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November 14, 2012




Still not getting it.. so again I'll repeat it. Google is never planning to make money off Android. They are trying to turn the OS platform into a commodity as it is a complement to their core web business.

10 years old now, but still just as applicable as it was 100 years ago:

Google makes web software. The cheaper they can push access to their web software the greater the demand for web software becomes. The whole idea behind Android is to push down any barriers (including cost) for users to use Google services. Same for chrome OS, same for their push into fiber public networking.

So again: Google will not make money off Android. Google is not trying to make money off Android. If Google makes money off Android, expect them to lower prices until they aren't anymore. This is the opposite strategy to Apple and is why Apple and Google are at war.

Mr Eric Wu

@Earendil Star
Elop said on Feb 11th 2011 that MS will pay "billions, plural". MS has been paying $250,000,000 per quarter for some time now. Give what Elop said, there must be more than 4 quarters in the contact and probably 2 years total. You'd see (in the company reports) that MS continues to pay it, regardless of success. MS can fired it's top people, but they still pay the money - so it is water tight in the contract.

The transaction is not as simple as a one-way-payment however. For every WP7.5/WP8 phone produced there has to be a license purchased (cost unknown but I guess about $15 to $25). There are minimum numbers required, and also a tired cost scale. The result is that although MS give $250,000,000 some goes straight back in lieu of licenses, however there will never be a case of it all going back (e.g. the amount is always cash positive for Nokia).

It works like this. If Nokia goes all in and fails, MS pays out loads to compensate. If however MS is right and WP is as successful as they expect, then Nokia does not get as much money but yet has a viable business.

The exact amount is never disclosed publicly, but the rough workings (above) are.


Mr Eric Wu.

Tomi T Ahonen

About Nokia payments to Microsoft

Hi Piot ! Good to see you back haha.. Thanks for that comment. Yeah, like Eric Wu just posted, Microsoft is paying Nokia 250 million dollars per quarter in marketing support to help launch Windows Phone, but Nokia pays an undisclosed royalty to Microsoft for every Lumia handset. The Microsoft payment is, like Piot wrote, in Nokia Quarterly results.

At the moment the payment is likely very lop-sided, ie Microsoft is receiving back far less in royalties than what it pays quarterly to Nokia, and no doubt, all parties involved are disappointed at how poorly in absolute numbers the Lumia series is selling right about now. I would think, that somewhere in the 10 million Lumia units level the payments should be about equal, and once Nokia sells more than that, it starts to pay out more than Microsoft's support brings in, and while we don't know the length of the Microsoft support contract, we'll find out soon enough when it has ended, as it won't show up in the Quarterly results anymore... I am expecting 2 years, 3 years max. And I have also been reporting the Nokia ASP prices and smartphone unit profitability (ie loss-making) also in real commercial business, when that Microsoft subsidy is removed, to illustrate the market acceptance level of Lumia (which in revenue and profit/loss terms is obviously 250 million dollars per quarter worse than Nokia reports for its smartphone unit).

Keep up the great discussion..

Tomi Ahonen :-)


@Mr Eric Wu

"Over the life of the agreement, both the platform support
payments and the minimum software royalty commitments are expected to measure in the billions of US dollars.
The total amount of the platform support payments is expected to slightly exceed the total amount of the
_minimum software royalty commitments_."

I think you may have slightly misread that?

1) If Nokia does poorly, they will receive a lot more money from Microsoft than they pay out.
2) If Nokia does 'okay' (their expectations), then they will receive slightly more than Microsoft than they pay out.
3) If Nokia does better than expectations (never gonna happen, but they can dream), then they will pay out far more to Microsoft than they receive in payment. So the deal with MS is mostly a fallback case where Nokia does poorly - if they do well, then they will pay out far more in license fees than they receive in support payments.

Pretty bad from Nokia's point of view in my opinion.
If Nokia does badly, MS will pay them - but not enough to keep Nokia afloat.
If Nokia does well, they will spend the bulk of their profits paying license fees to Microsoft.

...Elop is about as good at working out contracts as he is at running companies. ;)


@various people: It is curious that the usual Symbian/Maemo/Meego crowd has converted to Android. (Or not, since the main attraction of Meego seems to have been not being Apple, so, eventually the Meego crowd would come around.)

Anyway, with respect to the "marketshare always wins" argument, one may be forgiven for being skeptical when Android has 70% of the market and nothing like that in terms of profit or innovation. This doesn't mean it's wrong, but certainly that wasn't the pattern with Windows.

If you want a counter-example, look at Groupon, which was also based on scaling first. Eventually, it got to the point of nearly every possible customer being on its lists, and then tanked. The point is not that the businesses are similar, but that this argument needs to be adapted to each case.

