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Google announces nearly $10 billion in quarterly revenue, little mention of Android

post #1 of 56
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Despite announcing a 33 percent sequential quarterly increase in revenues and promoting its Google+ competitor to Facebook, Google's detailed financial results for Q3 2011 made almost no mention of Android, indicating how little revenue the project actually generates.

Google's $9.72 billion in revenues were generated largely by the company's own web sites, which reported revenues of $6.74 billion, or 69 percent of its income.

"Network revenues," generated through affiliate partners through Google's AdSense programs, contributed $2.6 billion, or 27 percent of the total. Other income outside of Google.com and AdSense advertising amounted to $385 million.

Just over half, 55 percent, of Google's revenues were generated outside of the US, a slight increase in the foreign share over the previous quarter.



Where is Android?

Nowhere in its quarterly earnings report does Google even mention Android or use the word "mobile."

In its quarterly earnings presentation (PDF), the company makes a single mention of Android, noting that alongside Youtube and Chrome, it is a "business demonstrating high consumer success."

Outside of that, Google focuses on its "Core ads business," where it makes nearly all of its revenues, and "New businesses where were investing to drive adoption and innovation: Social, Enterprise, Commerce, Local," a series of efforts including the aforementioned Google+, and competitive efforts including its web-based alternatives to Microsoft Office and its own version of Yelp.

However, Google's revenue figures indicate that outside of its core ads business, there simply aren't any revenues to talk about. In the case of Android, that's because Google has given away software hoping to unlock a market for mobile display advertising and paid search.

During the company's conference call, Google's new chief executive Larry Page noted a "run rate" of $2.5 billion in annual mobile revenues (income derived from Android, iOS, and other platforms), growth of about 2.5 times the company's 2010 mobile revenues, but a tiny fraction of the revenues Apple is generating as a hardware maker.

Battle of the business models

Last year, Steve Jobs indicated that the shift from desktop PCs to mobile devices had changed the business model Google has historically relied upon, because mobile users are now using apps rather than primarily searching for things in the browser.

After initially partnering with Google and essentially handing it the iPhone's web search traffic, Apple responded to Google entering the smartphone business as a competitor with Android by developing its own iAd program as a competitor to Google's mobile ad aspirations. However, Google appears to make the vast majority of its mobile revenue from paid placement of web search results, not from display ads, just as is the case on the conventional desktop.

While pundits like to dramatically pit Apple's iAd against AdMob/AdSense, Apple appears to see its iAd mobile display advertising revenue as an alternative way to monetize third party software development, rather than a core business unto itself. Despite continuously expanding its iAd program, the company is making the vast majority of its revenues (and profits) in selling hardware, which subsidizes everything else the company does.

In its most recent earnings report in July, Apple announced revenues of $28.57 billion on sales of 20.34 million iPhones, 9.25 million iPads and 3.95 million Macs.

Apple also announced having sold 220 million iOS devices through the end of the June quarter, compared to the 130 million Android devices Google had sold then, and the 190 million devices that Google just announced having sold through September. Apple will announce its own fall quarterly earnings October 18.
post #2 of 56
Ok, so it's a bit of an apples to oranges comparison to contrast Apple's venues against Google's Android-relateed income (if there is any at all), but it is interesting to note because in the PC days, which Android is compared to as a Windows-standin, Microsoft actually made more money than Apple selling software rather than the whole widget.

PC makers also made more money than Apple, and there were 5-8 PC makers each selling more computers than Apple. Today, there's only 2-3.

In the Android era, Google is making nearly nothing on Android directly AND indirectly, while phone makers are all pretty much making minor profits or losing money (like Motorola & Sony Ericsson).

Additionally, Apple is making far more iPhones than any individual Android maker, to the point where Apple is selling more hardware than all Android device makers combined (and nearly as many smartphones as the entire Android ecosystem).

Apple is also creating successful new derivatives like the iPod touch and iPad, something Android licensees can't seem able to do at all, let alone profit from.

So from that perspective, it's interesting to see how different Android is from the Windows era.
post #3 of 56
Thanks DED for keeping us up to date on GoogleInsider.
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post #4 of 56
Google will need to pay Oracle $2 Billion to settle the Java lawsuit. Say goodbye to all of these QTR earnings

And, get ready for Google to start paying $1 to Oracle per handset going forward

Google, say goodbye to your mobile business model

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post #5 of 56
"130 million Android devices Google had sold then, and the 190 million devices that Google just announced having sold through September"

So Google finally have stopped talking about activations, and about sold units?

