How does google make money off Android?

[shobuddy]

I'm not very business savvy. Google put/puts resources behind Android to create it and maintain it. Google then gives it away for free. Phone manufacturers then take the code and customize it to their specs. So how does Google's bottom line operate in this setup? Obviously they are getting $omething somewhere.

 

[brillrick]

In everything, Google makes their money from Ads. Google purchased a company called Admob for $750,000,000 that serves mobile ads. You may notice that many of the android apps are free and ad-supported. Those ads are usually served through the Admob service platform.

AdMob - Wikipedia, the free encyclopedia

From Google's most recent SEC filing:

How We Generate Revenue
Advertising revenues made up 97% of our revenues in 2008 and 2009, and 96% of our revenues in 2010. We derive most of our additional revenues from offering display advertising management services to advertisers, ad agencies, and publishers, as well as licensing our enterprise products, search solutions, and web search technology.
Google AdWords is our auction-based advertising program that enables advertisers to place text-based and display ads on our websites and our Google Network members’ websites. Display advertising comprises the videos, text, images, and other interactive ads that run across the web on computers and mobile devices, including smart phones and handheld computers such as netbooks and tablets. Most of our AdWords customers pay us on a cost-per-click basis, which means that an advertiser pays us only when a user clicks on one of its ads. We also offer AdWords on a cost-per-impression basis that enables advertisers to pay us based on the number of times their ads appear on our websites and our Google Network members’ websites as specified by the advertiser. For advertisers using our AdWords cost-per-click pricing, we recognize as revenue the fees charged to advertisers each time a user clicks on one of the ads that appears next to the search results or content on our websites or our Google Network members’ websites. For advertisers using our AdWords cost-per-impression pricing, we recognize as revenue the fees charged to advertisers each time their ads are displayed on our websites or our Google Network members’ websites. Our AdWords agreements are generally terminable at any time by our advertisers.

 

[srkmagnus]

Yes, ads is the way Google makes money off Android. Almost every aspect of Googles applications have ads and a well built-in search feature.

 

[Major]

They get a cut of paid app purchases as well, I imagine.

 

[srkmagnus]

They get a cut of paid app purchases as well, I imagine.

yes, they do get a cut. I'm not sure wwhat the percentage is, but it has to be decent enough considering android is making its way to the hands of many consumers.

 

[98koukile]

Take a small piece of enough pies and eventually you have a few whole ones... They make their money on quantity, it the hundreds of millions I would assume is there eventual target

 

[NotJustAPhone]

As people spend more time on their smartphones, Google uses Android to drive users to their various services to generate ad revenue. If they average something like ten bucks a year in revenue per user, it adds up to real money quickly, especially since Google is claiming that 400,000 new Android devices are activated every day.

 

[shobuddy]

Thanks for the responses. To add to the question, how do free app markers make money? I realize that some apps have advertising but there are some that don't. Why would they (individual or company) put resources into making a free app?

 

[ANDROID__JUNKIE]

I know of a few programmers that have created apps to get exposure and gotten jobs because of them. Also sometimes the free app is a taste of what you can get in a paid version. I think this is smart as more people are able to try an app without buyers remorse.

 

[srkmagnus]

Also, remember that free apps do give developer's exposure. A good application can be kept free and revenue generated through the advertising. Some people hate ads, but a well placed ad in App doesn't bother me one bit. I'll support a developer if the App is good -- hopefully its an incentive to keep Apps updated. l

The more masses who have an use an app, whether free or paid, offers more exposure to the company and its premium services.

 

[shobuddy]

This from wikipedia fwiw:

Application developers receive 70% of the application price, with the remaining 30% distributed among carriers and payment processors (Google does not take a percentage).[20] Revenue earned from the Android Market is paid to developers via Google Checkout merchant accounts, or via Google AdSense accounts in some countries.[21]

 

[fortesquieu]

Besides AD mobs, Google makes its money off searches. So when there are more Android phones, it makes it easier for people to keep using Google search off their phones, such as the search button on their phones.

 

[KiboeTheDog]

yes, they do get a cut. I'm not sure wwhat the percentage is, but it has to be decent enough considering android is making its way to the hands of many consumers.

it's not 30% like what apple takes

because apple robs the clients, artists, and developers.

 

[shobuddy]

This is an older article but the only one I could find. According to it, Google takes 30%.

Google to Take a Hefty Cut on Android App Sales | Gadget Lab | Wired.com