Both Apple and Google make popular mobile operating systems.
Apple packages its operating system, iOS, with hardware, the iPhone, and sells the whole thing for ~$600. This business has created huge profits for Apple, and now the company has a $US500 billion market cap.
You would think that Google would see this success and copy it.
But it does not.
Google gives away its operating system, Android, for free to hardware makers.
Why does Google do this?
One reason: The company believes giving Android away for free increases the size of the world’s Web-connected population. The company believes that increasing the Web-connected population will inevitably lead to more Google searches — which Google can monetise with search ads.
Is Google’s theory correct?
There is some new evidence to suggest the answer is yes.
Horace Dediu of Asymco has a chart that proves there is at least a correlation between the size of the world’s Internet population and Google revenues.
Here it is:
More good news for Google is that there is plenty of toothpaste left in this tube: