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It does honestly seem like Google stumbled into a goldmine. Google basically set out to create the Sidekick 2.0 (I don't really get the constant "Android starte

It does honestly seem like Google stumbled into a goldmine. Google basically set out to create the Sidekick 2.0 (I don't really get the constant "Android started as a Blackberry ripoff" claims, when there are much more obvious Danger roots). I really don't see Page/Brin/Rubin in a room in 2006, rubbing their hands together thinking they were going to shock the world. It seems more like the Google guys were big Sidekick fans and saw the chance to work with Rubin for relatively cheap. But they kept their options open, made a lot of cautious small bets rather than going all in. They didn't make the iPhone, no, but they placed themselves in a position where they could react to iPhone. By being open to the opportunity and a lot of luck, they essentially became the only choice a monster sized industry had in the face of huge disrupting new competitor. Google often get slagged for the unfocused, perpetual beta thing. But laser focus is overrated. For example, given the choice of only picking Chrome OS or Android, a laser focused Google would have never gone Android. Overall I think it is much better to admit the future is unknown, and be prepared (especially for a large company with Google-sized resources).

beatle 15y ago
What goldmine? They just replaced Nokia. Android is the new Nokia. Lots of worthless Market share, Zero profit. EDIT: I realize i'm going to be down voted for this. But if you don't think it's true, you're delusional.
- Kylekramer 15y ago
  The profits obviously aren't as simple as x widgets cost y dollars to produce and sell at price z (might change with the impending Motorola acquistion) and it is probably never going to be known strictly how much Android makes. But if you think Google can't convert half a million new Android phones a day into money, you haven't been paying attention to Google at all.
  - falling 15y ago
    I think this blind faith in Google to be a bit weird. I still find unbelievable they can make that much money just with ads – I do believe they do, it just befuddles me – on a phone it's even harder to display them and in fact you don't see as many in the mobile web, are we really sure that Android is profitable? Maybe it's not yet and they're still trying to find the business model for it. Maybe it will never directly be, it will just serve as measure to not be excluded from the mobile world and keep competitors (not derogatory) from eating into Google.
    - jerhewet 15y ago
      > I still find unbelievable they can make that much money just with ads I do as well, and wish there were more research available on internet advertising. I'm sure a few companies at the top of the pyramid make money, but everyone else (IMNSHO) is taking money out of their left pocket and putting it into their right pocket (A buys ads on B, B buys ads on C, [...] Z buys ads on A; in the end, a zero-sum game). I'm sure we'll be shouted down, but you're not alone in your opinion.
      - nl 15y ago
        I do as well, and wish there were more research available on internet advertising Have you actually looked? It's one of the most actively researched fields in the world at the moment. Try http://www.iab.net/insights_research http://www.iab.net/insights_research to start. I'm sure a few companies at the top of the pyramid make money This is absolutely, completely untrue. One of the reasons internet advertising is so popular is because its effectiveness can be proven - advertising companies can show how people exposed to ads buy at a higher rate. The improvement in rate can be calculated exactly, which shows the advertiser exactly how much they should spend. Take a look at http://www.aimia.com.au/enews/IAB/IAB%20Retail%20Study%20-%20Finalv3.pdf http://www.aimia.com.au/enews/IAB/IAB%20Retail%20Study%20-%2... (skip to roughly half way thorough). There they promoted a new product in one market exclusively online, and did no promotion in the other market. Sales in the promoted market were 11% higher than the control. Don't believe it? Try it yourself - I wanted to understand it better, so signed up for an affiliate account and did some Facebook advertising. It worked quite well - I was able to make around $15 for every $1 spent (obviously this was a very specific market segment).
  - sedev 15y ago
    Well, I think that they currently aren't doing so, at least based on a track record of articles like this one: http://www.asymco.com/2011/11/09/mobile-games-the-denouement/ http://www.asymco.com/2011/11/09/mobile-games-the-denouement...
    - Kylekramer 15y ago
      The fact that Apple makes a lot more profits than Android manufacturers is nearly of no consequence for Google. Microsoft managed just fine as Gateway and others crashed and burned.
      - sjs 15y ago
        Microsoft sells Windows licenses for money. Google gives Android away and hopes to generate ad revenue from people searching on those devices. Not a very apt comparison.
  - fleitz 15y ago
