Google Lost Money on Android Throughout All of 2010

[dgstorm]

Even though Google doesn't publicly disclose its financials regarding the Android OS, the trial currently going on between Google and Oracle has been indirectly changing that. During one of the recent trial proceedings, the Judge in the case shared that Google actually lost money for every quarter in 2010 on their Android OS. He didn't give specific figures, but after reading aloud from one of Google's financial documents he finished with, "That adds up to a big loss for the whole year."

This is relevant to the case because "Oracle contends that Google should not be able to deduct certain Android expenses for the purposes of copyright damages in the case. However, Google spokesman Jim Prosser said Oracle misrepresented its financial numbers."

Source: Reuters

 

[kodiak799]

Not that surprising - android is clearly a loss-leader for Google. The only direct revenues would be their share (30%?) of Market and in-app ad sales.

That said, lawyers will have a field day with this one. Because Android drives all kind of revenue streams for Google, the biggest and most obvious one being search. My guess is Google has the data, but does not allocate revenue from search based on access from Android handsets.

 

[WestOkid]

Not that surprising - android is clearly a loss-leader for Google. The only direct revenues would be their share (30%?) of Market and in-app ad sales.

That said, lawyers will have a field day with this one. Because Android drives all kind of revenue streams for Google, the biggest and most obvious one being search. My guess is Google has the data, but does not allocate revenue from search based on access from Android handsets.

I get that there may be some indirect revenue associated with Android, but why do you say search revenue is related to android? Google owns 60% share on desktop, and every major phone manufacturer uses Google regardless of OS as the default search engine (even Apple). Windows phone uses Bing, but many people still use Google once they are in a browser. I think android is a foundation project. It is basically an investment Google is making to protect their future. I don't know how much(if any) that investment yields today.

 

[kodiak799]

It could be argued - not easily - that search revenue from Android devices should be Android revenue, or at least a share of it (and maybe Google does allocate a portion). Google Music revenues should have an allocation, as well (though that is probably operating at a loss given the newness). Take Android out of the market, and smartphones drop 30%...which would mean less search revenue.

Just because Google's accounting says Android doesn't make a profit doesn't mean that's true. All has to do with the internal allocation of costs and revenues. You've also got accelerated amortization of R&D, among other expenses, that masks the true profitability for tax purposes.