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4/26/2012
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The Google Phone That Never Was

Evidence at the Oracle v. Google trial reveals what the original Google Phone prototype looked like, before Apple's iPhone moved the goal posts. Related Android revenue information is also enlightening.

The Google Phone, as the company's Android phone prototype was called in November 2006, looks primitive by today's standards, but it was competitive at the time. The $199 device was to have run on T-Mobile's network and featured a $10 per month unlimited data plan for Internet browsing, Gmail, and messaging.

Trial Exhibit 387: Industrial Design Concept

The phone was expected to include a 200MHz or better ARM 9 chip, with GSM EGPRS baseband or possibly WCDMA. The design called for at least 64MB RAM and 64MB ROM, with external storage, a 16-bit color or better QVGA TFT LCD display, navigation keys, a 2MP CMOS camera, USB interface and Bluetooth 1.2 or 2.0.

Then Apple unveiled its iPhone on January 9, 2007 and it was back to the drawing board. The result was the T-Mobile G1, introduced in October 2008.

[ What does Apple have up its sleeve next? See Apple iOS 6 Wishlist: 10 Features We Want. ]

The Google Phone that never was showed up as evidence in Oracle's copyright and patent infringement lawsuit against Google. Oracle claims that Google copied its proprietary Java APIs to create Android. Google has admitted that a few lines of the Java APIs are present in Android but it insists any copying that occurred was a mistake, is trivial, and is defensible as fair use. Google further asserts that APIs aren't subject to copyright.

The Oracle v. Google trial continued on Thursday, with former Sun CEOs Jonathan Schwartz and Scott McNealy each taking a turn on the witness stand. Schwartz's testimony generally supported Google's arguments and McNealy's generally supported Oracle's.

The evidence obtained by Oracle via legal discovery and entered into the court record confirms that Google has struggled to match the Apple's iOS results with Android. For example, Google in 2010 predicted that its 5% share of Android app revenue in 2011 would come to $14.5 million. That would put the total app revenue projection for the year at $290 million, of which 70% or $203 million would go to Android developers. During 2011, Apple paid its developers about $2 billion.

Google's expectations about the ratio of paid apps to free apps downloaded by Android users is striking: While it's widely known that a greater number of the apps downloaded by Android users are free compared to the apps downloaded by iOS users, what's surprising is that Google expects a mere 1% of Android apps to be paid. A report last year suggested that 88% of gaming apps downloaded on iOS are free, which would make 12% paid. Google's internal projections from 2010 expected 99% of Android app downloads to be free in 2012, noting that this "conservative estimate" of 1% paid apps was far from Apple's 25% paid app figure.

But the documents also show that Android is a source of real revenue for Google. The company projected it would make $240.3 million on Android in 2010 and $840.2 million in 2012. Google believed it could make at least $1.3 billion in gross revenue from Android in 2013, or $800 million in net revenue, and possibly much more.

In fact, Android has been exceeding Google's expectations in terms of adoption. In mid-2010, the company expected there would be 145 million Android phones activated by the end of 2011. In Q3 2011, Google reported that over 190 million Android phones had been activated. By the end of 2011, Asymco estimated that between 224 and 253 million Android devices had been activated.

With that kind of growth, it's hardly surprising that Oracle came knocking with its hand out.

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