@tomi: "The critical central point of that digital convergence is the mobile service, that is delivered to our pockets through that gadget we call the mobile phone (increasingly, a smartphone). The one player, that has a certain path to that future is the carrier/operator who owns the spectrum and then builds a Billion-dollar network infrastructure with typically 10,000 base stations and antennas around the country, to serve their millions of clients. So if we look at mobile advertising or mobile banking or mobile commerce or mobile social media of the future, the only 'guaranteed' winner who will be there, is the evolution of what we now think of as the carriers/operators like Vodafone, Sprint, Telefonica, China Mobile etc."

Again, if this was really the case, shouldn't we see it happening? The carriers in Europe are in a price war brought on by innovation at the edge of the network. They haven't been able to close up Android, and, if they can't restrict what services are on phones, they are selling connectivity only. This means they will have a nice business, but selling petrol isn't the "converged center" of the auto industry.

The operators basically haven't launched a new product that's gotten wide acceptance since, maybe, flat-rate calling plans.



There might be several reason that Nokia user ran to android...
1. They heard "Microsoft", and they ran away because they remember Windows CE, Windows Mobile...
2. They heard "Microsoft", and they ran away because they know OS/2, Novel, Netscape, Sendo...
3. They heard what Elop did, and they don't want to use the Non-Elop platform
4. Android simply the best
5. Google did Android the right way.
6. User were smart, they know Android is better than Microsoft
7. What Microsoft did in Desktop browser war & Desktop OS war dent Microsoft name/reputation.
8. Microsoft = Not good quality
9. This image of Steve Balmer make them puke ( & & & )

Nokia will be dead...!!!


The next problem for Nokia: Windows Phone 8 has „freezing issues“.
So the new Lumia 920 has problems like almost every Lumia.

„Early adopters of Windows Phone 8 hardware are complaining that it reboots at random, up to several times a day, and that they're not being offered any prospect of a quick fix.“

The suggested solution is funny indeed:
“Support staff from the three companies have reportedly been suggesting rebooting, removing the beta release of Skype and (in the case of Nokia) booting the phone without a SIM for ten minutes, then booting with the SIM back in again, which apparently worked for one user.”

First of all, they have the solution from a user – so no clue where the root cause is. Secondly the annoyed customer has to de-install Skype (remember the software from Nokia's best buddy Microsoft). Finally the customer has to do annoying SIM switching, so that the freezing issues are possible(!) solved.


And the Windows plague goes on - now on your smartphone:

So much for that.


Maybe Windows 9 will fix that....


Have you paid any money for Google Search lately? Or Google Plus? Or YouTube? Or Mail? Or Text and Tables? Or Maps? Or any other Google service, which costs them gazillions of dollars to develop and operate?

It is actually quite shocking to see how some people aren't able to understand even basic economic correlations.

As a service company like Google your sole metric is usage. Without having (basically) sold a single mobile device, 70% of everyone owning a mobile device, rapidly increasing and beeing the future of computing, is using Google services - that's unpayable. And Android is the guarantee it stays that way.

It doesn't matter what it costs to create and maintain Android, it doesn't matter if they make any money selling it, and it doesn't matter if they make any money in the Google Play Store. As long as people use Android and use Google Services that amount of money is negligible compared to the value for Google - and it cannot be measured in figures.

If you can't understand this you are either a moron or a troll - and in the case of you two most probably both.


WP8 has problems?

It is always amazing how the quality of "the best software money can buy" is so much worse than Free software.

The same with "the best developers money can hire".



At certain level, free software IS BETTER than commercial software.

For example,
Anyone here aware that Windows 8 OS have 16 Gigabyte in size. (I'm not certain if the phone version of Windows 8 is the same size of the tablet). and google OS only have size around 300MB... WHY???
---> ***I think*** that's because microsoft trying to create a 'death trap' in their OS, they were so affraid of counterfit, so that they create an OS full of 'trap' that will trap any modification.

on MAP....
anyone here know the openstreet?
OpenStreet map have a better accuracy because they don't have to include the easter egg.
Easter Egg on map is a FALSE map so that when someone else copy it, it can be proven.
**Ex.A park, An alley in the place where it's not there.
**Ex2. In digital copy, some area have certain coordinate value marked, that might make the map off by a couple of centimeter.

as lasko said...
if you can't understand this..... probably both.

(for my post above)



You wrote, "As a service company like Google your sole metric is usage. Without having (basically) sold a single mobile device, 70% of everyone owning a mobile device, rapidly increasing and beeing the future of computing, is using Google services".

The fallacy here is the assumption that all Android users do, in fact, use Google services. Do you think all of the millions of Android users in China are doing mobile web searches with Google or are using Gmail? How about the millions of users who buy a Android phone for less than $100 and use it essentially as a feature phone? And as we have seen with Amazon, you can release an Android device devoid of Google services. Android success guarantees neither success nor future profits for Google.

