Google announces nearly $10 billion in quarterly revenue, little mention of Android
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 we?re 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.
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 we?re 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.
Comments
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.
And, get ready for Google to start paying $1 to Oracle per handset going forward
Google, say goodbye to your mobile business model
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.
Thanks DED for keeping us up to date on GoogleInsider.
Thanks for reposting the whole article.
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.
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.
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.
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.
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.
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.