back to article Android is turning a profit for Google

Eric Schmidt, Google CEO, reckons that Android is making money for the search giant, and claims it has already covered the cost of its development in increased advertising revenue. The detail comes in a fawning article about the open-source OS from Newsweek, covering how Android was developed by one man with a vision (Andy …


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  1. Code Monkey

    In my case he has a point

    It was only the linuxy Android that made me take an interest in smartphones. Otherwise I'd just have got another, smaller dumbphone.

  2. The Other Steve


    "it has already covered the cost of its development in increased advertising revenue"

    Android is pwning your eyeballs for Google eh? Who knew ?

    1. Daniel 1

      The statement is deliberately vague

      The actual assertion from Schmidt is that "Android-based phones generate enough new advertising to cover the cost of software development". True, this suggests an assertion that Android had "covered the cost of its development" - and since this must include buying Android Incorporated in the first place, this seems improbable. The truth is, it probably means "ongoing cost of development", which seems much more likely.

      So, while the initial investment was a loss-leader, as far as his company is concerned the fight is now self-sustaining. The target, is a market, what will probably represent virtually the entire internet-using public (for at least part of that time) by the middle of this decade, so Schmidt probably feels it will have been cheap at the price, if he can get that market.

      1. The Other Steve

        Yes, the statement is very vague

        "The target, is a market, what will probably represent virtually the entire internet-using public"

        Virtually the entire internet using public will be using Android ? The hell you say !

  3. John Sanders

    All that matters...

    Is what the unsuspected general public knows.

    As we the geeks are few and the damn users are in the millions...

  4. copsewood

    I also suspect Google's making money claim is true

    Many commerce areas of the Internet, once it started becoming commercial, were also self referential. If people are paying real money for mobile apps in what sense is advertising for these not genuine commerce ?

    Aspects of accounting in connection with assets resulting from recent investment are also speculative e.g. "goodwill", meaning the probability that someone who has seen your adverts will buy something on the basis of such. But accountants do have to quantify such nebulous and virtual realities in annual reports. I and I suspect others didn't believe Google was profitable on such accounting bases in its early days as a free search provider until the reality that they were taking a lion's share of the genuine Internet advertising revenue became undeniable.

  5. Jim Coleman


    I did say that purchasing a phone sporting an OS made by an Advertising company was only ever likely to end up with you being bombarded with, well, advertising. The OS is just the means to an end, that end being ads.

    Say what you like about Windows Phone 7, at least it's an OS made by an OS company, so the first aim of it is to be an OS rather than a mobile spambot.

    1. James Hughes 1


      Not entirely sure many people would agree with your assessment of Microsoft being an OS company (or perhaps a decent OS company).

      That said, Google are not really an OS company either - they have repackaged a linux like thing and made it Android (and they did a good job, considering they are an advertising company. Google Earth is pretty good too, for an advertising company too). And in general use, you get no more spam/unwanted advertising that just using a PC, so I am not sure what you are saying.

      1. The Other Steve

        I am not sure what you are saying.

        Seems to be a common enough feeling on this thread

    2. M Gale

      Have you downloaded half of the free Apple apps?

      Enjoy your iAds, and I can't see Microsoft resisting the lure of an entire ecosystem of users and developers to wring licensing fees out. You think Microsoft haven't seen the money that Apple and Google get from their respective Marketplaces?

      As you'll see they're a little more friendly than Apple's stance on advertising, but don't think that Windows Mobile 7 will be anything other than "Me Too" with .NET. In fact, I imagine it'll tie up quite nicely with Bing. The question is whether people want Windows on their phone, and whether companies really want to give Microsoft any more money than they have to already.

      Google has Schmidt, also known as 1 of 7. Apple is a personality cult where it is Our Way Or The Highway, and you can go anywhere you want to with Windows today, as long as you're willing to empty your pockets whenever Microsoft feel like holding their users up by the legs and shaking. All of those companies want your search results, your favourite tracks, your purchase history and any other data they can get their hands on because the profiles of a billion users together are worth quite a really large amount of money.

      So who do you choose? Borg Drone, Jesus or Chair-botherer?

      1. The Other Steve


        "[ Apple, MS, Google, evil corporate bastards, etc] "

        Wait! Are you telling you me that all these companies want to make to make MONEY ???

        THE EVIL BASTARDS !!!!!!!!

        "So who do you choose? Borg Drone, Jesus or Chair-botherer?"

        I don't chose, because I am not a frothing at the mouth idiot who feels the need to deify or demonise a particular item of technology or provider thereof.

        1. M Gale

          Selective blindness.

          "The question is whether people want Windows on their phone, and whether companies really want to give Microsoft any more money than they have to already."