How does Google know how many Android system are sold, since the Android OEMs does not tell Google that. Google can only track activations.
post #6 of 56
Quote:
Originally Posted by Aquatic View Post

Thanks DED for keeping us up to date on GoogleInsider.

Thanks for reposting the whole article.
post #7 of 56
So having Google as a default search engine for all iOS devices helps Google gain such huge profits?
post #8 of 56
Is it really that surprising they got into the smartphone market? Google was probably concerned that they might otherwise be pushed out eventually.
post #9 of 56
A website that is virtually funded by Google criticizing Google's Advertising stream. WTF. Get rid of the google adds.
post #10 of 56
Quote:
Originally Posted by Apple v. Samsung View Post

A website that is virtually funded by Google criticizing Google's Advertising stream. WTF. Get rid of the google adds.

I thought of it as a great irony.
post #11 of 56
Of course Google doesn't mention Android. They are being sued over Android and any revenue stream paints a bigger target on them.

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post #12 of 56
seems like android is a zero sum thing, and since they need to pay recently microsoft and maybe others (soon) too they'll end up losing money with android. and thats quiet uneconomical even if they use android just to spread the platform to gain global share.
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post #13 of 56
How this stock is priced at 550+ has always mystified me. They just must imagine this company can monetize money theoretically due to it's search business, but it's clear the jumps between both quarters is not impressive.
post #14 of 56
Quote:
Originally Posted by Apple v. Samsung View Post

A website that is virtually funded by Google criticizing Google's Advertising stream. WTF. Get rid of the google adds.

The same would go for Bing.

Being the biggest search engine company and adsense provider shouldn't give one a pass on their business practices.
post #15 of 56
Quote:
Originally Posted by Havid Dasselhoff View Post

seems like android is a zero sum thing, and since they need to pay recently microsoft and maybe others (soon) too they'll end up losing money with android. and thats quiet uneconomical even if they use android just to spread the platform to gain global share.

The thing that occurs to me is that Apple's App paradigm shift by passes Google's strangle hold on the web since Apple's Apps don't use it. So unless Google has apps out there that keep them involved even if they give away the technology their income model slowly dwindles as the web gets used less and the Internet becomes ever more an App conduit. This is what I think Schmidt realized while on Apple's board which must have been a chilling thought prior to Android in its iOS rip off form.
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post #16 of 56
Quote:
Originally Posted by hmm View Post

Is it really that surprising they got into the smartphone market? Google was probably concerned that they might otherwise be pushed out eventually.

That's exactly the kind of thinking that makes Google the paranoid sociopathic company that it is. It mirrors almost exactly the way Microsoft operated under Bill Gates. Either you control everything or you'll lose everything. Google is the new Microsoft.
post #17 of 56
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post #18 of 56
I tried... but I just don't care.
post #19 of 56
Quote:
Originally Posted by mdriftmeyer View Post

How this stock is priced at 550+ has always mystified me. They just must imagine this company can monetize money theoretically due to it's search business, but it's clear the jumps between both quarters is not impressive.

Google only has 322 million outstanding shares. Maybe the investors that hold this stock are optimistic. Apple on the other hand, must have a lot of greedy, pessimistic investors. They're always yelling "Where's the dividend? When's the buyback? When's the split? Where's the growth potential?" I don't think I ever hear these voiced complaints for Google's stock. Google also has about $41 billion in reserve cash that could be used for dividends or buybacks. Apple's earnings get analyzed inside and out and it appears to be a major waste of time since no one on Wall Street "understands" the damn stock. Whatever the hell that supposed to mean, I don't have a clue. You're either making money or you're not. Clearly, Apple is making major money.

Apple's making revenue hand over fist, and should easily have a higher share price than it is, but hell, no, it ain't gonna happen with such tight-fisted buttheads holding the shares. I'd be floored if Apple shares popped like Google's did upon earnings. But, Apple's shares don't usually pop on earnings and this quarter will be no different. Apple will probably be sitting on about $81 billion in cash, though. That can buy Apple a lot of leverage to keep boosting revenue.
post #20 of 56
The on going legal battle stage with Google Making money on Android or not even though it is given out as free. And if Google now report any earnings they would have causes even more trouble for themselves.
post #21 of 56
Quote:
Originally Posted by mdriftmeyer View Post

How this stock is priced at 550+ has always mystified me. They just must imagine this company can monetize money theoretically due to it's search business, but it's clear the jumps between both quarters is not impressive.

