From the archives: originally posted August 6, 2014 on

In light of Apple’s latest earnings report, I began to think about how valuable iOS really is to Apple. For a company that was founded almost 40 years ago, it’s incredible that in only the past 7 years of its existence, iOS now accounts for a staggering majority of Apple’s revenue.

I went through the latest numbers and broke down Apple’s revenue by source. They do not give detailed breakdowns of their iTunes or accessories categories, so I am using a pro-rated percentage of each based on the ratio of iPhone/iPad vs. Mac/iPod. The numbers are most likely higher than I have here, because I am not counting iPod as iOS (even though iPod Touch is running iOS) and I doubt that iTunes/accessories share is actually split as neatly as iOS vs. Mac. It is fair to say in reality they both skew heavily toward iOS. So consider these to be conservative estimates.

By my count, 81% of Apple’s revenue last quarter was iOS-related. And again, I believe that to be a conservative estimate.

81%! Something that did not exist 8 years ago now accounts for 81% of Apple’s revenue. And that percentage is growing over time.

Now compare that to Google’s most recent earnings report.

They are very generic about these, but I suppose Android is part of the 5% labeled “Other”, and in reality it’s actually closer to or literally 0%. Remember, Android is FREE. No revenue attached to it.

Now of course, some portion of Google’s advertising revenue is tied to traffic coming from Android devices, so some percentage of the other 95% is coming from Android devices. I believe it would be unwise to call that Android-specific revenue though, because it is fair to say that if Android didn’t exist, a lot of that Google advertising traffic would stay intact as people are Googling (and viewing network sites) regardless of the device they’re on.

And that’s just the point isn’t it: If Android didn’t exist, it wouldn’t really affect Google’s revenue very much. Or possibly, it wouldn’t affect it at all.

Everyone is always making direct comparisons re: Android vs. iOS. While there are many apples (no pun intended) vs. oranges arguments to be made about software vs. integrated hardware, etc., it’s important to also remember that what these two operating systems represent to their respective owners is very different from a business and cash flow perspective.

If Google takes a bad turn with Android, and all their market share dries up, their revenues stay intact.

If Apple on the other hand falters with iOS, 81% of their revenue would be affected!

That is super scary if you are Apple– you can’t make any sudden movements because you are in jeopardy of sinking almost your entire business. On the flip side most people would argue that generating a lot of revenue from your products is quite desirable.

Google on the other hand can afford to make much more dramatic bets, because the short term risk is much lower.

Of course, longer term, I’d imagine that Android’s success is considered to be quite important to Google’s future success. But if it failed, they would still have plenty of time to figure out a different plan for tomorrow before today’s revenue dried up.

“The greatest enemy is one that has nothing to lose.” -Christopher Paolini