O'Brien 187
Opinion 105
Stories about Google revenue from Android miss the point: How much it saves Google

The Guardian made a splash today with a post about how much revenue Google receives from Android:

“Android generated less than $550m in revenues for Google between 2008 and the end of 2011, if figures provided by the search giant as part of a settlement offer with Oracle ahead of an expected patent and copyright infringement trial are an accurate guide.”

This is the result from some back-of-the-envelope number crunching by the Guardian, not a confirmed figure from the company. So take it with a grain of salt. These numbers are being offered in the context of litigation, so will no doubt be challenged by Oracle.

Still, that hasn’t stopped other folks from making even wilder calculations. Gizmodo, for instance, notes that since Larry Page said the company would make $2.5 billion in revenue from mobile products, Google therefore makes about $2 billion from iOS devices:

“All of those iOS devices means that Google actually earns four times as much from its deal with Apple than from Android.”

First, don’t take any of these numbers to the bank. But second, before you express shock at over how little Google seems to make from Android devices, you have to see this in the bigger picture:

Android SAVES Google money. We don’t know exactly how much (no matter what anyone else says).

Here’s why: Google pays to be the default search engine on Apple’s Safari browser. Again, we don’t know how much. But imagine for a moment, as I wrote a couple weeks ago, if Apple had the same smartphone market share as it does with the iPad and tablets. How much more would Google have to pay for that spot? Yes, Apple and Google need each other. Google is increasingly dependent on Apple to drive mobile search traffic. Apple needs to offer the very best search engine.

But still, the explosion of Android devices has enhanced Google’s leverage in that relationship with Apple. Without Android, Apple could well have Google under its considerable thumb. And the price Google pays to be the default search engine would easily be much, much higher.