It's not the price of the stock that's important. It's the price of the stock in relation to earnings. Google is trading at 20 times earnings. But in any case, I see your point. Google has always commanded a higher earnings multiple than Apple, something I can't understand at all. Amazon is trading at 104 times earnings. Out of the three, Apple has shown phenomenal growth. Yet, Amazon and Google command a much higher earnings multiple.

Google has carved out a niche for themselves. They own search, which will generate tons of cash flow for years to come. As an investor myself, I have my own concerns about Google. They have search and nothing else.
post #22 of 56
isn't it obvious that it is not google's intention to make money from android or the handsets but instead from their core search and ad supported services which integrate so seamlessly in the android experience. that is the whole point. and it is brilliant in my opinion. think about it, use google as the search provider on your android phone, sync your contacts, mail and calendar just by signing into your google account. maps w/navigation (free turn by turn). everything just works seamlessly and that is by design. a new android adopter will find themselves using many of the core google services and in turn be show advertisements which is their core competency.
post #23 of 56
Quote:
Originally Posted by vvswarup View Post

It's not the price of the stock that's important. It's the price of the stock in relation to earnings. Google is trading at 20 times earnings. But in any case, I see your point. Google has always commanded a higher earnings multiple than Apple, something I can't understand at all. Amazon is trading at 104 times earnings. Out of the three, Apple has shown phenomenal growth. Yet, Amazon and Google command a much higher earnings multiple.

Google has carved out a niche for themselves. They own search, which will generate tons of cash flow for years to come. As an investor myself, I have my own concerns about Google. They have search and nothing else.

Google has 'search and nothing else'?? Please tell me you're shitting me.

http://en.wikipedia.org/wiki/List_of_Google_products

Google has more products than almost any company I can think of. Yes, they're dominant in search, but have diversified into so many new things in the past few years. I thought about how many Google services I use the other day- and it was scary.
post #24 of 56
Quote:
Originally Posted by Slurpy View Post


Google has 'search and nothing else'?? Please tell me you're shitting me.

http://en.wikipedia.org/wiki/List_of_Google_products

Google has more products than almost any company I can think of. Yes, they're dominant in search, but have diversified into so many new things in the past few years. I thought about how many Google services I use the other day- and it was scary.

He might have been referring to how Google makes money.

Search? Absolutely...

Google Earth, Picasa and Buzz? Not so much...

You're right... Google has a ton of products.

But how does Google make all of its money? Search and advertising.
post #25 of 56
Does the author of this article realize Android is free?
post #26 of 56
Google uses Android the same way Apple uses iOS, to sell more of its real product, but that's where similarities between the two companies end. Their core businesses that bring the revenue are drastically different, ads vs. hardware, respectively. I don't see Google drinking up Apple's milkshake any time soon. The attempts to paint them as rivals are rather forced, imo.
post #27 of 56
iOS generates money for Apple through the hardware.

Android generates money for Google through advertising revenue.

Google's advertising revenue is clearly stated in Google's report.

It's not rocket surgery, is it?
post #28 of 56
Not sure how this relates to iOS or Apple but yea. Go Google? I really don't care. Lol.
post #29 of 56
Quote:
Originally Posted by shompa View Post

"130 million Android devices Google had sold then, and the 190 million devices that Google just announced having sold through September"

So Google finally have stopped talking about activations, and about sold units?

How does Google know how many Android system are sold, since the Android OEMs does not tell Google that. Google can only track activations.

How do you know? There could easily be a clause in the OEM license agreement requiring the OEM to tell Google how many units were sold. In fact, the various license agreements may require that.

Quote:
Originally Posted by Apple v. Samsung View Post

A website that is virtually funded by Google criticizing Google's Advertising stream. WTF. Get rid of the google adds.

I agree. If people would stop using Google, they'd lose a lot of power overnight. There are plenty of alternatives. I wonder about this, too. Back when I was using a lot of Google advertising, I very rarely had customers coming to me from that source. As web advertising has been growing at double digit rates for years, I wonder if it will eventually become saturated - and the value start to decline.
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post #30 of 56
Way to start a flame war, AI.

Anyways, Google makes money VIA ADS on Android....not the OS itself. Apple makes money selling hardware...
post #31 of 56
Quote:
Originally Posted by RichL View Post

iOS generates money for Apple through the hardware.

Android generates money for Google through advertising revenue.

Google's advertising revenue is clearly stated in Google's report.

It's not rocket surgery, is it?

