It’s been a long bubble. And Msft is not bubbling much anymore.
Side question: How does Google make money off the Android? Do they get it all from the phone manufacturer, phone service provider, support or..?
I haven’t seen anything on how this works, but I imagine Google has some solid plan in mind. Any idea of the business model there?
Nope, they're part of the DJIA for a reason - they're now a stable, long-term growth company like XOM or WMT. Consistent profits, very good dividend, stable marketshare. They're no longer a volatile stock, they've become certifiably blue-chip!
Side question: How does Google make money off the Android? Do they get it all from the phone manufacturer, phone service provider, support or..?
I haven’t seen anything on how this works, but I imagine Google has some solid plan in mind. Any idea of the business model there?
Google makes nothing off the sale or use of Android OS - zero. They make some off the Android Market, but where they make most of their money is the same place they make it on the web: search and ad impressions.
Android uses Chrome, has Google Search as its engine, and Google Maps. All use paid-for advertisement, much like Google's own Internet search engine. Having 50+ million phones and devices (and that number increasing by 300,000 per day) showing your ads is a HUGE revenue stream.
Google hasn't deviated at all from their business plan - sell ad impressions. Everything they do is to get more impressions in front of users. Even if that means developing a free OS for use on phones and devices. It's all about ad impressions.
Thankfully, they keep the impressions small and unobtrusive!
There's a reason Apple banned AdMob (Google's ad engine) from the iPhone, and it's not about "safety" or "customer experience" as Jobs and Co. implied. It's about keeping dollars out of Google, and trying to get some for Apple.
To put it all into perspective, Apple made just over $8 billion last year, in net profit, on sales of $42 billion. A reasonable 19% profit margin.
Google made $6.5 billion - nearly as much as Apple - on sales of $26 billion. A very nice 25% profit margin.
Microsoft made $19 billion on sales of $62 billion. A huge 31% profit margin.
Between those three heavyweights, Apple comes up short in the profit margin, and barely beats Google in terms of absolute dollars. And Microsoft still crushes the other two, with revenue nearly equal to the other two combined, and more total profits than the other two combined.
Apple's about to be passed by Google, in terms of absolute profit dollars. My guess is it happens sometime Q1 of 2011, thanks to the steamrolling marketshare of Android. When that happens, you'll see a pretty long and probably steep slide in the share price of AAPL.