Google's Android: Following the money on mobile search

Google launched its G1 Android powered phone with T-Mobile Tuesday and it didn't take long for Wall Street to make some guesstimates on mobile search revenue. What's it worth in revenue to put Google's search on handsets?

First up, Piper Jaffray analyst Gene Munster reckons that Google gets about $30 million to $50 million in mobile search revenue today. Toss in Android and voila Google will mobile search revenue of about $2 billion by 2012. In other words, mobile search will go from less than 1 percent of sales today to about 6 percent in about three years.

Also see: T-Mobile, Google unveil G1; Techmeme roundup

Gallery:

Hands-On with T-Mobile G1 (right)

Munster writes about Android and the big picture:

We do believe mobile will rapidly become a more important factor in Google's overall story as traditional search continues to slow. By 2012, our estimates suggest mobile could contribute $2 billion in revenue for Google, which would represent about 6% of total revenues. Additionally, revenue from the mobile channel should be nearly 100% accretive as mobile search has proven to have an inverse relationship to desktop search according to Google (desktop search peaks on Monday when people are at work and mobile search peaks on the weekend when people are out). Therefore, we believe mobile will be the key revenue driver in the long term for Google's search business.

Fair enough, but Munster's prognostication is almost bearish relative to others.

Get a load of Sandeep Aggarwal, an analyst at Collins Stewart. Aggarwal projects Android powered revenue of $5 billion in 2011. Collins Stewart's motto is "Independent thinking" so maybe Aggarwal was just playing the part. Here's his entry into the Android revenue guessing game:

Our view is that the launch of Android will likely trigger the mobile Internet adoption globally, in turn creating an entire Android ecosystem (30+ technology & mobile cos.) with Google arguably being the largest beneficiary. We think that Android will fully blossom in about 3 years and will likely see a very fast adoption of mobile Internet usage, thus triggering massive mobile initiated search/display ad opportunities for Google. Given mobile phone installed base of 3bn vs. 1bn for PCs, 24/7 access to mobile devices by users, known demographic information for mobile users, and location knowledge, make mobile Internet the most lucrative new opportunity for Google, since it launched its core search offerings nearly a decade back. We think that by 2011, Android can be a $5bn incremental ad revenue opportunity for Google on global basis.

Aggarwal's analysis is based on an installed base of 4 billion mobile devices and $1.25 in Internet ad revenue per mobile device, or five paid searches at a quarter per paid search a year.

There will be more guesstimates in the days to come, but I wouldn't place any hard bets on these figures.

Gallery: T-Mobile G1 Event: Google Android, HTC (right).