Back in 2010, Google thought Android had some very nice potential for growth -- at the time, it projected its mobile operating system might even reach more than 200 million installed users by 2013.
Turns out Google was wrong: it busted through the 200 million threshold in 2011 instead and is now on a trajectory for more than 700 million users in 2013.
All this number-crunching is based on Google's internal estimates for Android growth, which recently came out during the Oracle patent trial (see slideshow below). Asymco analyst Horace Dediu dug through the data and compared it with the activation announcements that have been made public to determine that Google greatly underestimated Android's potential.
So far, about 370 million Android devices have been activated, which is between two and three times as much as Google was expecting at this point.
It's possible that either Google truly had no clue how fast Android would catch on worldwide, or that they were under-promising in the hopes of being able to over-deliver, but it seems unlikely anyone would under-promise this much.
Dediu also points out something interesting and potentially insulting to Android users in his analysis:
Unexpected, exponential user growth is usually accompanied by a dramatic positive improvement in the finances of a company and a higher return to shareholders. The curious aspect of Android's success is that it has not had an impact on either. The market has not "discounted" the half-billion anticipated Android users into a price for Google shares that reflects this growth. It can only imply that those users are not very valuable.
That's right, Android fans -- the market has labeled you as cheapskates.
Actually, it's a bit more complicated than that, and Dediu has been going to great lengths this week to explain how Android functions as an extension of Google's search and ad-based business model. Check that out if you want to dive deep into Android's expenses and revenues.
Meanwhile, I'd be interested to hear your thoughts on the matter of foresight. If Google had more accurately foreseen Android's meteoric growth, would it have been able to position itself accordingly to monetize more effectively from sources other than search?