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Eric Schmidt Explains Why Android Could Earn Google $10 Billion a Year

googleschmidt“If we have a billion people using Android, you think we can’t make money from that?” Those were Eric Schmidt’s words when confronted with the notion of how exactly Google plans to turn a profit off of their Android OS that they so readily hand out free of charge. He isn’t just talking about the typical ads Google uses to make gains in almost every facet of their enterprise, either. If there were 1 billion Android users coming into contact with Google’s ads through mobile search and apps like Google Maps raising that figure might be easy to reach, but Schmidt also has his sights set on a second source of income: selling subscription services such as access to news content.

As it stands there aren’t quite that 1 billion users on Android yet, though that isn’t to say their rapidly growing market share makes the number unrealistic looking towards the future. With current activation rates of 160,000the 1 billion figure would take 17 years to attain, though month over month activations show growth of 60 percent, meaning that if Google can reach rates of about half a million activations per day they could reach the 1 billion number in about five years. Of course, even without 1 billion users Android still stands to make a pretty penny for Google as the platform continues to get a strong footing in the mobile market.

[via MocoNews]




  • Phil

    And this is why we don’t innovate in terms of technology as fast as we could. Everything is about pleasing some suits that don’t see long term. When Android is crushing everything else on the market and they get a cut off the apps being sold this isn’t money? Was anyone else going to get to this position by selling an OS? But unfortunately most of the suits still can’t wrap their head around open source and how you find the money in it. By giving things away and keeping them open you quickly build an ecosystem that can bring you money in other ways. Or hell…have they thought about the fact that the investment in Google returns through HTC, Moto, Verizon etc? Do the investors only own stock in one company?

  • ari-free

    I think android will provide google with a much better opportunity than they have on the desktop. More people have cell phones than computers. And a cell phone is something that you can always have with you.

  • http://joshdobbs.com Josh

    As far as I know Google does not receive a cut of apps sold. As a developer they do take a percentage when I sell an app however I believe those go to the carriers or whoever is processing the payment.

  • ari-free

    it is very very important that google pushes android for the enterprise because that’s where all the money is

  • http://music.kwaping.com Kwaping

    A top-quality news feed from Google? “I’d buy that for a dollar!”

  • DannyB

    @Josh
    Are there any facts that cause you to believe that?
    Just curious.
    Who does get that 30% cut?
    Why wouldn’t Google get at least some of it?

  • Stefan

    I was expecting at least a mention of all the people that will start using more google services because of the great integration with android

  • Daniel

    @DannyB

    “3.2 The price you set for Products will determine the amount of payment you will receive. A Transaction Fee, as defined below, will be charged on the sales price and apportioned to the Payment Processor and, if one exists, the Authorized Carrier. The remainder (sales price less Transaction Fee) will be remitted to you. The “Transaction Fee” is set forth at http://market.android.com/support/bin/answer.py?answer=112622 and may be revised by Google from time to time. Developer is responsible for determining if a Product is taxable and the applicable tax rate for the Payment Processor to collect for each taxing jurisdiction where Products are sold. Developer is responsible for remitting taxes to the appropriate taxing authority”

    I actually wish it went to Google… then maybe the Android Market would look a little nicer. So technically you get charged twice for downloading apps. A “tax” on all purchases, and how much data you use (since we all know ‘unlimited’ isn’t unlimited.)

  • Wesley

    Have you been talking to Rupert Murdoch?

    Paid news…good luck with that.

  • Rimzy

    If google wants to increase the number of subscirbers they have, they need to tap the African Market, in Nigeria alone there are 150 million people, that is the most populated country in Africa, right now, RIM is taking over the market, i am Nigerian and everyone and their mama has a blackberry bold, i am not kidding! I think that Google needs to partner with the huge telecommunications giant in Nigeria like MTN and Glo, to increase the amount of consumers they have worldwide, i know people think Africa is so poor, but communication and connectivity is still something that everyone wants. I am not a huge RIM fan and i am bummed that in Nigeria people have not heard of Nexus one or Droids, but they are always expecting the newest blackberry. Get on that Google.

  • Phil

    @DannyB I thought that percentage was split between the carrier and Google as well.

  • name

    @Josh,
    I believe that is right. Google currently does not take a cut in apps sold. The cut currently goes to carriers.

  • SharonW

    @Daniel – Regarding this: “A Transaction Fee, as defined below, will be charged on the sales price and apportioned to the Payment Processor and, if one exists, the Authorized Carrier. The remainder (sales price less Transaction Fee) will be remitted to you.”

    Currently, Google IS the Payment Processor, i.e. Google Checkout.

  • Alex

    What if I have an unlocked phone without a carrier. How much do I pay for buying an app over wifi? Can I buy an app over wifi without a carrier contract? All my apps sell for exactly same price, no matter who buys it, so why do all carriers get an identical cut and why wouldn’t google get that cut?

  • Jason

    I don’t see how Google is not taking a cut, or even the full 30%. I can remove my SIM card and purchase apps over wifi through Google Checkout. How would Google know which carrier to pay?

  • Bob

    jason,

    99.9 percent of people are not going to do that. I think the reason why google is ready to pay 30 percent(minus transaction costs) is I think google does not believe native apps are the future.

  • ari-free

    “but Schmidt also has his sights set on a second source of income: selling subscription services such as access to news content.”
    I think that part was just speculation.

  • ari-free

    I know one thing is for sure: android is making OEM’s such as Motorola, HTC and Samsung vvvvery happy

  • Ben

    I think 1 million per day android devices are feasible. Android is cheap and less than free and soon will be applied on 200 dollars and less per phones. Android victory will be assured if we start getting 2.2 froyo phones for 200 dollars or less on prepaid markets. 2.2 is a game changer

  • slider

    New religion Apple (say-academics)

    http://www.foxnews.com/scitech/2010/07/28/new-religion-apple-
    say-academics/

  • JJFNIGHTS80

    It’s because their smarter than APPLE. In my opinion anyway.