Google fails to monetise mobile as much as it would like as apps override searches
While Google continues to make money from mobile search and ads it is not as much as it would like; as mobile users use Google search less. Many reports suggest that iPhones generate more revenue for Google than Android. Charles Arthur's analysis revealed that one of the main reasons that people search less on a mobile is that there are apps for most things, reducing the amount of searches necessary.   

Google has won mobile, some Android fans will tell you, and has been consistently winning for years. The company has a massive market share lead in the smartphone business, and things aren’t going to change anytime soon. But Google might also have a serious problem: it doesn’t really make money from mobile. Well, it does, from mobile search and ads. But mobile users don’t use Google to search nearly as much as Google would like them to.

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In a detailed analysis on The Overspill, Charles Arthur looks at the available data Google shares about its business to draw some interesting conclusions. According to him, half of users perform zero searches each day on mobile devices. And since Google makes money from searches, that’s obviously bad news.

Google said recently that mobile searches represent half of total online searches (currently around 100 billion per month). Furthermore, mobile revenue generates only a third from of revenue coming from search according to an IAB 2014 report. Many reports have consistently suggested that the iPhone generates more revenue for Google than Android.

Arthur looked at the publicly available numbers, concluding that there are 1.4 billion Google Android handsets in use, 400 million iPhones and 100 million other mobile devices. Subtracting 100 million iPhones for China, a massive mobile market that doesn’t support Google services, that left him with about 1.8 billion smartphones that can perform Google Searches.

Doing similar math for the desktop user base, he concluded that there might be 1.5 billion PCs in use, out of which just 1,035 million might do Google searches. On top of that, there might be roughly 300 million tablets in the wild.

Crunching the numbers, Arthur found that to reach 50 billion searches per month, mobile users have to perform from 0.925 to 0.98 mobile searches per day, or up to 27.8 per month. To pull off the same feat on desktops, users would have to perform 1.23 searches per day on average, or around 37 per month.

Arthur also identified one main reason people search less on mobile: there’s an app for that. An application ready to handle a particular service, like Facebook, Yahoo, or mail, is already available to a smartphone user, who’s less likely to search for that service online. Comparatively, desktop users often type Facebook or Yahoo in the search bar out of habit or laziness, leading to a Google search that displays ads. While that isn’t a real search, it’s still profitable for Google.

The irony is that Google makes sure all Android partners put Google services front and center on a device, with Search and Google Now getting premium screen real estate. Google Search is all over Android phones, yet people don’t use it as much as Google wants them to.

Arthur concludes that buying Android and making it freely available “was a defensive move to stop Microsoft being the gatekeeper to the mobile web,” but Google doesn’t necessarily have a way to monetize it effectively yet.

“But it turns out that search wasn’t actually the gatekeeper to mobile; having a well-stocked app store is,” Arthur said. “That’s where the searching really happens. Now Google faces the second stage of the mobile web. What will its answer be?”

Arthur’s full analysis of Google’s current search business is available at the source link, complete with graphs showing Google search habits.