    No one doubts that Android is a complement to Google's business but fundamentally if the app store developers can't make money then it's largely pointless. iOS is the place where people like 37Signals can thrive. Android is the place where people like Facebook can thrive. They've got a market of millions of people who don't buy anything, but click ads occasionally. Android should team up with AdBusters because on the Marketplace everyday is buy nothing day.
    - beatle 15y ago
      Google's Android Market earn just 7% of what Apple's App Store makes despite larger market share. http://tech.fortune.cnn.com/2011/11/21/piper-jaffray-android-app-revenue-is-7-of-iphones/ http://tech.fortune.cnn.com/2011/11/21/piper-jaffray-android...
      - nl 15y ago
        They estimated Android downloads to be 6.7 billion about 2 weeks before Google announced there had been 10 billion downloads. That isn't very accurate.
        fleitz 15y ago
        A download does not a sale make.
        nl 15y ago
        Did you even read the article? They explicitly compare their estimate of 6.5 billion Android downloads with 18.5 billion iOS downloads. Free downloads are included in both cases (but the Android estimate is way, way out) (Edit: To make it doubly clear, I'm implying that their estimate of revenue share shouldn't be trusted either)
        fleitz 15y ago
        Yes, I read the article, I believe they stated that it was an estimate. Perhaps their estimation methods are conservative. Perhaps Apple provides better data than Google upon which to make estimates. Perhaps the timing of the data leads to more accurate estimates for Apple. You can't simply say that because one estimate was wrong that everything else shouldn't be trusted. (Well you can say it, but there's no logical basis that underpins the argument) Perhaps they estimated the downloads based on sales, who knows. A week before Google released their data the estimate was useful, now it isn't because we have better data, that's simply how life goes. In the business of selling apps I'd much rather I went to market underestimating the size of the market than overestimating it. To me, one more download is one more client to support with no revenue upon which to service it. I guess if I developed for the Marketplace I could have 40% more freeloaders than anticipated. Awesome, just what I needed, more expenses and the same rev. I'm not in the business of cheerleading mobile operating systems, I'm in the business of selling stuff. (To be fair, I do cheerlead Apple because people can't buy my stuff on Android, perhaps the market is changing and I'll have to adapt, but once my stuff is available on both platforms, I really wouldn't care what people use) I'll be ecstatic when the marketplace is at a billion a year but I think that's a bit off at this point. App Store vs. Marketplace is like Google vs. Bing for traffic, if you're a huge site you'll see 15% of your traffic from bing, but if you're a smaller player you'll see 99% from Google. Likewise when doing SEO work I don't care about bing because it doesn't drive traffic for me like Google does. On the other hand I use Bing for SEM because it has cheaper CPCs with a better conversion rate.
- untog 15y ago
  Lots of worthless Market share Every user having their searches funneled through your search engine. Tight integration with your e-mail service, your video sharing service and your VOIP service. Much, much more. Millions of people conducting their lives through your product is definitely not 'worthless'.
  - ceejayoz 15y ago
    > Every user having their searches funneled through your search engine. Tight integration with your e-mail service, your video sharing service and your VOIP service. Much, much more. iOS currently has all of that except the VOIP, FWIW.
    - untog 15y ago
      This isn't an iPhone vs Android ego stroking contest, though. Both companies have market share, it is beneficial to both of them.
- pavlov 15y ago
  Just a few years ago, the old Nokia was consistently bringing in >1 billion USD in profit per quarter. If your theory is correct and Android has simply replaced Nokia, it's making a good amount of money for someone. (Unless $1B == 0 in your world.)
- slykat 15y ago
  I don't understand why I keep hearing this mantra so often - it's completely off-base. Android is clearly a goldmine. The goldmine is the incremental search revenue Google gets from controlling the Android platform. Why do you think the search volume on mobile is a hockey stick at Google? Literally every single android device has a dedicated search button on it; iOS devices do not. Which device do you think has higher searches per user? The incremental search volume (and search ad revenue) is enough to justify the entire Android investment. More importantly, without Android, Apple had the ability to lock out Google from mobile search by changing the default search provider to non-Google. The lost revenue if Apple changes its mind and Google is locked out of mobile search? There's your 2nd goldmine. The argument that Android is not a money maker is like the argument that Gillette selling razors below cost is bad idea. At the end of the day both Gillette and Google make a tons of money off selling something that isn't exactly the main product, but is peripheral to it. In Gillette's case it's razor blades, in Google's it's search.
