Android Pulls In 500,000 Pairs of Eyeballs Every Day
Android's daily activations are on the rise, fulfilling Google's hopes for building a massive base of users to view its mobile ads. "Eric Schmidt once commented that 'scale was a key to making Android a big profit center,'" recalled ABI analyst Michael Morgan. "Schmidt said, 'If we have a billion people using Android, you think we can't make money from that? All it would take is $10 per user per year.'"
Each day, more than half a million Android devices fire up. That's the word from Andy Rubin, Google's VP of engineering. In a Twitter post Monday, Rubin also noted the number of Android daily activations is growing 4.4 percent week over week. It was only two months ago that Google touted daily activations at 400,000.
If Android maintains this growth rate, the activations will double again -- to one million -- by the end of the year. While that pace will likely level off, the daily activations give Google a dominant position among smartphone operating systems.
The growth in Google's Android OS is outpacing Apple's iPhone activations as well as Apple's overall iOS activations that include iPads and iPods. Apple's daily iPhone activations number less than half of Google's 500,000.
Google did not respond to LinuxInsider's request for comments by press time.
A Variety of Revenue Streams
With the large number of activations and fast-paced growth rate, it would seem Google has a base worth capitalizing on -- but how? Profits don't come from Android itself, which Google gives away. Ads don't seem to have proliferated on mobile devices to any great degree. Yet there are a number of financial benefits Google can derive from its Android user base.
"More people using Android means that more people are using key installed applications such as Gmail, Google mobile search and even Google Maps," said Michael Morgan, senior analyst, mobile devices, for ABI Research.
"These products benefit from network connections," he told LinuxInsider. "The more people that use them, the more user data Google has to offer advertisers and application developers."
Android users also provide a mammoth base of customers for applications sales. This builds Google's ecosystem of application partners as well as providing a flow of revenue.
"The more handsets sold, the more applications are downloaded, and Google makes money off of these transactions," said Morgan. "They also make money registering app developers who are selling applications."
There is an inverse relationship between the number of Android users and the cost of applications, he noted.
"The more consumers choose Android devices, the less Google has to pay for its applications to end up on other operating systems. That's more of a cost savings approach than a revenue generator," Morgan explained.
All About the Numbers
Revenue from ads viewed on mobile devices may already be reaching significant levels. Google reported that mobile ads added US$1 billion to its revenues in 2010, Morgan noted.
"I would imagine that number is only increasing," he said. "Scale is the key for Android to succeed. And with ever increasing adoptions rates, the timeline to achieving that scale keeps getting shorter."
Google has claimed that it doesn't need much revenue from each Android to make a difference.
"Eric Schmidt once commented that 'scale was a key to making Android a big profit center,'" Morgan recalled. "Schmidt said, 'If we have a billion people using Android, you think we can't make money from that? All it would take is $10 per user per year.'"
Extra Eyes for Ads
While Google doesn't receive revenue from the use of the Android operating system, that was never part of its business model. The goal was always to build an audience for advertising and applications.
"Google doesn't see any direct benefit from the activations other than as a PR boost to the Android OS itself," Greg Potter, a data analyst at In-Stat, told LinuxInsider.
"Indirectly, Google sees benefits by increasing the number of eyes available for their AdSense and AdMob advertisements," he said.
When Android devices bring half a million consumers into the ecosystem on a daily basis, Google can't help but benefit.
"Google makes money off Android by selling advertisements in ad-supported applications and mobile search results," said Potter.