Google Play becoming serious business?

Even though Google’s Android operating system dominates the mobile scene, the Google Play app store hasn’t been a huge contributor to the company’s bottom line. But that may start to change, according to a new report from Evercore stock analyst Ken Sena.

More than 80 percent of the smartphones sold in the last quarter were powered by Android, according to IDC and other research firms; Android also dominates the tablet market.

And as a result, analysts at Evercore estimate that Android users will download more than 41.5 billion mobile apps this year, or almost twice the 23.6 billion apps that Apple gadget-owners are expected to download from the iTunes store.

But unlike Apple, which makes its own hardware, Sena notes that Google itself only sells about 12 percent of Android devices, under the Motorola and Nexus brands. The biggest maker of Android phones and tablets is Samsung, which sells about 40 percent of all Android mobile gadgets.

And when it comes to apps, Google currently doesn’t keep much of the money that users pay when they download from the Google Play store.  Google doesn’t disclose numbers, but Sena estimates that, if a user pays $1 for an Android app, Google gives 70 cents to the developer and shares most of the remaining 30 cents with the hardware maker and the user’s wireless carrier.

But Sena suggests that could change. He estimates that revenue from Google Play app sales, AFTER subtracting the developers’ 70 percent share, could reach $3.4 billion by 2015.  “As Google is able to renegotiate the terms,” he added, Google could see more profit “as it keeps more of the 30% cut.”

Of course, Android already has a big value for Google because the company sells ads that it shows on many of its own apps, like Google Search. But if Sena is right, the Play store could become more of a profit center by itself.



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