  - sedev 15y ago
    Why do you think the search volume on mobile is a hockey stick at Google? I could take a guess. "Google Exec Testifies Before Senate That Two-Thirds of Mobile Search Happens on iOS Devices" http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-search-comes-from-apples-ios/ http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-sea...
    - nextparadigms 15y ago
      Well iOS used to have a much larger user base, but Android has almost caught up, and will even surpass it. But depending so much on iOS so far is exactly the reason why Google needed Android.
  - guelo 15y ago
    > I don't understand why I keep hearing this mantra so often When Android got #1 market share the Apple fanboys decided that direct profit is the only number that matters.
  - mesec 15y ago
- tnuc 15y ago
  There is a lot of profit in the Google ads that permeate so many android apps.
- icebraining 15y ago
  I downvoted you purely because of your edit.
- interlagos 15y ago
  You should be downvoted for it, and it's sad that you haven't thus far. Worthless market share? Zero profit? Such emotionally-driven hubris has no place on HN.
- webwright 15y ago
  I'll downvote you because I think you're missing the point. Android makes Google $2.5B/yr (that's a run rate, up from $1B this time last year). Google's total run-rate is about $35B by comparison. Given that it's in land-grab mode, I imagine they are re-investing like crazy in Android-- they realize that the dominant smartphone operating system has a lot of market power. As an example, Microsoft makes more on Office/Server stuff than they do on Windows. tl;dr Comparing a dominant operating system (Android to a hardware company that grudgingly made software (Nokia) isn't really valid.
diminish 15y ago
Personally owning, several androids in the family as phones and tablets, I am thankful to Google for pushing open source to a proud leader. All manufacturers may freely use it and may offer newer phones. I wish I will be able to play more with Android the way I do with my Linux, as soon as Nexus like devices become commonplace. Thanks Google.
ethnomusicolog 15y ago
I don't understand why you attribute it to luck. Don't we have plenty of evidence of how much smart google top management can be?
rdouble 15y ago
It seems more like the Google guys were big Sidekick fans and saw the chance to work with Rubin for relatively cheap Android the company was built to sell to a larger company. The acquisition could be attributed to the shrewdness of Android's sales pitch to Google.
- beatle 15y ago
  who said Android's cheap? Real cost of Android = Android acquisition price + Motorola acquisition price ($12.5 Billion) + Lawsuits
  - nl 15y ago
    Motorola acquisition price ($12.5 Billion) Android has been successful already, even without that. Lawsuits Only Oracle has sued Google over Android, and the outcome of that is far from settled.
  - webwright 15y ago
    Cheap all depends on the ultimate value. I remember when people scoffed at the spending/fundraising that Facebook was doing. They'll do 4.5ish billion in revenue this year. Android enjoyed a 2.5x growth rate in revenue over the last year. If that continues for a few years, your formula will seem pretty cheap. On the motorola acquisition, it's fairly hard to calculate what it saved Google. Will the patent portfolio they picked up save them billions in settlements/legal costs? Quite possibly.
    - beatle 15y ago
      Saw this before. The key words are....annualized and revenue. They did not report mobile quarterly figures or costs and profits. But. we can extrapolate: $2.5 Billion annualized == $625 million quarterly mobile revenue. Elsewhere in the earnings report: $10 Billion total quarterly revenue One of the costs broken out was TAC (Traffic Acquisition Costs,) -- these were $.25 for each $1 of revenue. Assuming that TAC costs are consistent across mobile and non-mobile that means: quarterly mobile revenue - TAC == $470 million ANAICT, Gross margins were 40% of revenue - TAC quarterly gross mobile profit == $188 million No figures were given, so let's assume that 50% of mobile comes from Android phones (50 % from iPhones and all other smart phones) quarterly gross mobile profit from Android == $94 million No direct expenses/costs were given for mobile, Android development, etc. If we assume Google has 10 people on the Android team @ $100,000 each, per year (Pay, office, equipment, benefits, etc.) or $.25 million per quarter That would leave: Android quarterly profit before taxes == $93.75 million Obviously, these are just SWAG estimates (and I hope my math and logic are correct) -- but they are an attempt to put in context the headline of this article" --------- Google announces $2.5 billion in mobile revenue/run rate == $93.75 million Android quarterly profit after taxes (30%) $93.75 Million quarterly profits from Android is peanuts. Apple earns more selling smart covers.
sedev 15y ago
Maybe a silver mine, but definitely not a goldmine. Apple is still taking home the lion's share of the profits in mobile, which the author of the article rather ignores.
