Is Google Better Off Killing Android?

With every quarter that goes by, the theme in the mobile landscape continues to be Apple (NAS: AAPL) iOS and Google (NAS: 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 (NAS: 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 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.

At the time this article was published Is Google Better Off Killing Android?Is Google Better Off Killing Android?Fool contributor Evan Niu owns shares of Apple and, 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,, Apple, and Google. Motley Fool newsletter services have recommended buying shares of Google,, 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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"With Google's primary incentive to pushing Android being all about building a moat around its advertising business, is it paying off?"

Android was originally envisaged as a defense (moat) against Microsoft's Windows Mobile and perhaps RIM and Symbian too. They had no idea (who did?) that Apple's iPhone would so utterly re-invent mobile computing that it would virtually destroy Windows Mobile, RIM and Symbian. But once Apple did introduce the iPhone, Google went all-in by transforming Android into an iPhone OS competitor. How's that worked out for them?

- They've spent untold billions creating and promoting Android.

- They've alienated Apple and many other companies.

- They've incurred patent liability risk.

- They've committed to Android by investing an additional 12.5 billion in Motorola.

- At best they will make 900 million from Android in 2012. To put that in perspective, Apple made that every two days last quarter.

- Their platform is being forked and their money making services are being stripped out by Amazon Fire and other variants of Android.

Using 20/20 hindsight, we can now say that Android was a huge mistake for Google. They've made no money, they're at least 12.5 billion in the hole and their opportunities to make money from the platform are diminishing rather than growing.

Not much of a moat. More like a pit.

March 31 2012 at 7:10 PM Report abuse rate up rate down Reply

growing pains, but as soon as Google market their own hardware and puts a stop to Android update delays nonsense from carriers and manufacturers, the better off they'll be. From what I read they have some ambitious goals this year.

I'll be ready with wallet for a Google supported Android tablet.

March 31 2012 at 5:13 PM Report abuse rate up rate down Reply

Apple has been buying up 3D mapping companies to develop their own mapping services, and they have Siri finding things for iPhone users without Google. They'll inevitably move farther away from Google in the future. That's why Google can't rely on other companies to continue sending money their way in perpetuity. They have to control the ecosystem.

March 31 2012 at 4:49 PM Report abuse rate up rate down Reply
Todd Neumann

Really man? Really!?? Nice spin, I'm sure apple and microsoft would be very overjoyed if google got out of the mobile game. Google is positioning itself right now. Mobile growth is going to be the biggest consumer market. China just got a 1,000,000 mobile subscribers. I don't see Google leaving that revenue out plus having a ecosystem is much more important in the long run and Google owns that. Glad you don't run a business!

March 31 2012 at 4:46 PM Report abuse rate up rate down Reply