Is Google Better Off Killing Android?

With every quarter that goes by, the theme in the mobile landscape continues to be Apple (Nasdaq: AAPL  ) iOS and Google (Nasdaq: GOOG  ) Android gobbling up market share at the expense of just about everyone else.

With Google's primary incentive to pushing Android being all about building a moat around its advertising business, is it paying off?

Oracle's (Nasdaq: ORCL  ) patent infringement lawsuit against Google is turning up some interesting tidbits found in the court documents. The Guardian recently played some numbers games with the digits included in Google's proposed settlement with Oracle, and its calculations imply that Android has contributed just $543 million in revenue to Big G between 2008 and 2011.

The report also estimates that Apple's iOS contributes 4 times more in mobile revenue for the search giant, thanks to its integration of various Google services, including Maps, YouTube, and default search.

In October, CEO Larry Page had said Google's annual mobile revenue run rate is up to $2.5 billion. That means Android contributes a pretty small chunk of the search giant's mobile ad revenues, and that iOS brings in more ad dollars.

Google doesn't break out specific numbers with Android-related revenue for investors, so we're left to speculate. The OS is distributed for free, and Google also doesn't keep anything from app sales, as Apple does, so it really is all about the ads.

I'm a little skeptical on The Guardian's exact calculations, since it seems the report is comparing its $543 million four-year estimate (which could be wrong) with Google's current annual mobile run rate to get the 4-times estimate, which isn't an appropriate comparison. That being said, I think it's entirely believable that iOS generates more ad revenue than Android, which is the more important underlying notion anyway.

So if Google makes more money off iOS-related ads than off Android, despite Android's taller market share, would Google simply be better off killing Android? Google could settle the score once and for all if it broke down the digits for us, but that'd be kind of like asking Amazon.com to give us a number on Kindle Fire sales.

Until then, it does seem that iOS is doing a better job of making Google money than Android is.

Even if Google's not making that much money on Android, component suppliers are. That's why you should check out this report on 3 Hidden Winners of the iPhone, iPad, and Android Revolution, since these companies are banking on both iOS and Android. It's 100% free.

Is Google Better Off Killing Android?Is Google Better Off Killing Android?Fool contributor Evan Niu owns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Oracle, Amazon.com, Apple, and Google. Motley Fool newsletter services have recommended buying shares of Google, Amazon.com, and Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On March 31, 2012, at 5:10 PM, applefan1 wrote:

    Well, if their Board of Directors and CEO understood how to grow their business, increase profits and increase the share value, they would be STUPID if they didn't dump Android. They make more revenue from iOS than they from Android. It's a no brainer. It is just a way to humble these people. That's what their current decision making process was in the first place. PURE EGO.

  • Report this Comment On March 31, 2012, at 5:26 PM, applefan1 wrote:

    About the only way Google could make a decent amount of money is to have an app store, music/video/books sites that can compete, designing and selling their own phones and tablets that can compete and their own media players. Basically, they would have to copy Apple's entire ecosystem, which they can't do so easily and make it compelling enough to attract more buyers. But they don't have the time or the shear R&D strength in all of the areas that they need, plus to ability to go after the Apple Store concept. It would take them at least 10 years to catch up. Plus, they don't have an Office killer because Apple users can still buy the most popular Office app, which nobody has made a dent in Microsoft's marketshare. Yeah, Everyone hates having to pay for Office, but they still do because it is better than the copies, or at least it is the standard and people think they still have to buy Office.

  • Report this Comment On March 31, 2012, at 5:49 PM, applefan1 wrote:

    I wonder if the Shareholders could go after Google for NOT dumping Android. Hahahaha

  • Report this Comment On March 31, 2012, at 5:51 PM, applefan1 wrote:

    Letter to Google Board of Directors and CEO.

    ANDROID SUCKS! DUMP IT! IT'S LOSING YOUR COMPANY MONEY!!!

    SIncerely,

    An Apple Fan.

  • Report this Comment On March 31, 2012, at 5:58 PM, applefan1 wrote:

    Copying Apple is like the "I before E" rule.

    For those that don't remember grade school English. The I before E rule is as follows:

    I before E, except after C, or in words like Neighbor and Weigh. On Tuesdays, Holidays and throughout the Month of May, and you'll always be wrong no matter what you say.

    So, if you try to copy Apple to make more money, no matter what you do, no matter what day, you'll always be wrong regardless of what you do and say. This is what is called FOG market instead of FUD marketing. IBM created and used FUD marketing which is Fear, Uncertainty and Doubt, but when it comes to Apple is it FOG marketing. FEAR OF GOD (no religious connotation intended). It used to be FES, Fear of Steve, but since he's gone, it is FEAR OF GOD. Dell tried, they couldn't compete, HP has tried, they couldn't compete, Microsoft has tried, they couldn't compete. Hahahahaha. Basically, just dump Android. It is just a cheap imitation.

  • Report this Comment On March 31, 2012, at 6:25 PM, bsimpsen wrote:

    While it might seem that Google would be better off without Android, they can't afford to toss it. If Apple closes the gates (as they are by replacing Google Maps with open sourced maps) Google will be locked out of the mobile market.

    They have to keep Android's foot in the door, or die.

  • Report this Comment On March 31, 2012, at 11:40 PM, ConstableOdo wrote:

    Dump Android? What would happen to all the Droid Lovers out there that think Android is the best mobile OS under the sun despite its horrible fragmentation problems. I'd get a big kick out of seeing Google drop Android support and just throw it into open OS community. Maybe there would be some other company to pick up development. I think there would have to be or the Android OS ecosystem would collapse overnight.

    I'm fairly certain that Android going away is just false hope on my part since Apple isn't making any headway on its court battles over Android IP theft. What a waste of Apple's time and money only to get nothing back and Android device vendors are making out like bandits.

  • Report this Comment On April 02, 2012, at 10:27 AM, gilbertmj2 wrote:

    Sure, ok, fine. But how much does Android cost Google to produce again? MR > MC?

    What about positive externalities that are lost on paper?

    If Google is proposing the settlement, they would want to pay less than more, so why wouldn't they cook the books on the revenue figures?

  • Report this Comment On April 02, 2012, at 10:32 AM, beastwork wrote:

    Maybe I'm missing something but I do see a single case for dropping Android in this article. I do however see an abundance of fanboism in the comments that followed.

    Google got where it is by giving away a great product for free and developing a way to monetize that product. Why are you guys so convinced that the same won't be true for the Android platform? I guess if you all had your way everyone would have an iPhone, since they are just that wonderful.

    Android may never beat iOS because Apple does such of great job of marketing its products, but I see no reason to believe that Android should be killed off as it is a viable competitor to iOS.

    Again, what is the business case for killing Android?

  • Report this Comment On April 02, 2012, at 11:39 AM, jandtl7 wrote:

    applefan1, are you 20 or younger? Didn't you know that PC actually copied and nearly put Apple into bankruptcy? Also nothing Apple created since Mac are new ideas. Which means Apple copied from someone else and was successful.

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