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Google may not directly benefit from offering the Android operating system to phone vendors for free, but mobile devices are an important -- if still relatively small -- part of its revenue stream. The company expects to earn some $2.5 billion on mobile this year from advertising and its 30% cut on app sales through Google Play (formerly Android Market). However, it seems very little of this revenue actually comes from Android.
According to figures presented by Google as part of a settlement offer with Oracle in a patent and copyright infringement case, Android devices generated less than $550 million in revenues between 2008 and the end of 2011. We should note that Google previously declared a $1 billion run rate for mobile revenues in just 2011, so $550 million spread across four years suggests Android contributed little towards that number.
With roughly 200 million Android devices having been activated to the end of 2011, including an estimated 90 million during the past two years, The Guardian estimates that Google derives slightly more than $10 per Android handset per year. The rest of the money apparently comes in thanks to Google’s deal with Apple, in place since the original iPhone launched in 2007, through which it provides maps and the default search engine to some 315 million iOS devices sold so far -- nearly half of those were sold in the past year.
If accurate, that means Google is making four times as much revenue through iOS than with its own ecosystem. Though selling mobile ads is all that matters for Google's business in the end, its reliance on Apple is worrying considering how the relationship between the two has gone sour in recent years.
Apple appears to be slowly distancing itself from Google services. It's reportedly developing its own maps services and recently added add Baidu to the search engines available as options to Chinese iPhones. Moreover, although Siri usage hasn't exploded so far, it also has the potential to cut down the volume of Google searches done through the iPhone's browser, affecting mobile advertising revenue as a result.
This highlights the complex mixture of revenue streams for mobile platform players. It's no secret that Microsoft makes more money from Android than it own Windows Phone, thanks to its patent portfolio.
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