One of my favorite Wall Street technology analysts is Jonathan Goldberg of Deutsche Bank. He combines his big-picture analysis with ear-to-the-ground sentiment reporting, meshing the virtues of a beat reporter with a series number cruncher. In the Jan. 18 edition of the Digits newsletter, Goldberg dropped what felt to me like a bombshell about Google (GOOG), considering all the positive press that Apple (AAPL) has gotten from its most recent earnings and gains in the Asia Pacific region.
Namely, Goldberg's sources in China say Google's Android operating system has already pulled away from the pack there and assert that it'll be the big winner in the Middle Kingdom and, most likely, in Asia as a whole. "Our latest visit to China made it clear that Android has become the faraway leader in mobile operating systems [OS]," wrote Goldberg.
An Explosion of Opportunity
That's particularly interesting because Asia is likely to be the largest market in the world for advanced smartphones for the foreseeable future. That Google is pulling away in this critical geography not only lends credence to the search giant's decision to get into the operating system business but also hints at a real explosion of Android-related revenue opportunities in the not-so-distant future.
Apple is now pulling in at least $2 billion per year from App Store sales. The potential upside for Google could be far higher due to the sheer vastness of the addressable market. Incidentally, Goldberg reported that phones running Android likely outsold the iPhone in Asia in December. His prediction is that Android devices will outsell both the iPhone and the iPad during 2011 and pull further ahead in 2012.
Equally important, Goldberg ran into strong evidence that Android had gained real traction in a huge swath of the OS market for a wide range of devices. Said Goldberg of the time he spent talking to tech firms in China: "Every company highlighted that Android was being used in far more than phones and tablets. We saw or heard of Android laptops, set-top boxes and ATMs among other categories."
In other words, Google has a real shot at controlling vast chunks of the technology landscape and, by extension, inserting its advertising network into those devices, either via hooks in the Android operating system or via sales of applications for Android devices of various flavors.