Google took a bath on Android in 2010, judge reveals Android gave Google nothing but a net loss for every quarter of 2010, despite making about $97m in revenue in the first quarter of the year. Google doesn't release specific financial information about Android, but the numbers came out in the Oracle v Google trial over the Chocolate Factory's use of Java in its mobile operating …
First it isn't creative accounting.
It's called using your dominance in one market to undercut the competition in another so that you can become the dominant force in that market.
Guess what... It's illegal.
Not only can you see damages in terms of this case, but also damages in terms of Microsoft and their partners...
Hence the sound you hear is the acidic saliva dripping from the lawyers mouths as they smell a fat paycheck brewing....
So, to summarise:
Google makes little money from Android. Their mobile search revenue comes mostly from Apple devices. They've splurged to buy Motorola, partly to protect Android from patent claims, partly as an Android-device maker. And Oracle is suing them over whether Android plagiarised Java.
There must be a cunning strategic plan there somewhere... but I'm not seeing it
Well, the motorola part is pretty easy to figure out. $12bn for a company that has trivial market share and makes a loss almost every quarter doesn't sound so good, but they have a huge number of standard essential patents for 3G/4G/WiFi/H264 etc. This is perfect for defending android, because if you refuse to let somebody use those patents they can't make a phone at all. Apple might stop motorola using slide-to-unlock, but motorola can stop the iPhone from making phone calls.
That's obviously worth $12bn. Of course there's the small issue that they're FRAND patents, and motorola is now being investigated for market abuse because they agreed to license those patents fairly, so what google are really buying is a couple of extra anti-trust investigations, possibly a huge fine, and the very high probability that those FRAND patents are going to be worth a few million a year in licensing rather than a few billion after the EU gives them a good slapping.
Ok, so it does in fact look like google are buying a large pocket hole and a kick in the bollocks for their $12bn. There must be a plan in there though :)
"Their mobile search revenue comes mostly from Apple devices."
Not sure how you got to this conclusion. I may be wrong, but I assume the revenue they're talking about here is specifically "Android" and not "mobile". i.e., licensing fees to partners and Market fees to developers.
Or have I missed something in the article?
I think he was talking about google's general android strategy, not the article or the oracle case.
They give android away for "free" (subject to MS and others' patent tax further down the line), so android makes no direct income (and after costs, a huge loss).
They make money from mobile ads, but it seems that most of their ad revenue actually comes from iOS rather than android.
And they're buying motorola, a company with tiny (~4% maybe?) market share and a balance sheet that shows a lot more red than black over the past few years - supposedly for patents that (from what I've seen so far) are either pretty weak or a FRAND pledged. If they can use the FRAND ones, they're very powerful - but most countries so far have said they're not allowed to. The exception is Germany, and the cases there have led to an EU anti-trust investigation. The patents don't look like they're worth much, and they could lead to a large fine.
So a lot of people are really wondering what google's actual strategy is. It's really not at all obvious :)
If they really were losing hundreds of millions per year on Android then surely they wouldn't mind just handing such a dog of a business over to Oracle in order to settle the lawsuit. They've had no reservations about shutting down other money losing projects, what makes Android so special?
Hah hah, yeah Fats, it is too funny. Added to this, the vast majority of Android 'adoption' is on cheap and nasty plastic phones that are purchased by users in the 3rd world. The only snag with this is that these users are too poor to buy a data plan, and too poor to be a worthwhile target for advertising companies (so worthless to google - nobody WANTS to buy these users personal information).
It means oracle will shrug its shoulders, and take the triple damages arising from damage to oracle (which is the other half of the damages) because of fragmentation of java etc.
But it's not really damages they want - it's google to be found guilty. Then, even if the damages are zero, oracle wins. Why? Because google has to take that license they decided not to bother with. They have to ask oracle for it. And oracle can say no if they want to - which they don't. End result will be that google takes a license where it pays oracle *per device* to use java. Say $10 per device, multiplied by the hundreds of millions of android devices that get sold... it's big money ;)
They might also tell google that android can have a standard implementation or none at all - either way android devs get fucked.
Java is not fragmented. Android is not Java. Android applications are developed using the Java language only. The Java Runtime Environment (which runs and *is* Java) has nothing to do with it.
