Google forecasts a fortune in Android

Google's Android mobile operating system now accounts for 13.0 percent of the U.S. smartphone market according to data issued earlier this month by market research firm comScore, and the platform's growth corresponds with an increase in mobile search queries. Two weeks ago, Google reported that searches across the Android ecosystem grew 300 percent [1] over the first six months of 2010, adding that the company's mobile traffic has increased 500 percent over the last two years. "When the web is better, more people use it more often. And that means they search more often," said Google senior vice president of product management Jonathan Rosenberg during the company's second quarter earnings call in mid-July. "Android is a leading example of this." According to Rosenberg, the web browser is the most popular application on the Android platform. "What do [users] do there?" he said. "They search more than they ever have."

It was nevertheless an eye-opener when Google chairman and CEO Eric Schmidt told The Wall Street Journal this week that the company is positioning Android to drive revenues exceeding $10 billion [2] a year, galvanized by advertising and digital content downloads. Given that Google reported [3] $23.6 billion in revenues for all of 2009, thanks almost exclusively to Google-owned websites and network sites--not mobile--it seems like an enormous leap. But with Google now activating 160,000 new Android devices every day, Schmidt said he's confident its signature web search, maps and ad-subsidized services will continue to thrive as consumers migrate from the desktop to the smartphone. "If we have a billion people using Android, you think we can't make money from that?" Schmidt said, explaining Google could earn $10 billion annually at a rate of $10 per user per year. Schmidt added revenues could also derive from selling premium digital content from newspapers and other media providers.

Local mobile search is still Android's bread and butter, of course--speaking at the CTIA Wireless 2010 event in March, Google director of mobile advertising Diana Pouliot said [4] one of every three mobile search queries received by the company now includes some element of local-specific intent. Android's future as a cash cow depends on local-specific searches continuing to flourish, and a new comScore study [5] released by the Yellow Pages Association suggests the outlook is promising: According to comScore, the number of mobile subscribers accessing local business directories via mobile phone increased to 17.3 million in March 2010, up 14 percent year-over-year. The number of consumers accessing business directories on a mobile device at least once per week is now closing in on 5 million, up 16 percent over last year--comScore adds that 58 percent of mobile subscribers who access business directories are 34 or younger, and over half enjoy a household income in excess of $75,000. In addition, they're three and half times more likely as the average mobile media user to access women's magazine content, health information, real estate listings and job listings. It all adds up to a compelling opportunity for advertisers--and what's good for advertisers is good for Google, and its bottom line. -Jason [6] [6]

P.S. After AT&T announced it would introduce tiered data pricing based on consumer usage, the move fueled speculation some developers may begin creating applications that are significantly less bandwidth-intensive than rival solutions. It's now two months later--are developers seizing the opportunity? Are there new or established low-bandwidth apps poised to hit it big? Let me know [6]. [6]