- mey 15y ago
  I'm sure Android is much more to Google then the Android Market place. Like iOS device, it's also creating an ecosystem of devices/service. How many people now have gmail accounts, and are searching through google then before they had Android devices? Google hopefully understands (don't see any indication they don't) that they are getting a channel to market directly to users as well as obtain new users. This system gives them a platform to directly compete in a variety of media markets, now as a content provider in addition to their ad model.
  - chimeracoder 15y ago
    To me, it's completely clear that Google's plan for Android is much broader than the Android marketplace. Google's had a reputation for neglecting products in the past, but even despite that, they would have focused far more resources on the Android Market and angled it differently if that were their focus of Android. Google wants to create a platform that will dominate all mobile devices for years to come. Cell phones (and, more recently, tablets) are just one aspect of that. They want a standard OS for any small-scale device. In their vision of the future, your coffee maker, refrigerator, and laundry machine may all use an Android-based platform. This is one of the reasons why they are perfectly happy with Android being used for cheap smartphones which are really just amped-up feature phones. They don't want to be seen as elitist, the way that Apple tries to market itself as high-end. They want to have high-end products, sure, but it's equally important to them that they cover the range of that spectrum. I don't know if they had exactly this in mind when acquiring Android, but by now, it seems clear to me that this is their goal.
  - guygurari 15y ago
    > How many people now have gmail accounts, and are searching through google then before they had Android devices? Judging by Android users I see around me, not a single one.
Steko 15y ago
It's more like Google's stumbled onto a gold mine that's already been looted: Google makes $5-$10 per Android phone, maybe 10% of what it's partners make. That's about the same amount as Microsoft makes off each Android phone and is perhaps 1/50th of what Apple makes off each iphone. Even worse it turns out that the half empty gold mine is on public land and any crazy old coot can waltz in and start mining themselves: Android won their "empire" by being the only credible licensed iphone clone in 2009. The real question is whether this empire is going to be of the Han/Roman/Windows variety as so many commentators assume or will it be a short lived dynasty like the Qin/Napoleonic/Netscape variety. I'll put my money on a Three Kingdoms scenario playing out. Why do I think WP 7 has a ghost of a chance when everyone's done nothing but dismiss them? Let's review: Android phones started shipping in Fall 08. However they really didn't have any traction until Fall 09 when Verizon started pushing the Droid. And it wasn't until Froyo phones shipped en masse in Summer 2010 where Android started to dominate carrier shops. In the same way WP7 launched buggy, incomplete and lackluster in late 2010. It had no traction for it's first 3 quarters. Lately though we've seen a mature OS update released on a 2nd generation of phones that were designed for it. More importantly Microsoft has made no secret of it's desire to buy market share with retail subsidies. And it will certainly be buying this market share at Android's expense. How much they're willing to lose buying this market share isn't clear but if it's anything like the money they've plowed into Bing that's a lot.
- karlmdavis 15y ago
  Do you have citations for your $5-$10 figures? Also, you're neglecting to account for the money they're making from the Android market: apps, movies, books, etc.
  - sixcorners 15y ago
    The 30% they give to the carriers?
- ypcx 15y ago
  The future is Open Source. That's why Microsoft has no place there. Also don't be fooled by how much money is made where. Money is just a tool; one of.
fpgeek 15y ago
"They didn't make the iPhone, no, but they placed themselves in a position where they could react to iPhone." Exactly. They set themselves up so they could quickly react to disruptive change in the smartphone market. The iPhone happened to be what came along. Most people don't understand what an impressive accomplishment this is. Let's look at how long it took for some other smartphone competitors to release their response to the iPhone: Palm took two years (and started over from the ground up). Microsoft took three years (and still doesn't have traction). Nokia took took four years (and then threw it away). RIM still isn't there yet (next year?). And Google? They took one year. They clearly were doing something right. BTW, props for remembering Danger. So many people don't in these discussions and (for someone who was working with smartphones back then) it is incredibly frustrating.
- rimantas 15y ago
  > And Google? They took one year. They clearly were doing > something right. Like buying Android Inc. in 2005?
  - fpgeek 15y ago
    If you want to read "the Android team" where I said Google, feel free. The overall point is the same.