Claiming that Java is fragmented because Android uses the Java language is like saying that England is fragmented because English is spoken in both America and England.
This is a copyright case about whether the American's are allowed to speak English.
Java SE, Java ME... where did android fit in again? Android apps work anywhere there's a standard Java install right?
They don't, and I bet android is by far the biggest java platform - it's caused major fragmentation. Personally I couldn't care less, but it's oracle's platform and this isn't what they wanted for it at all, so they've brought out the big legal stick.
What does "This is a copyright case about whether the American's are allowed to speak English." mean?!
"Java SE, Java ME... where did android fit in again? Android apps work anywhere there's a standard Java install right."
No, as I said, Android is not Java. Android applications require the Dalvik VM which is the Android equivalent of the Java Runtime Environment.
The JRE cannot run Android applications and Dalvik cannot run standard Java applications.
"What does "This is a copyright case about whether the American's are allowed to speak English." mean?!"
It means you need to separate the concept of the Java programming language from the Java runtime environment. The language is what the code is written in. The runtime environment is where the compiled code gets executed. The compilation to byte code is what separates Dalvik and the JRE.
>> "It means you need to separate the concept of the Java programming language from the Java runtime environment. The language is what the code is written in. The runtime environment is where the compiled code gets executed. The compilation to byte code is what separates Dalvik and the JRE."
Actually, he did, but you didn't. When he said that "Java is fragmented," he is talking about the mind-share of developers using that language.
You seem to be obsessed with trying to keep Android and Java separated by grasping to straws, delineating their technical differences. Who cares?! The reason this is at trial and a Judge is seriously considering the issue (as opposed to dismissing it right from the outset), is because it is not as clear-cut as you claim.
Sun's (and now Oracle's) intention with *both* the language and framework was to have developers expend effort on training for a single platform that will then run everywhere, including mobile platforms. Android throws a wrench into the works by splintering the development efforts of Java developers into essentially two platforms, and arresting Sun's (now Oracle's) potential to release an official mobile Java platform.
Part of Oracle's argument is that *this* was Google's intention from the beginning: to avoid having to compete with yet another programming language and exploit an existing large group of developers already trained in the language--without paying for a license to clone it or its API.
-dZ.
"Android throws a wrench into the works by splintering the development efforts of Java developers into essentially two platforms"
Sadly it's not possible to tell how straight you kept your face typing that bullshit. If you said 'three platforms' maybe I'd play along - counting the multiple incompatible ME profiles as just 1 platform.
At the time Sun decided not to join Google, JavaSE had no compatible UI layer for ME so wouldn't even compile if they needed a UI, get too clever and they still won't more than 5 years on after Sun lumbered off their lazy arses and added Swing to ME.
Sun fragmented their own platform then sat on anyone that tried to unfragment it again with the ME "not mobile" licence restriction. They couldn't even get WORA to work for apps worth using on any version of ME actually deployed.
If you design a language that embeds its own core functionality in libraries, its too late to complain when others believe your libs are essential language features. I can write (and have done it) entire functional apps in C and C++ without any external library support. The design of Java means even if you could compile with no core libs (you can't) there's no way to reach the metal to make your program actually do anything, without using language features embedded in system libraries that Oracle are now bitching about!
"It means you need to separate the concept of the Java programming language from the Java runtime environment."
Surprisingly enough, I did, and so did the judge - that's what the whole court case is about. Oracle has specifically said it has no issue with the use of the java *language* at all - it's all about the use of the java APIs.
But English is fragmented for the very reason you give. American is very different from English as spoken by most English people. Then we have got Indian English ( actually quite a close one to that spoken in England, closer than American as used by the average American), Canadian, Australian, NZ, South African and more. Yes, there is a common core. But very quickly one finds unique words and phrases and different semantics and syntax.
I'm no Java expert; but it does seem highly fragmented in the different libraries etc. for, say, string handling or platforms. Compare Perl or even C or Pyton.
IANAL nor am I an accountant, but it would seem that Google could easily claim to be losing money hand over fist with Android as a project in it's own right - pays for developers, then it gives it away after all - while still raking in the ad money from it's use as a part of it's quite separate advertising business.
