Google gossip
Google's VP of corporate development has gushed that buying software start-up Android was Google's ‘best deal ever,' while it is predicted that Google's mobile OS could reap $5bn a year in 2012.
David Lawee said it is up to the entrepreneurs to make the company Google has acquired a success, according to VentureBeat. The search giant reportedly snapped up fledgling Android, founded by Andy Rubin in 2005 for a sum thought to be around $50m.
However, Lawee admitted initially being sceptical of Android and reportedly said: "I saw this guy in my building for two years, walking his dog, and I was like, I hope this guy does something," but now admits it was Google's best acquisition.
He reportedly added:"It's obvious when the deal doesn't work out, because the people leave. That's the key metric: Is the technology being used? A lot of it depends on the perseverance of the team coming in."
While the open OS is free, Google makes money from mobile ads, similar to its search business model and it now thought Google mobile ads pull in around $1bn a year for the firm.
In fact, an investment research boutique called Town Hall Research has estimated Google should make $5bn in mobile revenue by 2012, The Wall Street Journal reported.
The firm has reportedly jumped to this conclusion based on information that Google should have 350m smartphones running Android in Q3 this year and mobile cost per click (CPC) is in the 10 cents range, concluding that Google is making money on about one search per smart phone per month.
It also believes more people will use Android and the number of paid clicks plus the cost per click will increase and also supposes display and app ads will give figures a boost.
The firm told the newspaper: "If Google did nothing, and simply let the growth in smart phones drive mobile search, the business could easily double to $2 billion by 2012. "If Google only increased paid clicks by one per month, while keeping CPC flat, the business could be $3 billion in 2012. However, in our scenario and analysis thereof, the most powerful metric to watch will be CPC."
"Google's ability to increase pricing will depend on providing a superior ROI for advertisers, and the advertiser's willingness to utilize mobile as a critical component of their advertising campaign. If Google is right, and pricing ultimately exceeded the corporate average, we would expect to see mobile revenue eventually overtake traditional search," Town Hall added.
Interestingly, Paul Jacobs, CEO of Qualcomm said the chip giant had toyed with the idea of buying Android, which would have been a natural extension of the firm's core business, but decided against it as it would have made Qualcomm ‘too powerful,' according to VentureBeat.
Given the money Android is now making Google, many people might presume Qualcomm is kicking itself but Jacobs reportedly said at the time the acquisition of Android might have scared its partners off as they might have presumed Qualcomm would be too powerful and able to dictate mobile standards.
Jacobs is thought to be in favour of multiple OS. "We see all ends of the spectrum. We don't want to be seen as taking sides," he added.
And Qualcomm isn't doing too badly despite passing off the Android acquisition opportunity as it reportedly sells 100m wireless chip sets per quarter and its chips were used in 700 different mobile devices in 2009.
