Android Business News, — March 29, 2012 16:27 — 0 Comments
Data provided in response to Oracle claim suggests iPhone generated four times more revenue than Google’s own handsets
Android generated less than $550m in revenues for Google between 2008 and the end of 2011, if figures provided by the search giant as part of a settlement offer with Oracle ahead of an expected patent and copyright infringement trial are an accurate guide.
The figures also suggest that Apple devices such as the iPhone, which use products such as its Maps as well as Google Search in its Safari browser, generated more than four times as much revenue for Google as its own handsets in the same period.
With roughly 200m Android devices having been activated to the end of 2011, including an estimated 90m during the past two years, it suggests that Google derives slightly more than $10 per Android handset per year.
The figures emerge from a damages offer that Google made to Oracle as part of settlement talks ordered by Judge William Alsup in the case, in which Oracle is alleging that Android infringes patents and copyright that it owns on the Java programming language. It acquired that intellectual property when it bought Sun Microsystems, which owned Java, in 2010. The trial is due to start on 16 April.
The suit began in 2010 with Oracle claiming that Android infringes a number of Sun patents and also infringes copyright in Java. The number of patents has been whittled down to just two.
In a pre-trial settlement offer, Google proposed that it would pay Oracle a percentage of revenues from Android, suggesting it would pay $2.8m in damages on the two remaining patents that Oracle is asserting for the period to 2011, and then 0.5% of ongoing Android revenue on one patent which expires this December, and 0.015% on another which expires in April 2018. The court documents do not explain how the Android revenue is calculated, but the key source would be advertising revenue. Google also gets a 30% cut from app sales to Android devices.
Google said the damages figures matched what had been calculated by a court-appointed expert. The offer does not mean Google accepts that it has infringed the patents claimed by Oracle.
The $2.8m offer, at a combined rate of 0.515%, suggests that Android’s total revenue from the launch of handsets at the end of 2008 through to the end of 2011 was $543m.
That also means that Android could generate more than $1bn in advertising revenues this year; last year, Google’s total annual revenues were around $38bn. Google lets manufacturers use Android for free, but to achieve “certification” they have to include services such as Google search, maps, YouTube and other functions.
Larry Page, Google’s chief executive, said during an earnings call in October that Google was “seeing a huge positive revenue impact from mobile, which has grown 2.5 times in the last 12 months to a run rate of over $2.5bn.”
But while some people interpreted that to indicate Android revenue, it overlooked Google’s deal with Apple, in place since the introduction of the iPhone in 2007, through which it provides maps and the default search engine for its iPhone, iPad and iPod Touch products, which run Apple’s iOS software. Apple’s chief executive Tim Cook said the company has sold 315m iOS devices, though nearly half of those have been sold in the past year.
Oracle rejected Google’s offer, saying the proposed damages were too low.
The lawsuit began after Oracle bought Sun Microsystems for $7.3bn in 2010 and with it the rights to the Java programming language and its patents. Oracle has complained that Android in effect copies functions of Java without a valid licence.
Oracle, a business software maker with $36bn in annual revenue, has said it is seeking hundreds of millions in damages – though it was forced to water down its earlier damages claims after pre-trial examinations led to a number of claimed patents on Java being invalidated.
Google, which relies on its dominance of search and advertising for most of its $38bn in annual revenue, believes that even if it loses the case, it won’t have to pay more than a few million dollars.
A joint statement filed this week provided the latest reminder of the friction between the two companies.
In the papers, Google argued that the trial could be shortened from its scheduled eight weeks and sought to appear before a US district judge instead of a jury. Oracle doesn’t believe the trial schedule should be revised, nor is it willing to waive its right to a jury trial. Juries typically award larger damages and are seen as more likely to find in favour of the plaintiff in patent and copyright trials.
Google had not responded to a request for comment as this story was being prepared for publication.
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