It's apparently a valid argument in court, even if the rest of the world is fully aware of the game being played. But then, when did the courts have anything to do with the real world?
I read somewhere that the judge told the jury to include 'indirect revenue' in their considerations. One issue google raised was that they could maybe claim 'fair use' so long as android 'wasn't commercial'.
Android they do indeed give away, the business will likely make a loss for years. Mobile Advertising might make a decent profit though, and I guess the court was told about that too.
i dont see how money can be brought into this at all.
Whether they made money off it or not is not the issue, its that fact they used something without a licence.
So, if I am accused of stealing a DVD, I can show my taxi fare receipt into town and the meal i had and say, overall the excursion cost me money, and get off with it?
** for our younger readers, "DVD's" were physical, large, shiny discs that films and software came on in the past **
It's more like they bought the DVD, then took excepts from it, and refilmed a lot of the scenes with a few mates. They then added a few adverts (which they got paid for) at the start and gave the DVD away, with a bunch of other stuff on it. A bit more complicated!
Technically you're allowed to use excepts from a film under 'fair use' (which is one of google's defences), but with restrictions. One restriction is that it can't be for profit (so you could use a short clip in a youtube video for comic effect, but if you were selling the clip you'd have to license it). Google give android away (and therefore it makes a loss), but they earn money from advertising.
Also, the 'loss' they made might be much lower than what they reported: if you showed your taxi ticket & meal receipt, the court would probably say the meal is unrelated to the DVD, and therefore you can only claim half the taxi cost because you also used it to go out for dinner. Likewise, most of the work that went into android is probably unrelated to java.
>> i dont see how money can be brought into this at all.
That's possibly because you're not a lawyer, or even read the actual goings on of the trial, including the opposing arguments and the judge's comments.
The reason money "can be brought into this at all," is that a "fair use" defense requires certain conditions be met--one of which is that it benefits society. This is typically qualified with the intent of the derived work: educational uses bolster strengthen this argument; while purely commercial ones weaken it.
By the way, I'm also not a lawyer, but I read some of the documents from the court.
Reading and knowledge, they're a dangerous thing.
-dZ.
More likely until google start paying license fees. Android is nothing like free (check how much MS make from android patent licenses!)
What's happened is that google doesn't sell android devices, so all the companies it should have taken licenses from (certainly MS, oracle we'll find out about pretty soon, possibly apple) have gone after the OEMs that make devices. The only major android maker *not* paying microsoft loyalties is motorola, and they're likely to be forced to pay soon (unless their scumbag FRAND abuse approach pays off - which would be bad news for *everyone*).
If that changes and google has to pay I'm sure they'll pass the license costs on - and then it won't be free. Just like it isn't now :)
I don't let my cell provider to share data with third parties or spam me themselves.
I had a sms from them telling if I disabled these options, weekend phone calls are free. Of course I declined and threatened them with lawsuit if they ever do this funny joke again.
Do you really think companies are that stupid to beg you for applying for a shopper card and do crazy discounts when you get it? You are just selling your profile to them.
Same on google mail. I can easily bet they lose money with that too. Nobody can offer free imap with gigantic space without any advertisement possibility. They just earn something else.
I am sure Android does not drive enough click through on the actually device to turn a profit. Google uses it ensure that no one goes off and does anything foolish... like using someone else's web portal through their phone. It is more about containing threats than driving tons of clicks on the mobile browser. Sales of apps on Play might be a big money maker some day, but not at this point.
Android makes no money, which explains why no one before Oracle is sueing Google. Now even if Oracle win, they will struggle to make a case for massive damages on a product which is making a loss.
http://www.theregister.co.uk/Design/graphics/icons/comment/facepalm_32.png
No, nobody sued google before this because very few companies have deep enough pockets.
If you read the article, the judge revealed this information outside of the jurors. It means that the jurors don't know this tidbit while they diliberate.
What makes this interesting is that it sets up additional lawsuits.
Does it really matter whether Google makes money from Android directly, indirectly, or at all? Oracle/Sun had a technology. Google liked it, used it and gave it away. If Google had paid a license fee, then perhaps they could not have given it away for free. It was Googles choice to take a loss, not Oracles.
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