beatle 15y ago

What goldmine? They just replaced Nokia. Android is the new Nokia. Lots of worthless Market share, Zero profit. EDIT: I realize i'm going to be down voted for this. But if you don't think it's true, you're delusional.

Kylekramer 15y ago
The profits obviously aren't as simple as x widgets cost y dollars to produce and sell at price z (might change with the impending Motorola acquistion) and it is probably never going to be known strictly how much Android makes. But if you think Google can't convert half a million new Android phones a day into money, you haven't been paying attention to Google at all.
- falling 15y ago
  I think this blind faith in Google to be a bit weird. I still find unbelievable they can make that much money just with ads – I do believe they do, it just befuddles me – on a phone it's even harder to display them and in fact you don't see as many in the mobile web, are we really sure that Android is profitable? Maybe it's not yet and they're still trying to find the business model for it. Maybe it will never directly be, it will just serve as measure to not be excluded from the mobile world and keep competitors (not derogatory) from eating into Google.
  - jerhewet 15y ago
    > I still find unbelievable they can make that much money just with ads I do as well, and wish there were more research available on internet advertising. I'm sure a few companies at the top of the pyramid make money, but everyone else (IMNSHO) is taking money out of their left pocket and putting it into their right pocket (A buys ads on B, B buys ads on C, [...] Z buys ads on A; in the end, a zero-sum game). I'm sure we'll be shouted down, but you're not alone in your opinion.
    - nl 15y ago
      I do as well, and wish there were more research available on internet advertising Have you actually looked? It's one of the most actively researched fields in the world at the moment. Try http://www.iab.net/insights_research http://www.iab.net/insights_research to start. I'm sure a few companies at the top of the pyramid make money This is absolutely, completely untrue. One of the reasons internet advertising is so popular is because its effectiveness can be proven - advertising companies can show how people exposed to ads buy at a higher rate. The improvement in rate can be calculated exactly, which shows the advertiser exactly how much they should spend. Take a look at http://www.aimia.com.au/enews/IAB/IAB%20Retail%20Study%20-%20Finalv3.pdf http://www.aimia.com.au/enews/IAB/IAB%20Retail%20Study%20-%2... (skip to roughly half way thorough). There they promoted a new product in one market exclusively online, and did no promotion in the other market. Sales in the promoted market were 11% higher than the control. Don't believe it? Try it yourself - I wanted to understand it better, so signed up for an affiliate account and did some Facebook advertising. It worked quite well - I was able to make around $15 for every $1 spent (obviously this was a very specific market segment).
- sedev 15y ago
  Well, I think that they currently aren't doing so, at least based on a track record of articles like this one: http://www.asymco.com/2011/11/09/mobile-games-the-denouement/ http://www.asymco.com/2011/11/09/mobile-games-the-denouement...
  - Kylekramer 15y ago
    The fact that Apple makes a lot more profits than Android manufacturers is nearly of no consequence for Google. Microsoft managed just fine as Gateway and others crashed and burned.
    - sjs 15y ago
      Microsoft sells Windows licenses for money. Google gives Android away and hopes to generate ad revenue from people searching on those devices. Not a very apt comparison.
- fleitz 15y ago
  No one doubts that Android is a complement to Google's business but fundamentally if the app store developers can't make money then it's largely pointless. iOS is the place where people like 37Signals can thrive. Android is the place where people like Facebook can thrive. They've got a market of millions of people who don't buy anything, but click ads occasionally. Android should team up with AdBusters because on the Marketplace everyday is buy nothing day.
  - beatle 15y ago
    Google's Android Market earn just 7% of what Apple's App Store makes despite larger market share. http://tech.fortune.cnn.com/2011/11/21/piper-jaffray-android-app-revenue-is-7-of-iphones/ http://tech.fortune.cnn.com/2011/11/21/piper-jaffray-android...
    - nl 15y ago
      They estimated Android downloads to be 6.7 billion about 2 weeks before Google announced there had been 10 billion downloads. That isn't very accurate.
      - fleitz 15y ago
        A download does not a sale make.
        nl 15y ago
        Did you even read the article? They explicitly compare their estimate of 6.5 billion Android downloads with 18.5 billion iOS downloads. Free downloads are included in both cases (but the Android estimate is way, way out) (Edit: To make it doubly clear, I'm implying that their estimate of revenue share shouldn't be trusted either)
        fleitz 15y ago
