Yahoo! Investors, You Have a Dog in the Android Fight

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Yahoo! investors need to keep an eye on the whole brouhaha between Apple and Android-based smartphone makers. If you don't, it could leave your Yahoo! investment broadsided in the long run.

For every Android-based phone that's sold, Google (NAS: GOOG) stands to benefit by reaping more mobile advertising revenue -- not Yahoo! (NAS: YHOO) . Google has done a phenomenal job over the years enticing handset makers like Motorola Mobility (NYS: MMI) , Samsung, and HTC to use its free mobile operating system Android on their smartphones and tablet computers.

So much so that Google's slice of the $2.1 billion mobile advertising market is expected to soar to 23.8% this year for its mobile display advertising, compared with 18.8% last year. And that's not good for Yahoo!, which has its efforts squarely focused on boosting its display advertising sales -- both mobile and online.                                    

Google posted stellar third-quarter results, aided in part by its mobile advertising revenues and rapid Android device growth. In a rare move in which Google broke out its mobile advertising revenue results from its overall revenue results, its CEO said the search titan's mobile revenue run rate is currently at $2.5 billion, more than double that from a year ago.

Yahoo! should friend Apple
Yahoo! ought to be giving Apple (NAS: AAPL) an "attaboy": The computer maker is indirectly helping Yahoo! in its quest to steal mobile advertising revenue away from Google.

Recently, the U.S. International Trade Commission sided with Apple on one of its four patent infringement claims filed against Android-based smartphone maker HTC. Under the commission's ruling, as of April 19, HTC will be banned from importing smartphones that allow the capability to recognize telephone numbers, according to a Bloomberg report. That potentially reduces the number of HTC Android-based phones coming into the U.S. market until HTC gets its work-around in place.

For Yahoo!, that's obviously good news on the mobile advertising front.

Yahoo! should friend British Telecom
Apple isn't the only tech titan accusing Google of violating some of its patents with the features it loads into Android. Earlier this month, British Telecom weighed in with its own patent infringement lawsuit.

The European carrier alleges that Android's location-based services, personalization tied to content and services, and navigation and guide information smack of thievery of its technology. It's seeking not only financial relief but also an injunction.

Yahoo! investors should be interested in the injunction or any efforts that would slow down the distribution of Android-based mobile advertising, err, mobile software.

Yahoo! should friend Oracle, sort of
Oracle
(NAS: ORCL) is another tech behemoth that has filed a patent infringement lawsuit against Google over its Android software. Last year, the enterprise software giant alleged that Android's application programmer interface (API) took its cues from its Java API packages.

Although Oracle wants upward of $1.4 billion for the alleged infringement, it's smart to realize that there is more money in gleaning a bit of Google's mobile advertising revenues. It's also asking for 15% of the mobile advertising revenues derived from the Android platform.

The parties are trying to hash out a settlement and the trial has been postponed from its October start until the new year, according to an ITworld report.

Yahoo! investors should keep a keen eye on this fight. APIs are a critical part of the software makeup, and should the court ultimately find Google needs a Java license and Oracle wants to play hardball, Google's mobile advertising revenues could take a hit if it has to hand over a large chunk of its advertising to Oracle.

While that won't put money into Yahoo!'s pocket, it may help to narrow the comparison gap between the two Internet companies.

Yahoo! should marry Microsoft
Microsoft
(NAS: MSFT) , a significant Yahoo! partner in search technology and its advertising efforts, is fooling around with Google's Android, and it's not even behind Yahoo!'s back. Yahoo! should have tied the knot with Microsoft years ago and could have benefited from the software giant's philandering ways.

With Microsoft collecting royalties from members of Google's Android ecosystem, it's lining its deep pockets quite nicely. As noted in one Motley Fool report, Microsoft has more than half of all Android-based devices paying a licensing royalty.

Too bad Microsoft doesn't add a clause in those agreements stipulating that Yahoo! gets a cut of all the mobile advertising revenue that some of these Android ecosystem players generate. Just a thought...

My watch alert
Can't get enough of this Android patent dog fight and want to stay in-the-know on Apple, Google, Motorola Mobility, Oracle, Microsoft, and, of course, Yahoo!? Add them to your free Watchlist, which delivers up-to-date news and analysis on your favorite companies:

At the time this article was published Fool contributorDawn Kawamotodoes not own shares in any of the companies listed. However, she is an avid user of both Yahoo! and Google, and knows about dogs and dog fights.The Motley Fool owns shares of Google, Yahoo!, Apple, Oracle, and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Google, Yahoo!, Apple, and Microsoft.Motley Fool newsletter serviceshave also recommended creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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