Android is definitely becoming big part of Google business. In a research note this morning, Munster asserts that Android generated $5.90 per use in mobile advertising in 2010; he sees the total increasing to $9.85 in 2012. He adds that the Android Market app store also could boost monetization per user from in-app advertising over the next two years.
Former CEO Eric Schmidt last summer said he thought Android could be a $10 billion business if there were 1 billion users each generating $10 a year – and the analyst contends the company is well on the way to hitting the $10 per user level. Pointing out that Google has said it is on a $1 billion annual run-rate in mobile advertising, he estimates that the company had $850 million total mobile revenue in 2010, with Android generating about 16% of the total, or around $130 million, which would translate to $5.90 per Android user. (That implies about 22 million Android users for 2010.)
By 2012, he thinks there could be 133 million Android users generating $9.85 a year, which would mean $1.3 billion in Android-related revenue. While that certainly sounds impressive, I would note that the Street is looking for overall Google revenue in 2012 to be $31.7 billion; Munster’s estimate would put Android-related revenue at about 4% of the total.
Munster maintains his Overweight rating and $725 target on Google’s shares.
Android
