Android smartphone profits halved in 2014

Re/code reports profits in the Android smartphone market tanked in 2014 due to slim margins. Last year the global Android hardware market saw profits halve, marking the first year that there was any significant drop in profitability.

Samsung saw a big drop in profit, while Chinese players like Xiaomi are operating on slim margins to boost marketshare. Other players like Sony and Motorola lost money selling Android phones. If this trend continues, the Android market will primarily become a Samsung + Chinese OEM ecosystem:

That’s obviously of concern to the hardware companies, but it should also be worrisome for Google.

“It is important for Google that the ecosystem stays healthy and balanced,” Sharma told Re/code. “Without profitability, some of these players will eventually disappear and it will primarily become a Samsung + Chinese OEMs ecosystem, which is probably not what Google wants.”

Google, which makes Android, doesn’t profit directly from the operating system, but reaps enormous benefits as its many services are adopted. That, in part, helps explain the significant TV ad campaign that Google has been running touting Android and those that make devices using both the Google operating system and services.