          Notice use of the word "companies", and stop jumping to conclusions. It doesn't suit you.

        2. paulf

          @OH MY GOD! YOU'RE RIGHT!

          "I don't chose[sic], because I am not a frothing at the mouth idiot who feels the need to deify or demonise a particular item of technology or provider thereof."

          What are you doing here, then?

          1. The Other Steve


            Well, you've got me bang to rights there.

  6. dotdavid

    App store revenues?

    Considering Google take a 30% cut of the price of each app sold in the app store, surely that's making them some money?

    Granted, probably not enough to cover dev costs up until now, but it was always going to be a longer game than that.

  7. Jack Garnham 1


    Perhaps the fact that there are so many Androids out there is now adding more value to Google's advertising model, rather than just making money by being a vessel for ads.

    I use my Android Handset (HTC Desire) to look up almost everything now. The fact that pretty much every recent Android Handset has a dedicated search button on there is indicative of the fact that Google's primary intention is for you to search for stuff using them, thereby making advertising more relevant, thereby making their advertising model better value to prospective advertisers.

    The fact that I now reach for my phone to search, rather than getting out my laptop means that they're getting more lovely information about me and others like me as it's so much more convenient. I don't doubt that indirectly this is making Google lots of money and may well have been its plan all along.

    I don't get Ads served to me directly, though, as I have mine rooted with an ad-blocker.

  8. fandom
    Dead Vulture

    Indeed it must

    Yes, it must be true, otherwise he is opening himself to be sued by the stockholders, and he has been saying so for months now anyway.

    I can't see why it is such a hard thing to believe: they can charge manufactures for the Google apps, as some of them aren't open source, they charge to get a developer account, they get a 30% cut of the app market sales, and they make buyers get a Google checkout account which they may, or at least might, use somewhere else.

    Besides, even if they were losing money on android it would still be worth their while to do it. Wouldn't be surprised if they were worried about a future in which mobile gadgets from Apple, RIM, Nokia and the minor players were unable to use anything but Bing or couldn't, for technical, but unspecified, reasons, work with Google apps.

    Being at the mercy of you competitors is never a good place to be.

    1. Nick Kew

      Worried about a future?

      Would you stand for an Apple, RIM or Nokia phone that could only use Bing and not Google?

      I certainly wouldn't, and I don't think that's just because I'm a geek. Can't see Apple, RIM or Nokia going out of their way to alienate what is likely a majority of all smartphone users.

      Nokia has alienated me with the N900, but that's cockup not conspiracy. And I love the E71, not least because google fits well even into its small screen.

  9. Arctic fox

    If its actually true then it is without doubt the........

    ........fastest return on invested capital in business history - _if_ its true. By the way I can hear the band playing in the park, that old time favourite "Believe if you like".

  10. jonathanb Silver badge

    Location based advertising

    You go to the Google Maps app and search for a business located near you. Business pay for that in the same way they used to pay to be in Yellow Pages. I guess that's where they make their money.

  11. William Boyle

    No I would not have

    The fact of the matter is that I would not have purchased a smart phone until something that is (mostly) open source like Android was widely available and functional. So, count me in as one who shunned the iPhone (too closed), Symbian (too niche), et al. MeeGo may be an alternative for me in the future. As for advertising, I have not found it too intrusive (yet) on the Android, and in reality, my Nexus One works a treat!

  12. DJ Wickerman

    I can imagine Schmidt triumphantly saying..

    "Oh Magoo(gle), you've done it again!"

    Good ol' Mr MaGoogle strikes again!

  13. Il Midga di Macaroni

    Smartphone mania is growing

    We know internet usage from phones is growing at a fairly incredible rate, and that Android devices are out-performing the market in growth rate. Surely that pretty well adds up to what Schmidt is saying?

  14. peter collard

    Long term play

    Google have a very clever strategy - which Sun kicked off many years ago with "the network is the computer" - their goal is to get people using the internet more so they can make more money. If you have Android - you put your contacts into Google, Email into Google and calendar into Google - docs (notes) into Google and they all sync so you can access them from your desktop and even let your wife (aka Social Secretary) book social activities into your schedule. It works - its brill - and I don't have to worry about my phone crashing/ getting lost and loosing my contacts. The maps work - my car sat nav crashed - leaving me in the wilds of Yorkshire trying to find Croft racing circuit - the Android gps got me there without any difficulty. I've given up newspapers - the saving pays my 15 GBP/month contract and I don't have to get out of bed to read the news.

  15. Stefing

    To quote Michael Jackson - That's just ignorance

    The vast majority of Android applications are free, revenue is generated by unintrusive ads, part of which goes to Google.

    Surely that's not too difficult to understand?

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