        Yes, I read the article, I believe they stated that it was an estimate. Perhaps their estimation methods are conservative. Perhaps Apple provides better data than Google upon which to make estimates. Perhaps the timing of the data leads to more accurate estimates for Apple. You can't simply say that because one estimate was wrong that everything else shouldn't be trusted. (Well you can say it, but there's no logical basis that underpins the argument) Perhaps they estimated the downloads based on sales, who knows. A week before Google released their data the estimate was useful, now it isn't because we have better data, that's simply how life goes. In the business of selling apps I'd much rather I went to market underestimating the size of the market than overestimating it. To me, one more download is one more client to support with no revenue upon which to service it. I guess if I developed for the Marketplace I could have 40% more freeloaders than anticipated. Awesome, just what I needed, more expenses and the same rev. I'm not in the business of cheerleading mobile operating systems, I'm in the business of selling stuff. (To be fair, I do cheerlead Apple because people can't buy my stuff on Android, perhaps the market is changing and I'll have to adapt, but once my stuff is available on both platforms, I really wouldn't care what people use) I'll be ecstatic when the marketplace is at a billion a year but I think that's a bit off at this point. App Store vs. Marketplace is like Google vs. Bing for traffic, if you're a huge site you'll see 15% of your traffic from bing, but if you're a smaller player you'll see 99% from Google. Likewise when doing SEO work I don't care about bing because it doesn't drive traffic for me like Google does. On the other hand I use Bing for SEM because it has cheaper CPCs with a better conversion rate.
untog 15y ago
Lots of worthless Market share Every user having their searches funneled through your search engine. Tight integration with your e-mail service, your video sharing service and your VOIP service. Much, much more. Millions of people conducting their lives through your product is definitely not 'worthless'.
- ceejayoz 15y ago
  > Every user having their searches funneled through your search engine. Tight integration with your e-mail service, your video sharing service and your VOIP service. Much, much more. iOS currently has all of that except the VOIP, FWIW.
  - untog 15y ago
    This isn't an iPhone vs Android ego stroking contest, though. Both companies have market share, it is beneficial to both of them.
pavlov 15y ago
Just a few years ago, the old Nokia was consistently bringing in >1 billion USD in profit per quarter. If your theory is correct and Android has simply replaced Nokia, it's making a good amount of money for someone. (Unless $1B == 0 in your world.)
slykat 15y ago
I don't understand why I keep hearing this mantra so often - it's completely off-base. Android is clearly a goldmine. The goldmine is the incremental search revenue Google gets from controlling the Android platform. Why do you think the search volume on mobile is a hockey stick at Google? Literally every single android device has a dedicated search button on it; iOS devices do not. Which device do you think has higher searches per user? The incremental search volume (and search ad revenue) is enough to justify the entire Android investment. More importantly, without Android, Apple had the ability to lock out Google from mobile search by changing the default search provider to non-Google. The lost revenue if Apple changes its mind and Google is locked out of mobile search? There's your 2nd goldmine. The argument that Android is not a money maker is like the argument that Gillette selling razors below cost is bad idea. At the end of the day both Gillette and Google make a tons of money off selling something that isn't exactly the main product, but is peripheral to it. In Gillette's case it's razor blades, in Google's it's search.
- sedev 15y ago
  Why do you think the search volume on mobile is a hockey stick at Google? I could take a guess. "Google Exec Testifies Before Senate That Two-Thirds of Mobile Search Happens on iOS Devices" http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-search-comes-from-apples-ios/ http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-sea...
  - nextparadigms 15y ago
    Well iOS used to have a much larger user base, but Android has almost caught up, and will even surpass it. But depending so much on iOS so far is exactly the reason why Google needed Android.
- guelo 15y ago
  > I don't understand why I keep hearing this mantra so often When Android got #1 market share the Apple fanboys decided that direct profit is the only number that matters.
- mesec 15y ago
tnuc 15y ago
There is a lot of profit in the Google ads that permeate so many android apps.
icebraining 15y ago
I downvoted you purely because of your edit.
interlagos 15y ago
You should be downvoted for it, and it's sad that you haven't thus far. Worthless market share? Zero profit? Such emotionally-driven hubris has no place on HN.
webwright 15y ago
I'll downvote you because I think you're missing the point. Android makes Google $2.5B/yr (that's a run rate, up from $1B this time last year). Google's total run-rate is about $35B by comparison. Given that it's in land-grab mode, I imagine they are re-investing like crazy in Android-- they realize that the dominant smartphone operating system has a lot of market power. As an example, Microsoft makes more on Office/Server stuff than they do on Windows. tl;dr Comparing a dominant operating system (Android to a hardware company that grudgingly made software (Nokia) isn't really valid.

