Google Shares Revenue From Mobile Search, Not Apps

Android device shipments in North America will rise 163.9% to 12.3 million units in 2010, according to Canalys. The Palo Alto marketing and analysis firm attributes the skyrocketing growth to new devices from HTC, Samsung, Motorola and LG, but others are more skeptical about the reasons why.

Some believe Google's success from Android will come from more than building great products, third-party developer networks, and a cloud computing business model. The buzz suggests the Mountain View, Calif. search engine has begun to share revenue with carriers that sell handsets running the Android operating system, according to multiple sources familiar with the deals. Uncited sources suggest that revenue-sharing agreement only occurs when Google applications accompany handsets, such as Search, Google Maps and Gmail.

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Google already shares revenue with mobile partners from paid-search ads, confirms a Google spokesperson. "We share revenue on search, not on mobile applications," he says. "The same is true for non-Android devices that use Google as the default search engine."

While AT&T spokesperson Seth Bloom declined to comment on business relationships, Google's confirmation came as news to former Mobile Marketing Association President Michael Wehrs, who has heard rumors that Google will share revenue with carriers and handset makers. It's not clear if the deals are for all types of ad content, the sale of mobile applications or only paid search ads.

Aside from paid search ads there are other ways to monetize and measure the effectiveness of a campaign, such as click to call or click to action when someone signs up for a newsletter or an email service. There's a revenue share model among the companies involved. And then there are commerce ads where someone clicks on the ad to buy something.

New models being launched by carriers opens up innovative ways of thinking about monetizing content and ads. "Sprint's new Overdrive product changes many things," Wehrs adds. "The carrier now gets one subscription from a person, but they can connect five devices. That's multiple phones or phones and laptops. They don't need data cards under a separate subscription. That's a model that hasn't existed before."

Sprint's model will help handset makers sell more devices, but some will still have a difficult time this year. Advertisers, third-party application developers or carriers looking for a compelling choice to build a revenue stream would likely choose to advertise, build or sell an app for phones running Android. Perhaps because both BlackBerry's and Microsoft's Windows Mobile operating systems lack momentum.

Take Microsoft, for example. The Redmond, Wash. company will find it difficult because the commercial availability of Windows Phone 7 Series will not arrive until shortly before the holiday season, according to Canalys. While Windows Phone 7 Series represents a major improvement to the platform that was badly needed from Microsoft, the delay between announcement and expected commercial availability in Q4 2009 will make this year tough for Microsoft.

Windows Phone shipments in North America are expected to remain almost flat this year, at 4.7 million units -- a 7% share of the market, according to Canalys.

1 comment about "Google Shares Revenue From Mobile Search, Not Apps".
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  1. John Grono from GAP Research, April 17, 2010 at 8:38 a.m.

    Wow! 163.9% growth - such precision in their estimates. Why not just say we wet a finger, stuck it in the air, had a guess at 12.3m units to the nearest hundred thousand ... which works out to over 150% growth. The trouble with such "implicit precision" is that some people believe that these estimates will be spot on.

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