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Google Android lost money in every quarter of 2010

by Alistair Lowe on 7 May 2012, 10:54

Tags: Oracle (NASDAQ:ORCL), Google (NASDAQ:GOOG)

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When it began last month, the Oracle vs Google legal hearing over alleged Java copyright and patent violations in Android had been split into three phases; copyright liability, patent claims and damages.

Still in deliberation over the copyright phase, the jury had been granted the weekend to come to a decision over the matter where, the group states that it has reached a unanimous verdict on all but one of the questions posed to it. Should the jury not reach a unanimous decision on all of the points, the judge agreed to allow a partial verdict in order to move on to the next phase of the trial.

Before sending the jury out on Friday, Judge Alsup read from a sealed Google document containing profit and loss figures for Android in 2010. According to the judge, Android made Google a loss in every quarter of 2010, "That adds up to a big loss for the whole year," he stated, revealing for the first time Android's lack of profitability, potentially deflating Oracle claims that Google profited from its alleged infringement of Java copyrights and patents.

Whilst the judge's revelation should have no impact on the jury's verdict, it may very well have an impact on the level of compensation that Oracle may be able to claim, should it ultimately win the trial.



HEXUS Forums :: 11 Comments

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How do they define profitability?

Google, as far as I can tell, no longer makes any hardware. Android itself is essentially given away free, so costs money to develop. As a result, simply saying “how much money does Android make from sales?” - probably not very much. But when you consider that Google is now a massive player in the smartphone market and is extending its advertising tendrils into the pockets of almost a million new users a day. Not to mention that the default mail client is Gmail, the default web browser goes to Google as a homepage, all this funnels traffic their way and traffic means profit.

Yes, this was in 2010, but sometimes you have to tack a kick in the nuts when you're planning for the future. Does it matter if they lost a billion, ten billion dollars? I'd say the market reach they have now makes up for it.
Remember that market reach applies to Oracle as well… If Google used another language then Oracles competitor would have gotten a major boost.

As it turns out Oracle has benefited from the mass market penetration that Andriod provides by using their programming language so you have to take that into account.
Unfortunately for Oracle this is true, Google have lost tons giving away Android, because this was their intention all along - get the software out there to as many people on as many devices as possible and make money from advertising etc.
Whiternoise
How do they define profitability?

Google, as far as I can tell, no longer makes any hardware. Android itself is essentially given away free, so costs money to develop. As a result, simply saying “how much money does Android make from sales?” - probably not very much. But when you consider that Google is now a massive player in the smartphone market and is extending its advertising tendrils into the pockets of almost a million new users a day. Not to mention that the default mail client is Gmail, the default web browser goes to Google as a homepage, all this funnels traffic their way and traffic means profit.

Yes, this was in 2010, but sometimes you have to tack a kick in the nuts when you're planning for the future. Does it matter if they lost a billion, ten billion dollars? I'd say the market reach they have now makes up for it.

I suspect it's estimated Android derived revenue offset by the expenses of development / management / advertising the os to oems/ infrastructure for Google Play and associated bandwidth. Whether this covers ad revenue or not I don't know.
The direct profit from Android comes from the market, both selling licences to phone manufacturers to use it, and the cut they get from each application sale. But more people using Android also has secondary benefits for the rest of the Google business, mainly advertising, which I doubt was included in these profit calculations.