Google makes more money from iOS than Android

by Phil Hornshaw

It seems Google makes more money from Apple’s mobile devices than its own Android smartphones and tablets, thanks to the use of Google’s search products by those devices.

The story comes by way of PC World, which cites a story from The Guardian looking at documents filed in Google’s court case with Oracle. In that case, Google revealed that it has made less than $543 million from Android devices between 2008 and December 2011, and that’s almost four times as much revenue has come from iOS devices.

The reason for that discrepancy is that Google doesn’t make its money off Android, per se, but off the products it provides that mobile device owners use. Android gets licensed out to smartphone makers for free – that’s part of what makes it so appealing and its use so widespread – and Google collects 30 percent of app sales and advertising on those devices. Meanwhile, on iOS, Google makes money through advertising on the use of search in Mobile Safari or ads used on Google Maps, for example, and it doesn’t have to split that money with anyone.

Horace Dediu of Asymco reckons Google’s take from iOS devices might be even higher than what The Guardian guesses at, figuring that Google could be making five times as much per iOS device as compared to Android. Dediu also says while Google is making around $1.70 for each Android handset per year, for a total of about $3.50 over the two-year life of a device, Apple made around $576.30 per iOS device sold in 2011. Google is pulling revenue from Android, but not nearly at the rate Apple is from iOS, which means that Apple is in a better position to push its operating system while Google has to rely on money coming in from its biggest competitor.

And last week, Flurry Analytics released a report that found developers were making about 35 cents on their Android apps found in Google Play for every dollar those same apps made in Apple’s iTunes App Store. Meanwhile, those apps sold from Amazon’s Appstore made about 80 cents for every dollar they made on iOS – suggesting to Flurry that Google may start losing developers to the higher revenue possibilities Amazon offers.

Google needs to work harder to make Android a more viable business. Right now, it’s bringing in most of its mobile revenue from its biggest competitor, one that is still looking to destroy it, despite what Google’s CEO might say to the contrary. Rumor has it that Google is about to jump into the tablet market itself, with a co-branded 7-inch tablet to compete with Amazon’s Kindle Fire.

If that’s the case, Google needs to look at ways the tablet could make money the way the iPad does for Apple by selling the device, selling content and creating customer loyalty. The nature of Android makes it difficult, and as the PC World story points out, Google is going to need to find ways to increase developer revenue and reduce the overall friction of Android in order to make it a viable business on which the company can rely.