Google's Android Activations Worth $3.65B a Year: Oracle

 
 
By Clint Boulton  |  Posted 2012-01-19
 
 
 

 

Google's (NASDAQ:GOOG) 700,000 daily activations of devices based on its Android operating system may be worth $10 million annually in mobile ad revenues, totaling $3.65 billion a year overall, according to Oracle (NASDAQ:ORCL).

Oracle sued Google in August 2010 for patent and copyright infringement, accusing the search engine provider of infringing seven Java patents and other copyrights. Oracle is seeking monetary damages and an injunction against Google from using its IP in Android.

Oracle, which in June sought $2.6 billion, plus a revenue share of between 10 and 15 percent of Google's mobile advertising sales generated from Android phones, said it would stay or dismiss its patent infringement claims against Google in lieu of a near-term copyright trial to facilitate a resolution.

Oracle also provided a current report of its calculation for how much Android is worth to Google.

"While this case awaits trial, more than 700,000 Android-based devices are activated every day, all fundamentally built around the copyrighted Java APIs and the enhanced performance enabled by Oracle's patents," Oracle said in its filing. "Each day's worth of activations likely generates approximately $10 million in annual mobile advertising revenue for Google."

FOSS Patents blogger and IP expert Florian Mueller noted that this sum assumes annual advertising revenues of $14 per Android user, which Oracle presumably arrived at in the discovery process of the trial.

While Google has yet to confirm or deny this average revenue per user (ARPU) estimate, the total Android ad earnings of $3.5 billion may be high considering Google CEO Larry Page said the company's total mobile ad run-rate for 2011 was $2.5 billion.

However, as Mueller has pointed out repeatedly in the past, any such payment would be marginal compared to the overall value of Android to Google over its lifetime. Indeed, Android is only a few years old and will increasingly touch more Google products.

Oracle recognized as much in its filing, noting that its calculations don't include Android Market revenue, "lucrative relationships with manufacturers of myriad devices on which Android can and does run, to the inordinately valuable access Android provides to customers for its new social network service, Google+."

Of course, any damage estimate Oracle would lay claim to is a moving target at this point. Android's activations won't sit still at 700,000 a day, considering Google reported 550,000 daily activations in only November. Google could claim 1 million activations in the next 6 to 12 months. If Oracle hasn't settled with Google by then, it could be eligible for even more money.

Oracle's suit is just one of many revolving around Android, which has soared to become the  top smartphone operating system with more than 50 percent market share worldwide.

Apple (NASDAQ:AAPL), for example, has sued Motorola (NYSE:MMI), Samsung, HTC and others for patent infringement, while Microsoft (NASDAQ:MSFT) collects royalties from companies using Android in their consumer electronics products.

 
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