Google doesn't really break out its revenue from mobile advertising now and when it did the amount was minuscule compared to desktop revenue. If Android was making them oh-so-much cash in the mobile advertising space and was growing exponentially, I would think its executives would point that out since it would cause its stock price to surge and eliminate any fears over its proposed Motorola acquisition.
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post #32 of 56
Quote:
Originally Posted by mdriftmeyer View Post

How this stock is priced at 550+ has always mystified me. They just must imagine this company can monetize money theoretically due to it's search business, but it's clear the jumps between both quarters is not impressive.

The share price is high because of that Google grows fast and makes a lot of money.
They have a P/E of about 17 witch is quite reasonable. (Amazon has about 100 witch is unreasonable)

The question is why Apple is valued so much lover then Google. (P/E 12). Apple have grown much faster (63% average last 5 years) and have 80 billion in cash.

Apple should have a P/E in the high 20is. (just 2 years Apple had a P/E of 22 = Apple was valued almost 100% more then today)

The problem for Apple is that it is to big. A fair value of Apple would put Apples value in the GNP of Canada.

Apples 80 billion could buy many countries in the world.
Maybe they should do that? Start an utopian society with only macs, no crime, all have Jobs, all are happy?
post #33 of 56
Quote:
Originally Posted by cameronj View Post

Thanks for reposting the whole article.

LOL! Indeed!
post #34 of 56
Quote:
Originally Posted by shompa View Post

The share price is high because of that Google grows fast and makes a lot of money.
They have a P/E of about 17 witch is quite reasonable. (Amazon has about 100 witch is unreasonable)

The question is why Apple is valued so much lover then Google. (P/E 12). Apple have grown much faster (63% average last 5 years) and have 80 billion in cash.

Apple should have a P/E in the high 20is. (just 2 years Apple had a P/E of 22 = Apple was valued almost 100% more then today)

The problem for Apple is that it is to big. A fair value of Apple would put Apples value in the GNP of Canada.

Apples 80 billion could buy many countries in the world.
Maybe they should do that? Start an utopian society with only macs, no crime, all have Jobs, all are happy?

Dude, you need spell-check!
post #35 of 56
Quote:
Originally Posted by RichL View Post

iOS generates money for Apple through the hardware.

Android generates money for Google through advertising revenue.

Google's advertising revenue is clearly stated in Google's report.

It's not rocket surgery, is it?

No, it's not rocket surgery.

But ... I got to thinking - what the hell is rocket surgery? Then I looked it up and the answer from Urban Dictionary is

"A word dumbasses use ..."

Hmm ...
post #36 of 56
Quote:
Originally Posted by freckledbruh View Post

Google doesn't really break out its revenue from mobile advertising now and when it did the amount was minuscule compared to desktop revenue.

They don't? Yikes, I guess Larry Page spoke out of turn today and he said revenues in the last 12 months from mobile totaled $2.5B. Rookie CEO didn't get your memo.



More seriously, I recall Eric Schmidt recently mentioning the Google was generating from advertising revenue from iPhones/iPads than from Android devices. I think the ratio was 60/40 but can't remember precisely. Does anyone remember?
post #37 of 56
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post #38 of 56
Quote:
Originally Posted by mdriftmeyer View Post

How this stock is priced at 550+ has always mystified me. They just must imagine this company can monetize money theoretically due to it's search business, but it's clear the jumps between both quarters is not impressive.

Yea 33% versus prior year really sucks ... very mystifying ....

If you do the numbers, their growth is accelerating versus '09 ... '09 to '10 was in the low 20% ... '10 to '11 is in the low 30%
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post #39 of 56
Quote:
Originally Posted by Apple v. Samsung View Post

A website that is virtually funded by Google criticizing Google's Advertising stream. WTF. Get rid of the google adds.

We have "Reader" to fix that.

J.
post #40 of 56
lulz @ the typical google hate. Google's business model is genius because even if you are not directly using their product, they are still able to integrate and exploit off outside ideas. In the end, the consumer gets more choice and so does the developer. How tough is it to throw an ad in an app or on a web page? Pretty simple and not nearly as restrictive as the environment you'll find working in iOS.

On another note, apparently there were multiple reference to Android and upcoming Ice Cream Sandwich release. Perhaps Apple folks choose not acknowledge these key statements.

Quote:
Originally Posted by stelligent View Post

No, it's not rocket surgery.

But ... I got to thinking - what the hell is rocket surgery? Then I looked it up and the answer from Urban Dictionary is

"A word dumbasses use ..."

Hmm ...

You use urban dictionary as a serious reference guide? "Rocket Surgery" is a play on 'rocket science' and 'brain surgery'... I thought even dumbasses got that joke.
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