatically increase their engagement (and revenues) with an audience hungry for apps they were excluded from enjoying. During this evolution, Apple squeezed the lions share of hardware profits from this industry, and also helped iOS developers earn billions of dollars in their app store marketplace.
Now in 2013, people are starting to imagine the next five years of mobile, and its clear Google will have many things going for it. The number of Android handsets will be huge. Developers will be enamored by the size of the potential audience. Android is more open and may encourage a different style of app innovation thats gated off from iOS. Of course, all is not rosy: Its yet unknown how much money Android users will spend on apps and through app-actions, Android developers will need to make hard choices about developing for so many different types and sizes of devices in Android, and users may determine they want more consistent experiences across devices rather than ones that are skewed by Android. On top of this are the mega-unknowns, such as What will Samsung do? and What to make of Googles integration of Motorola? and How many Android devices run the latest OS updates? Fun, indeed.
Finally, we must follow the money.
On devices, Apple continues to squeeze out almost every available inch of profit. This certainly wont last forever, as reflected by recent corrections to Apples stock price to start 2013, though I suspect their stock will snap back to high levels soon given the companys iPhone-based revenues alone (not including any other products or services) eclipses the total annual revenues of other major tech companies. Samsung will surely take more hardware profits as a percentage than they have to date, but we will have to wait and see just how much. When it comes to native services, Google is in a good position to monetize all types of search, either through their phone browser, voice control, maps, or anticipatory systems. Ive heard Google knows a thing or two about how to monetize search.
And, what about the money around and within third-party apps? Historically, most of the profits here have been routed through iOS, with the parent taking a nice 30% cut. Theres no doubt were going to start to see Android-first apps being built at faster rates, increasing the percentage likelihood that an Android-first app goes mainstream. The device fragmentation will be a huge burden for individuals and smaller companies (though Im starting to see super-innovative solutions around apps and operating systems, which Ill touch on in another post), but larger companies with resources and growth (and investment) may be in a better position to apply resources to Android to capture the growth curves in adoption.
While it remains to be seen how dramatic this shift in devices may be its way too early to tell, and Im personally not giving up my iPhone until they pry it from my cold, dead hands theres no question the scale of Android, even with all the old devices and outdated software updates, will be at a scale. And, while it remains to be seen just how consistent an Android users willingness to run transactions within apps is, application developers, such as those creating new mobile-to-offline marketplaces, will likely be able to not only begin Android-first, but also extract revenues and profits once reserved for iOS.
Jobs was right (if not conservative) about his five years ahead statement in 2007, though my bias is iOS is still miles ahead of Android today. But, no doubt Android is growing in numbers and performing well on Samsung. I wonder what he would predict about the next five years if he were alive today. Ive tried to lay out an analytical view of what could happen as audiences grow and simultaneously shift, but the Apple loved by Silicon Valley and Wall Street alike is probably looking for something entirely new, something we dont even know about yet. Will it arrive from Cupertino? Google is flush with cash, operating at tremendous scale with room to grow, showing no signs of slowing down, and even the most iPhone-loyal folks around the Valley are starting to take notice and envision a future many of them couldnt see five years ago.

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