• http://twitter.com/utseo UtahSEO

    Very insightful. Those numbers from The Guardian didn’t really make sense to me either. I’m glad you took the time to explain it for me. Many thanks.

  • http://www.thednetworks.com Dhawal D

    Set the record straight, LikeASir!

  • http://www.facebook.com/preston.sumner Preston Sumner

    Not sure why you struggled to figure out where the $550 million figure came from when it’s simple math based on Google’s own statements and numbers. Nothing in this article really refutes the original claim that Google is making more money off of iOS than Android.

    Google could refute the whole thing immediately if they would just release revenue numbers for Android. But they don’t. There’s a reason why.

  • http://twitter.com/aaronwall aaron wall

    I think you meant “billion” in the first and third instances here  “$2.5 million – $550 million = $1.95 million”

  • http://searchengineland.com/ Danny Sullivan

    Google never gives any statement about what Android revenues are. You won’t find that anywhere.

    Google agrees to potentially pay $2.8 million in damages based on what a legal expert’s opinion of what the patents were worth for the period of 2008-2011, which may or may not be related to Android revenues. But we don’t know.There’s an assumption that the further payments from 2012 onward, which are percentages of Android revenue that would be paid, can be used to figure out what the 2008-2011 patent damages estimates must mean Android revenues are. That’s an assumption.

    Let’s assume that it’s correct, so that we can then say that Android’s revenue was $450 million. The next problem is that we don’t know what exactly that covers, as even The Guardian says. Does it include clicks on paid ads in the browser? That’s a huge issue that has to be clarified.

    But let’s assume that it does. Now we have to take that $2.5 billion in mobile revenue. That all net or gross? If it’s net, we assume that Google makes only a small slice of the revenue it agrees to pay Apple for iOS activity. That means the bulk of the $2.5 million might be mostly Android.

    We really don’t know. And I’m sure Google could release all those figures. But then again, Apple could also release the amount of money it pays Google. Neither company tends to reveal much of anything.

    The revenue figure also don’t go to Google’s uber-motive with Android, which has always been to ensure that it doesn’t find itself locked out of the mobile marketplace. To a big degree, it doesn’t matter if Android is a loss, as long as it keeps Apple or Microsoft from owning the mobile space.

    That’s the same reason it offers Chrome. Rarely do you see anyone ask how much money Google makes off of Chrome. But Google has a big investment in it. Why? Because it sees benefits beyond revenue in having a browser that isn’t controlled by competitors.

  • http://searchengineland.com/ Danny Sullivan

    Thanks, I’ll fix that.

  • http://www.facebook.com/people/Tony-Swash/790871973 Tony Swash

    Back in September 2011 as part of a senate judiciary hearing Google Exec Susan Creighton, testified under oath that two thirds of it’s mobile search comes from Apple iOS devices. Given the other ample evidence that iOS users actually use the web on their mobile devices far more than Android users and given that testimony from Susan Creighton it is reasonable to assume that the majority of Google’s mobile income comes from iOS rather than Android.

  • http://kaizenity.blogspot.com/ FalKirk

    Actually, the $550 million figure seems plausible.

    - In an earnings conference, Google stated that they anticipated making $2.5 billion from their mobile services in 2012.

    - Google also testified before Congress that two-thirds of their mobile services income came via iOS devices.

    - Using some rough math, that would mean that the maximum revenue Android could garner in 2012 would be $900 million. Since Android is only a part of Google’s mobile services, the actual amount could, of course, be less.

    The $550 million figure does not seem out of line with those figures.

  • http://searchengineland.com/ Danny Sullivan

    No, it’s not entirely reasonable to assume that.

    First, two-thirds of searches don’t mean that two-thirds of ad clicks come from iOS. You could have more ad clicks coming from Android.

    Second, let’s assume that it is two-thirds of mobile ad revenue is being generated by Google searches through iOS. Most speculation is that Apple keeps most of that income, as is common with partnership deals. So is the $2.5 billion figure including gross mobile revenues, including whatever happens on iOS. Or is it $2.5 billion net of what Google actually receives.

    Third, we still don’t know that “Android revenue” includes search revenue that happens within the browser on Android.

    iOS generates a lot of search traffic for Google. How much money that generates for Google in net revenue isn’t known. Whether search revenues are counted as Android revenues also isn’t known.

  • http://searchengineland.com/ Danny Sullivan

    See my other comments addressing this. They key question remains whether “android revenue” counts clicks on moble ads. We don’t know this.

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  • http://myindigolives.wordpress.com/ Ellie K

    Agreed, trying to back revenues out of court documents reduces to a guessing game. The relevant part in all of this is what you said down here in the comments, with the comparison to Chrome. 

    Google strategic planners, like most companies with some operating margin to spare, have a long term perspective. That’s reason enough to disregard whether or not Google makes 4x more from iPhone than Android, even if it were true (which I don’t believe is the case)!

    Question: Why not do financial statement analysis on Google’s earning releases, annual reports, 10K?  Wouldn’t that have been a better source for The Guardian than court documents? Or maybe not, as Google has those two share classes, and perhaps disclosure req’s are different for each? Or it could be even simpler: There are so many possible ways to attribute revenue that it is too difficult to figure it out based only on income statements and balance sheets.

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  • http://twitter.com/thetradedotcom The Trade

    Since it’s been referenced a few times, I just want to make the clarification that Susan Creighton testified that a 3rd party third party report released sometime before the hearing (I think Comscore?) stated that 2/3 of Google’s mobile revenue came from iOS — not that Google’s internal numbers stated tis.

    She didn’t offer specific internal metrics from Google, and even if she did, those numbers would be quite out of date by now.

  • http://twitter.com/WordWandering Jayesh Sharma

    Assuming the past payments are calculated on the same basis more or less as future payments is no great leap of faith as you seem to suggest.

    Also, we have to give credit to the people calculating these numbers that they have taken almost all relevant revenue in account when they talk of revenues from Android. When you say ” key question remains whether android revenue counts clicks on moble ads. We don’t know this” you are essentially saying they the experts you think calculated the revenues will essentially miss major sources of income. And that the 2.5 Bn figure that Larry Page stated uses some very different matrices to the ones used in patent litigation. 

    Of course there would be some discrepancies, but its safe to assume that they won’t be huge. After all, these are both legal matters and too much of difference between their definitions would open Google to litigation. So while there is some extrapolation involved, I see no reason why the guardian numbers are not in the right ballpark.