diminish 15y ago

Personally owning, several androids in the family as phones and tablets, I am thankful to Google for pushing open source to a proud leader. All manufacturers may freely use it and may offer newer phones. I wish I will be able to play more with Android the way I do with my Linux, as soon as Nexus like devices become commonplace. Thanks Google.

ethnomusicolog 15y ago

I don't understand why you attribute it to luck. Don't we have plenty of evidence of how much smart google top management can be?

rdouble 15y ago

It seems more like the Google guys were big Sidekick fans and saw the chance to work with Rubin for relatively cheap Android the company was built to sell to a larger company. The acquisition could be attributed to the shrewdness of Android's sales pitch to Google.

beatle 15y ago
who said Android's cheap? Real cost of Android = Android acquisition price + Motorola acquisition price ($12.5 Billion) + Lawsuits
- nl 15y ago
  Motorola acquisition price ($12.5 Billion) Android has been successful already, even without that. Lawsuits Only Oracle has sued Google over Android, and the outcome of that is far from settled.
- webwright 15y ago
  Cheap all depends on the ultimate value. I remember when people scoffed at the spending/fundraising that Facebook was doing. They'll do 4.5ish billion in revenue this year. Android enjoyed a 2.5x growth rate in revenue over the last year. If that continues for a few years, your formula will seem pretty cheap. On the motorola acquisition, it's fairly hard to calculate what it saved Google. Will the patent portfolio they picked up save them billions in settlements/legal costs? Quite possibly.
  - beatle 15y ago
    Saw this before. The key words are....annualized and revenue. They did not report mobile quarterly figures or costs and profits. But. we can extrapolate: $2.5 Billion annualized == $625 million quarterly mobile revenue. Elsewhere in the earnings report: $10 Billion total quarterly revenue One of the costs broken out was TAC (Traffic Acquisition Costs,) -- these were $.25 for each $1 of revenue. Assuming that TAC costs are consistent across mobile and non-mobile that means: quarterly mobile revenue - TAC == $470 million ANAICT, Gross margins were 40% of revenue - TAC quarterly gross mobile profit == $188 million No figures were given, so let's assume that 50% of mobile comes from Android phones (50 % from iPhones and all other smart phones) quarterly gross mobile profit from Android == $94 million No direct expenses/costs were given for mobile, Android development, etc. If we assume Google has 10 people on the Android team @ $100,000 each, per year (Pay, office, equipment, benefits, etc.) or $.25 million per quarter That would leave: Android quarterly profit before taxes == $93.75 million Obviously, these are just SWAG estimates (and I hope my math and logic are correct) -- but they are an attempt to put in context the headline of this article" --------- Google announces $2.5 billion in mobile revenue/run rate == $93.75 million Android quarterly profit after taxes (30%) $93.75 Million quarterly profits from Android is peanuts. Apple earns more selling smart covers.

sedev 15y ago

Maybe a silver mine, but definitely not a goldmine. Apple is still taking home the lion's share of the profits in mobile, which the author of the article rather ignores.

