updated 03:30 pm EDT, Wed April 25, 2012
Google had not accounted for touch pre-iPhone
A series of slides during the trial for Oracle's lawsuit against Google has revealed a very different vision to The Verge of how Android was originally to work as well as some of the problems Google has had since. In 2006, the original concept rendering was substantially different from the 2007-era QWERTY prototype as well as the touch phones that would come to dominate Android. With no mention of touchscreens in the initial plans, they suggest that Google hadn't significantly considered a touch interface for Android until the iPhone popularized the concept in 2007.
The search firm had gone so far as to suggest it might have subsidized T-Mobile's data plans to drive early adoption. Similar to what Google is doing now for Chrome OS, T-Mobile would have only charged subscribers $10 per month, with Google paying for some use on the assumption that its services would use a then-realistic 15MB per month. Some of that would have come from Google wielding its online clout to steer customers to T-Mobile, allegedly saving the carrier a total of $180. About $120 of this would have gone to discounting the data access.
Data from much later, in July 2010, also underscored that Android users' unwillingness to pay for apps was a problem. Even expecting Android's phone user base to double from 20 million to 40 million, Google expected to make $158.9 million on mobile ads for Android users and just $3.8 million on apps. The problem was only predicted to get worse by 2012, with $840.2 million coming from ads and $35.9 million from paid downloads.
Mobile VP Andy Rubin had admitted that a "low rate of app purchases [and] policy issues" were problems. At the same time, he had forecast Google's entries into content, such as books, music, and video, would net $1.5 billion a year by 2012. Tips have hinted that Google Play Music is faring poorly, and it's known that the sister book and movie stores are much smaller than competition from Apple or Amazon.
Also in 2010, when Android wasn't yet the largest mobile platform, Google was making much more revenue from Apple. iOS at the time was generating a $281 million yearly run rate, while Android was only netting $120 million.
The information was being collected at trial to help Oracle gauge how much Google may have profited from Android, and thus how much it stood to collect if it received royalties. Google doesn't make money from Android licenses and instead has depended mostly on ad revenue.