Can Android become a $10 billion a year platform?

Can Android become a $10 billion a year platform?

According to Piper Jaffray analyst Gene Munster, Google could accrue over $1.3 billion in mobile ads over the next year with it expected that each Android user could generate almost $10 per year in advertising.

Munster’s notes that Google’s mobile ads accounted for $850 million of its revenue in 2010, $130 million of which was accounted for by Android. This meant that the average revenue per user (ARPU) stood at $5.90.

Suggesting that Google will reach 133 million Android users by 2012, Munster predicts that each user will account for an average of $10 each year, ensuring that Android would contribute $1.3 billion a year in mobile advertising.

We’ve reported previously that Google intends on generating $10 in average revenue per user. In July 2010, Google’s CEO at the time Eric Schmidt, in an interview with the Wall Street Journal, noted Google was readying a huge push into mobile with the aim of securing revenues of $10 billion a year with the help of its Android operating system.

He noted:

“If you’ve got a one-trick pony, you want the one we have. We’re in the ad business, and it’s growing rapidly. We picked the right trick.

If we have a billion people using Android, you think we can’t make money from that?”

Schmidt’s “billion people using Android”, securing revenues of $10 billion per year. That’s $10 per user.

Google still has a long way to reach its target – the latest figures show that it is activating 300,000 Android devices a day. Manufacturers are increasingly utilising the platform to power their new smartphones and new tablet devices.

The search giant also updated the Android Market to provide a more immersive experience, incorporating remote installation and web-based application pages. This, coupled with a more streamlined payment system that includes in-app payments, will help Google generate more money from paid application downloads, something that Google has already admitted didn’t quite match up to rival application marketplaces including Apple’s App Store.

Google’s mobile strategy is constantly evolving, the company must adapt and evolve in an increasingly competitive market. Its target of a $10 billion a year platform might be some way off but we believe this analyst might be right on the money in this case.

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