mey 15y ago
I'm sure Android is much more to Google then the Android Market place. Like iOS device, it's also creating an ecosystem of devices/service. How many people now have gmail accounts, and are searching through google then before they had Android devices? Google hopefully understands (don't see any indication they don't) that they are getting a channel to market directly to users as well as obtain new users. This system gives them a platform to directly compete in a variety of media markets, now as a content provider in addition to their ad model.
- chimeracoder 15y ago
  To me, it's completely clear that Google's plan for Android is much broader than the Android marketplace. Google's had a reputation for neglecting products in the past, but even despite that, they would have focused far more resources on the Android Market and angled it differently if that were their focus of Android. Google wants to create a platform that will dominate all mobile devices for years to come. Cell phones (and, more recently, tablets) are just one aspect of that. They want a standard OS for any small-scale device. In their vision of the future, your coffee maker, refrigerator, and laundry machine may all use an Android-based platform. This is one of the reasons why they are perfectly happy with Android being used for cheap smartphones which are really just amped-up feature phones. They don't want to be seen as elitist, the way that Apple tries to market itself as high-end. They want to have high-end products, sure, but it's equally important to them that they cover the range of that spectrum. I don't know if they had exactly this in mind when acquiring Android, but by now, it seems clear to me that this is their goal.
- guygurari 15y ago
  > How many people now have gmail accounts, and are searching through google then before they had Android devices? Judging by Android users I see around me, not a single one.

Steko 15y ago

It's more like Google's stumbled onto a gold mine that's already been looted: Google makes $5-$10 per Android phone, maybe 10% of what it's partners make. That's about the same amount as Microsoft makes off each Android phone and is perhaps 1/50th of what Apple makes off each iphone. Even worse it turns out that the half empty gold mine is on public land and any crazy old coot can waltz in and start mining themselves: Android won their "empire" by being the only credible licensed iphone clone in 2009. The real question is whether this empire is going to be of the Han/Roman/Windows variety as so many commentators assume or will it be a short lived dynasty like the Qin/Napoleonic/Netscape variety. I'll put my money on a Three Kingdoms scenario playing out. Why do I think WP 7 has a ghost of a chance when everyone's done nothing but dismiss them? Let's review: Android phones started shipping in Fall 08. However they really didn't have any traction until Fall 09 when Verizon started pushing the Droid. And it wasn't until Froyo phones shipped en masse in Summer 2010 where Android started to dominate carrier shops. In the same way WP7 launched buggy, incomplete and lackluster in late 2010. It had no traction for it's first 3 quarters. Lately though we've seen a mature OS update released on a 2nd generation of phones that were designed for it. More importantly Microsoft has made no secret of it's desire to buy market share with retail subsidies. And it will certainly be buying this market share at Android's expense. How much they're willing to lose buying this market share isn't clear but if it's anything like the money they've plowed into Bing that's a lot.

karlmdavis 15y ago
Do you have citations for your $5-$10 figures? Also, you're neglecting to account for the money they're making from the Android market: apps, movies, books, etc.
- sixcorners 15y ago
  The 30% they give to the carriers?
ypcx 15y ago
The future is Open Source. That's why Microsoft has no place there. Also don't be fooled by how much money is made where. Money is just a tool; one of.

fpgeek 15y ago

"They didn't make the iPhone, no, but they placed themselves in a position where they could react to iPhone." Exactly. They set themselves up so they could quickly react to disruptive change in the smartphone market. The iPhone happened to be what came along. Most people don't understand what an impressive accomplishment this is. Let's look at how long it took for some other smartphone competitors to release their response to the iPhone: Palm took two years (and started over from the ground up). Microsoft took three years (and still doesn't have traction). Nokia took took four years (and then threw it away). RIM still isn't there yet (next year?). And Google? They took one year. They clearly were doing something right. BTW, props for remembering Danger. So many people don't in these discussions and (for someone who was working with smartphones back then) it is incredibly frustrating.

rimantas 15y ago
> And Google? They took one year. They clearly were doing > something right. Like buying Android Inc. in 2005?
- fpgeek 15y ago
  If you want to read "the Android team" where I said Google, feel free. The overall point is the same.