In November 2007, Google announced the launch a mobile operating system called Android. His origin was in the purchase he made a year earlier of a small startup in California, but what he announced in 2007 was quite significant. Android would be an open source operating system and an alliance was formed, the Open Handset Alliance, where manufacturers such as Samsung and HTC would be.
It took a year for the first device with Androd to come out, the HTC G1 (also called Dream). Since then, Android has evolved a lot and Google has clearly pivoted and, through this lever, towards mobile. How has the activity that Android brings to Google evolved over this decade?
From mobile for fans to ubiquity
Android’s growth was unstoppable since its inception, but at first it was in competition with giants like Nokia which, despite an overwhelming market share, has adapted poorly and belatedly to the new paradigm of smartphones.
In a few years, Google has succeeded in imposing its mobile telephony solution
As of 2010, you could argue that Android wasn’t just a niche operating system, for tech fans. The growth in that year was brutal and in the last quarter of the year you could say the market share was equal to that of Symbian, Nokia. Since 2011, Android’s domination has been uninterrupted.
Perhaps one of the reasons for this spectacular 2010 is that, despite the fact that Google was the software vendor for the Open Handset Alliance, has decided to release a terminal, the Nexus One, which would be the benchmark for developers and fans of the operating system.
So Google paved the way for where mobile phones should go. The Nexuses were never a bestseller, but they were a benchmark for where new operating system features went and how to design applications.
Since 2010, the domain of Android in the world is overwhelming. Growth continued until 2014, and since then it has remained around 80%.
In a few years, Google has succeeded in imposing its mobile telephony solution and in making its services the pocket of the majority of the planet’s population. And it was a great deal.
How Google makes money with Android
Google’s source of income hasn’t changed much since the company was founded. Advertising was the foundation of his business and still is. The only change (which is also fundamental) is that The Internet has gone from a desktop experience to a mobile experience. In the transition, Google has managed to keep its most used advertising services.
Google makes money with Android by advertising, selling apps, selling services, and charging for licenses
However, the number one way Google makes money on mobile is advertising. This can come from your search engine or the integration of your advertising services in third-party or own applications (like YouTube or Google Maps). It is the main source of income for Google and also on Android.
Another source of revenue for Google on Android is selling apps on the Google Play Store. Google enters 30% of everything paid for through the storeAlthough for this it has to bear the costs of distributing the applications.
Google also offers payment services within Android, for example Play Music, Play Books or Play Movies, although its revenues in this area are in the minority.
A final source of income is through charge manufacturers for licenses to use Google services in Android. Until 2018, these licenses did not exist, but due to restrictions in the EU, these licenses are billed in this territory (which can reach 30 dollars per terminal sold).
What is the estimated turnover of Android
It’s hard to know how much Google is making from Android since Google doesn’t break down the numbers. The only known figure is the one that Oracle gave in the lawsuit against the Mountain View company. There, in 2016, it was said that Google had entered thanks to Android and since its launch in 2008 $ 31 billion with 22,000 million profits
What is the share of Google’s revenue thanks to the existence of Android?
What we do know is that Google charges around $ 170,000 million per year in 2020, 70% is from advertising sales and the gross margins are very high, as well as the gross margin of around $ 90,000 million. And according to Statcounter, since 2016, there is already more mobile than landline traffic on the Internet.
How much of this revenue does Google have thanks to the fact that Android exists, its search engine is the one that comes by default and YouTube and other income-generating applications are preinstalled on the devices? It is very difficult to know. Intuitively, this might sound like a lot, but it’s also true that Facebook lives off mobile advertising and doesn’t dominate operating systems (despite its tough attempts). Ultimately, users tend to use good services.
But it is very interesting to know that Google pays Apple 8,000 to 12,000 million a year to be the default search engine for Safari on iOs. How much would you spend if Android wasn’t the dominant operating system?
Therefore, those who said ten years ago that Android was a side project, which would never make it profitable, they were wrong. Today, all businesses launched on the Internet are mobile first and Google is able to monetize its dominance of the operating system. This decade has seen an evolution of the Internet from desktop to mobile and Google, thanks to Android, has managed to dominate the wave of change.