Remember back in ’08 when Steve Ballmer, Microsoft’s CEO, dismissed Googl’s Android OS, stating that he believed that “building it was financially unsound for Google”? Man, he’s gotta be biting his tongue right about now. Well, even we have to admit, at first the business model for Android did sound a little…odd, being there was no foreseeable revenue, initially. But then again, who are we to question the successful search giant? However, the question does still remain, how is Google making money from Android? Well, ad revenue, duh. You know, those little annoying ads that pop up on your mobile device? Yep, they are there for a reason.
In 2010, Piper Jaffray analyst Gene Munster said Google generated $850 million in mobile ads for the year in 2010 and predicts that the OS could reap $1.3 billion in mobile ads by 2012. That’s pretty hefty if you ask us. In an article at eWeek, Munster stated “Android accounted for $130 million of this total, good for $5.90 average revenue per user (ARPU). For perspective, Google’s advertising totaled $25.77 ARPU, while its Web search engine accounted for $18.85 a head.” He also went on to say “Looking forward, Google could have an average of 133 million Android users by 2012, each generating $9.85 per year on advertising, meaning Android would kick in $1.3 billion to the company’s ad revenues.” I don’t know about Mr. Ballmer, but this certainly sounds promising for Google and future Android users. And we know, by a statement made by Eric Schmidt, the company’s long term goal is to hit 1 billion users. That’s not completely out of reach. One billion users at $9.85 per user? The results could be exponential!
In my opinion, it’s obvious Android is definitely headed in that direction. Recently, in Q4 of 2010 Android surpassed Symbian sales by a little more than 2%. And it’s expected that this trend will only continue. I suppose that is great news for those of us who report on the Android operating system. Here’s to the upcoming year in Android and to the many many breakthroughs we’ll see Android claim. Don’t forget to let us know what your thoughts are in the comments below.