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Google makes $3.65bn a year from Android, says Oracle

Database vendor reiterates its claim for share of those revenues if it wins patents case, as Google Q4 disappoints

By CAROLINE GABRIEL

Published: 20 January, 2012

READ MORE: Financial | Google | Patents/IPR | Android

Oracle may be willing to make major compromises to get a victory in its patent battle against Google, but it still aims to cash in on Android's success. Following the news, during the search giant's quarterly results report, that 700,000 Android devices are activated every day, Oracle believes that equates to revenues of $3.65bn a year. That, in turn, would influence the damages it could claim if it won its cases for copyright and patent infringement by Android against its Java platform.

"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 most recent filing. "Each day's worth of activations likely generates approximately $10m in annual mobile advertising revenue for Google."

Patents expert Florian Mueller, on his FOSS Patents blog, believes Oracle's estimates are based on assuming annual advertising revenues of $14 per Android user. "This litigation has allowed Oracle to conduct some discovery of Google's business model, but Google might deny this per-user revenue level," Mueller commented.

During Google's fourth quarter earnings call, CEO Larry Page did not break out Android finances, but said the business is not yet profitable, but is getting close. He said his firm was "close to monetizing" its mobile OS with revenues from mobile search, advertising and apps.

"We see a lot of potential for us to make money on Android," Page said. "You'll see us increase that over time."

Offering some statistics, he said there were 700,000 Android activations a day, and 3.7m over the Christmas weekend. Total Android devices sold to date now total 250m, with 20% of those sold since November 2011. And there have been 11bn Android Market downloads.

Overall, Google results disappointed Wall Street with Q4 revenues of $10.86bn, 25% up year-on-year. Net income was $2.71bn, or $8.22 per share, up from $2.54bn a year earlier, but analysts had hoped for $10.51 per share.

Despite its tub-thumping over the commercial value of Android, Oracle has recently offered major concessions to get a fast-track hearing of its case against Google. It has proposed dropping its patents case - temporarily or even permanently - in order to expedite the separate copyright infringement claims.

One of the major reasons for several delays has been disagreement over Oracle's calculation of the damages it would be due if it won the copyright trial. But it has even indicated itself willing to accept a court-approved figure (around $100m) in the interests of a quick hearing, rather than sticking to its own, far higher, claims (its first bid was $6.1bn and most recently it demanded between $900,000 and $1.4bn upfront). In that event, an element of ongoing royalties could become more important, and Oracle has already demanded a share of Android-based mobile advertising revenues - to the tune of 15% in its last proposal.

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