Google has always been in the business of generating online advertising revenues and even sharing some with carrier and handset partners, but it has clarified that this is limited to search and does not extend to applications like YouTube or Maps, or Android apps sold OTT. Google says it is a pretty standard deal, and works across all Android devices that have Google search. “We share revenue on search, not on mobile applications,” a Google spokesperson said. “The same is true for non-Android devices that use Google as the default search engine.”
But who knows the extent or nature of the deals and whether they are consistent across all operators? For other handset makers, this will make the playing field significantly more competitive and may change who the carriers and handset makers decide to work with. Some handset makers may be forced to do other ‘special’ deals, but for those who aren’t in the advertising business, it could spell trouble. On the flip-side, this is good news for carriers that have been looking for new revenue sources to help pay for the next generation of networks that will cost billions.
If what has been uncovered is true it could explain how the number of Google Android handsets being shipped has soared to 60,000 units per day in just over 18 moths on sale. Not bad figures in anybody’s books but part of the answer appears to be that Google may be sharing ‘extra’ advertising revenues with carriers that promote Android, according to multiple sources who are familiar with the deals. In some cases, sources alleged, Google is also cutting deals with the handset makers to adopt and promote Android.
So, let’s take a hypothetical situation. You are a large operator with an exclusive deal to sell Apple iPhones in your country. This probably means you have to share some of the revenue generated from iPhone customers with Apple. In comes Google with Android powered devices, maybe even their own Nexus One, and if you buy plenty you not only get to a great deal and keep the revenues generated by the handset owners you also get supplementary income generated from search-based advertising. Let me see, really popular handset that wins customers hand-over-fist but is potentially a net revenue loser or the ‘other one’ that is not so popular, but could be, and earns extra revenues. In fact the more they use it online the more revenue you are likely to earn from it.
If you were a mobile operator, what would you do?