If you look around now you will find Android phones running everywhere, Android phones cover about 76.03% of the global market share, and it seems that Android has become like a chicken that lays the gold for Google, how come Google’s profits from the Android operating system?
Google Profits from Android unveiled
In 2016, as a result of a legal dispute between Oracle and Google over the latter’s accusation of using the modified version of Java,owned by Oracle, to develop the Android operating system without compensation, Oracle revealed one of the secrets of Google Financial after claiming that Google’s profits reached 22 Billion dollars between 2008 and 2016, by the Android operating system alone.
These leaks and news have attracted the attention of many followers on the extent of Google’s profits from this operating system, public recognition proves that Google is making a lot of money already, while denial can raise investors concerns about the fate of their investments in the company, and therefore we find that this is the reason behind Google stuck and enforced a fence of confidentiality about Android’s financial statements.
Since Google did not charge mobile phone manufacturers when using the Android operating system on their devices since Android is an open-source operating system and any company can install this system on its devices, which posed very important questions such as: How Google makes these profits from the operating system Android? And what exactly is the Android revenue model?
Well, the two main sources of revenue are:
- Mobile Phone Ads
- Google Play
How does Google earn money through ads?
Google cleverly introduced its operating system for free, which ultimately helped develop cheaper phones due to the lack of license fees as long as you had the device, and the customer base grew until Android had a clear understanding and control of the market.
But Google relies mainly on displaying ads and targeting them correctly is their primary agenda. It is clear that advertising via mobile phones is the main source of income when it comes to the Android operating system, the Google paid to Apple billion dollars compared to be the default search on the iPhone phones engine is Google ‘s search engine, this is the tax that was Google paid for this privilege.
iOS users are more profitable than Android users from an advertising perspective because they have a higher average income and are more likely to buy things online. But Android users are much larger than iOS users.
Reports emerged last year that there are more than 2 billion Android devices worldwide. Even with a lower average per-user income, the money Google earns from ads on Android phones may be much higher than iOS revenue with any tax you pay.
Google also makes money from ads that are displayed when users search through its search engine, as many people also use YouTube apps, maps, cloud storage, Gmail and many other Google apps and services.
Google displays ads on some of these services, but it also analyzes user data to improve the relevance of the ads you show elsewhere. Because each phone user must sign in with their unique account when setting up the phone, the data is always very accurate and personal.
Google also earns a few cents when you click one of those ads that appear in many ad-supported apps. Although mobile advertising revenue is lower than computer advertising, the value of a click is generally smaller, but mobile phone usage is increasing every year. Thanks to the Android operating system and its suite of applications, Google has a network of capillaries that extract money from the entire ecosystem.
How Google earns money from Play Store?
In 2018, the Google Play Store generated total revenues of $ 24.8 billion compared to $ 19.5 billion the previous year. The Google store plays a very central role in the Android revenue model.
The Google Play Store, formerly called the Android Market, has grown much more since its re-launch. Now Google Play comes with pre-installed apps that help preserve its ecosystem.
Apps in the Google Play Store are a big source of revenue from Google, where the company takes a percentage of every sale of application developers in the Play Store. The store has more than 1.5 million apps between paid apps and in-app purchases.
Google Apps pre-installed
Google also makes money from its app services that come pre-installed on Android phones such as music, movies, books, and games, through paid subscriptions and product purchases.
Is there anything else?
Mobile ads and app sales are the biggest revenue streams for Android and Google at the same time, and the company also sells some devices but with small margins allowed by these devices, these funds are largely insignificant. The same applies to projects such as Android Pay and Project Fi.
In simple terms as Android is an open-source system that means that Google cannot make a profit through licensing, so it has created an operating system so that user information is more freely available to get a better network of ads for advertisers, and of course showing ads a convenient way to profit on mobile phones.
Of course, they do this on OS or OS as well, but they earn a lot on Android platforms because they barely pay for it. On the other hand, Google’s profits also come from transactions on the Google Play Store.