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Google Earns Only $1.70 a Year per Android Device

Hugh Pickens writes (1984118) writes | more than 2 years ago

Businesses 0

Hugh Pickens writes writes "While Apple generates more than $575 in profit for every iOS device and according to estimates in 2007 Apple earned more than $800 on every iPhone sold through ATT, Horace Dediu reports that Android generated less than $550m in revenues for Google between 2008 and the end of 2011 earning only $1.70 per year per Andriod device explaining how Apple is sucking up two thirds of the profit in the mobile phone business. Dediu's starting point is a settlement offer Google (GOOG) made to Oracle (ORCL) of $2.8 million and 0.515% of Android revenues on an ongoing basis. His assumption is that those numbers represent Google's revenue from Android to date. "If this is the case," writes Dediu. "We have a significant breakthrough in understanding the economics of Android and the overall mobile platform strategy of Google." The primary source of Google's mobile revenue is advertising and ironically, Google seems to be getting more revenue from iOS devices than Android — by a factor of 4 to 1 according to The Guardian's Charles Arthur. Of course profitability is not the only reason Google is in the mobile phone business. "P&L considerations were not the only (or even at all) factors in investment for Google, Having a hedge against hegemony of potential rivals, having a means to learn and develop new business and having a role in defining the post-PC computing paradigm are all probably bigger considerations than profitability," writes Dediu. "My take is that [Android] is not a bad business. But it's also not a great one.""

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