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How Much Revenue Does Google Get From Apps? January 11, 2010

Posted by Bernard Lunn in Uncategorized.
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That seems like a simple question? Wrong. Two authoritative sources peg the number at wildly opposite numbers:

BusinessInsider says $10m, based on “a source outside Google familiar with Apps”

SoftwareMagazine says $667m, based on a methodology that is not stated.

So, what is $657m ($667m minus $10m) between friends? Who cares? Well if you are an investor in SalesForce.com you might care to know who is the # in SaaS revenue (which at $667m is Google). If you are a VC investing in SaaS and mighty Google can only get $10m, you want to know.

I tried Twitter, Vark and LinkedIn to get more sources (as well as lots of Google and SEC time). All sources just reference these two extremes.

Software Magazine is quoting revenues for 2008 and is saying that Apps is about 3% of total revenue.

Let’s start with some base facts as per  Google’s latest 10Q (page 23):

Advertising revenues made up 97% of our revenues for the three and nine months ended September 30, 2008 and 2009. We derive most of our additional revenues from offering internet ad serving and management services to advertisers and ad agencies and the license of our enterprise products, search solutions, and web search technology.

So, the Software Magazine number looks closer than the $10m. Phew! Hate to think about all that hype for $10m!

On latest quarter reported – Sept 3oth – that is about $720m. But that is wrong. What we really need is a breakdown of the non-ad revenue ie:

  1. internet ad serving and management services to advertisers and ad agencies
  2. license of our enterprise product
  3. license of search solutions, and web search technology.

So if we knew 1 and 3 we would derive 2 – the apps biz. Or maybe Google will break out the data for us in future?

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