Google Would Be Better Off Abandoning Android Than Losing Its iOS Deals

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Google can't really afford not to be on iOS.
Google can't really afford not to be on iOS.

Quick, what makes more money for Google: iOS or its own Android operating system? If you didn’t know anything about what a farce Android has become, you’d assume that Google was making more advertising revenue out of its own platform and ecosystem, but you’d be wrong: the search giant makes up to four times more off of iOS. Ouch.

Those rather bleak numbers come via a damages offer that Google just made Oracle over charges that Android infringes upon various Javascript patents and copyrights. The Guardian explains the numbers:

In a pre-trial settlement offer, Google proposed that it would pay Oracle a percentage of revenues from Android, suggesting it would pay $2.8m in damages on the two remaining patents that Oracle is asserting for the period to 2011, and then 0.5% of ongoing Android revenue on one patent which expires this December, and 0.015% on another which expires in April 2018. The court documents do not explain how the Android revenue is calculated, but the key source would be advertising revenue. Google also gets a 30% cut from app sales to Android devices.

Google said the damages figures matched what had been calculated by a court-appointed expert. The offer does not mean Google accepts that it has infringed the patents claimed by Oracle.

The $2.8m offer, at a combined rate of 0.515%, suggests that Android’s total revenue from the launch of handsets at the end of 2008 through to the end of 2011 was $543m…

[But] Larry Page, Google’s chief executive, said during an earnings call in October that Google was “seeing a huge positive revenue impact from mobile, which has grown 2.5 times in the last 12 months to a run rate of over $2.5bn.”

But while some people interpreted that to indicate Android revenue, it overlooked Google’s deal with Apple, in place since the introduction of the iPhone in 2007, through which it provides maps and the default search engine for its iPhone, iPad and iPod Touch products, which run Apple’s iOS software.

Got that? Google is offering to play half a percent of Android’s advertising revenue to settle the Oracle case, or $2.8 million. If half a percent is $2.8 million, Android’s advertising revenue is about half a billion dollars. But Google’s total mobile advertising revenue is over 2.5 billion, making iOS potentially far more important to Google’s mobile ad revenue than Android is.

If that’s the case, it’s got to suck for Google that Apple seems posed to start dumping them as the engine behind many core services in iOS, such as Maps. Bet they wish they hadn’t incurred Apple’s wrath by launching a two-bit iOS clone now. There’s a lot more to this game than devices sold.