Feeds

iOS was SO much more valuable to Google than Android - until Maps

Apple cash hose dislodged from Choc Factory maw

Choosing a cloud hosting partner with confidence

Opinion So what about this Apple Maps thing then? Isn't it just so wonderful that Cupertino wants to improve the fanboi experience and thus has decided to replicate a perfectly serviceable alternative from a competitor? Sorry, become a competitor to its previous supplier...

As we might expect the reality is all about money and really quite considerable sums at that. It is an object lesson in how markets, specifically the ability to enter a market, tames red-in-tooth-and-claw capitalism by offering the consumer a choice. The choices made are what temper the usual capitalist desire to be a monopoly supplier.

As background it's worth considering this article from The Guardian: which states that Apple's iOS provides four times more revenue to Google than Android does. Bearing in mind all the caveats about numeracy among the arts grads, I had a bit of a dig through the numbers – and they seem to have proved their point. Apple pays Google to place Google Maps on iKit. Exactly what that number is we're not sure, only that the total revenue flow seems to be four times the amount that Google is getting from pumping Android out to all of its customers, Maps making up some fraction of that revenue.

Given that Android's revenue seems to be just over $500m for the past few years that means that Apple's total flow of funds to Google is some $2bn over that period. Even in the rarefied world of global technology companies that is still real money.

At which point the idea of Apple offering its own mapping product starts to make good old dollars and sense. The capital cost of creating the maps is one thing: but not having to offer the continuing revenue to another company is another. While Apple isn't charging users for the maps, it is also avoiding having to pay out to someone else for their use. It's a revenue saving even if it's not additional revenue.

The original deal probably made great sense: no one was really sure about how large the iKit market was going to be, so replicating all of the desired services in-house would not be a good use of capital. But once the market is large enough, why not start replicating those services currently being bought in? At some level of unit sales the savings will beat the capital necessary to produce the service.

Of course Maps aren't something that can be left off a device these days: far too many people find that that's actually what a phone is useful for (as an aside, how close are we to the point where the actual phone part of a phone becomes irrelevant and actually speaking to someone is the last thing anyone does with them?). So the options are try to renegotiate, to use someone else's maps or to build one's own. Clearly volume is such that the last one is the best option, for assuming that Apple's management are not idiots that's the path they have taken.

A slightly cynical way of looking at Apple Maps is therefore that it's nothing at all to do with making better maps, even if they are better maps. It's to save money with the useful side effect of annoying a competitor.

Two further things. The first is that serving up maps is bandwidth-intensive. One estimate (a plucked from the ether one but interesting all the same) is that it might triple Apple's own data-serving requirements, given that you do need over half a MB of serving capacity for each map request. That's good news for those like me who sell the scandium to the people who make the fuel cells that Apple uses to power its expanding server farms and data centres.

The second is the opportunity for a little parlour game on a Friday afternoon. Recall the set-up: Apple bought in services for iKit to begin with. Sales volume has been so high that it is now making sense to replace bought-in services with in-house developed and provided services. The game is: which supplier will be next to see their offering replaced?

The one that stands out to me is the Google search engine itself. This would be problematic: for to some extent Google is search. It would depend upon consumer thoughts and behaviour. If Apple decided not to integrate Google search, would people be turned off iOS altogether – feeling that if one cannot easily Google then what's the point of iKit? Alternatively, there's a possible world in which the iKit user base is so large that it is a sufficient source of traffic to support an entirely new search engine along with the necessary advertising platform. Certainly one could imagine that Bing would offer a hefty chunk of any extra revenue to replace the Chocolate Factory even if a new engine would not quite make sense.

This is just musing of course but then that's the point of parlour games. I can imagine a VC pitch along the lines of: “Apple might replace Google on iKit, we're positioning to be bought out to be that new engine.” I can also imagine that Tim Cook has at least asked the question, “So, how much does it cost to create a search engine anyway?” Anyone know the answer to that question? And anyone have ideas about what else might be sensibly developed in-house to reduce outgoing licence payments? ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Sea-Me-We 5 construction starts
New sub cable to go live 2016
Crouching tiger, FAST ASLEEP dragon: Smugglers can't shift iPhone 6s
China's grey market reports 'sluggish' sales of Apple mobe
EE coughs to BROKEN data usage metrics BLUNDER that short-changes customers
Carrier apologises for 'inflated' measurements cockup
Comcast: Help, help, FCC. Netflix and pals are EXTORTIONISTS
The others guys are being mean so therefore ... monopoly all good, yeah?
Surprise: if you work from home you need the Internet
Buffer-rage sends Aussies out to experience road rage
EE buys 58 Phones 4u stores for £2.5m after picking over carcass
Operator says it will safeguard 359 jobs, plans lick of paint
MOST iPhone strokers SPURN iOS 8: iOS 7 'un-updatening' in 5...4...
Guess they don't like our battery-draining update?
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.