@Baron95 and LeeBase. Google has not spent anywhere near $20 billion on Android. You are attributing the entire $12 billion purchase price of Motorola as an Android cost. However, Motorola came with $3 billion in cash, tax loss credits worth another $3-4 billion to Google and non-smartphone assets (e.g. TV boxes) that Google can sell off or monetize in other ways. I doubt Google has spent even $10 billion on Android.

John Waclawsky

Earendil Star If you read the comments you can see the coordinated support for Microsoft and the attempts at tearing down Google to distract from the real problem for Nokia: NO ONE WANTS A WINDOWS PHONE. This shilling is just Microsoft strategy. Lead by Baron95 and a few followers called "Microsoft Astroturfers"


You sound like a broken record. Every page the same comment. Just to give you an answer, Google expects $10 of revenue from an Android user in the future. If they are in 1 billion pockets, it's $10B a year, but the way things are going, they will be in double that number when things are said and done.

So yea, great investment, they also got thousands of patents, killed Microsoft (they said at the beginning that was the real reason, if there were no Android we would be seeing a WP world right now), got great respect from developer and OEM community and will forever recognized for that.



Google is now in a better position with slight control of Android than they were with zero control over Apple or Microsoft. Android itself has 'won' though, and Google will now focus on using their control so they can also 'win'. Not rocket science. Not even sure what you're arguing about anymore.

The gmail website is the 12th most popular website in China. So someone in China is using gmail even with all the blockages by the Chinese gov.
Samsung devices are also major sellers in China, and those all require a Google account at present, even in China.

You're right about Android success not guaranteeing success for Google - but then you'd be equally right about web browser success (chrome) not guaranteeing success for Google - or search success not guaranteeing success for Google Ads (if everyone installed adblock). You could also say that Windows success in China isn't a guarantee of success for Microsoft if everyone in China just pirates Windows and doesn't pay MS. So Android not creating any revenue for Google also doesn't guarantee success if all device manufacturers spend money to strip out Google.

What do the above all have in common? They're all normal business risks, and you can assume for all of them that if the product is a success then that success will also help the company behind the success. It's far more likely that Android winning means Google wins.

(Personally: I don't particularly care if Google wins or not - I don't really like Google as a company, but I do like their products - Android is going to be a major factor in computing for a long time to come, and having that open driver existing is going to be great for humanity as a whole.)

John Waclawsky

...notice the on-going trend of just tearing down Google. But never getting to the core of the problem: NO ONE WANTS A WINDOWS PHONE! ...Window Phoneys at work LOL!



>>But you can't ignore the negatives. By launching Android, Google caused Apple to do all it can to remove/limit/create_alternatives google services like Google Maps, Google Voice, Ad Sense, etc from the platform. It also cause Apple to increase integration with Facebook, Twitter, etc, that seek to exclude Google from advertising on their site, in favor of their own platforms. Microsoft, Amazon and maybe one day even Samsung will do the same.

Nobody can predict what will happen. But this point can be interpreted both ways: What would have happened to Google if Apple and Microsoft would have locked their platforms to their own services without Google having any alternative to keep those two in check? Now, that would have been the ultimate nightmare scenario and I'm dead certain that they would have developed their services anyway. Now Google has control over a large segment of the market itself where it can guarantee that vendor lock-in will not happen.

As for Samsung, why should they? I guess they have carefully analyzed how much money has been sunk by Microsoft into these things and how much revenue they got out. And to compete with Google on their core businesses they simply lack the infrastructure right now.
Amazon also can't be considered a serious competitor. Yes, they bypassed Google but they do not have anything to offer to compete with them. Their devices only serve one purpose: To make them sell content, nothing more, nothing less. A completely different customer base.

Besides, Samsung got to the top of the foodchain without vendor lock-in issues. Currently they are perceived as the good guys which massively boosts their business. Once that is gone things may crumble quite quickly.

>> You mentioned Chrome. Chrome and ChromeOS are other examples of Google investments that have not paid off.

So why? Certainly not to make money off these products. Google's interest is, as stated above, to keep the market open. Their biggest foe is Microsoft who, if they could would swallow the market whole and leave nothing to the rest of the world. Google has made damn well sure by now that this is no longer possible. This alone is an investment that's almost impossible to measure up in money. Its repercussions will be felt for many, many years to come and will ensure Google's commercial viability.

You mentioned Chrome. Chrome and ChromeOS are other examples of Google investments that have not paid off.

Also, Google has not proved that mobile ads can generate even a fraction of their revenue from PC Web ads. Users are just no clocking on ads that pop in a phone screen.

Google has clearly pissed off Apple and Microsoft. Just like Microsoft developed Bing, which ate 1/4 of Google's revenue. Apple has search in Siri, which completely bypasses Google, and may eat further into their search revenue.
You can argue that by developing and giving away Android, Google, motivated Apple and Microsoft to go after their revenue stream. That may be a heavy price to pay. Or it may work out. I'm just saying we don't know yet.

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