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Was Quattro a bargain? Was AdMob a rip-off?

Apple’s announcement of $60 million booked revenues for iAd, of which 60% is meant for developers implies $24 million operating profit for the second half of 2010.  Assuming this rate doubles $100 million for 2011, it becomes clear that the acquisition of Quattro for $250 million is reasonable (2.5x gross earnings) and that the AdMob price of $750 million seems expensive.

Now Google may have justification for the $750 million along the lines of income from non-Apple platforms, but the CPMs for Admob are a fraction (perhaps 10%) of what iAd is able to obtain.  Therefore, it’s a pretty fair conclusion that Google did not get a bargain.

  • Priit

    I always felt that Apple tricked Google into buying AdMob…

  • Tom Ross

    It becomes even more questionable once you account for the fact that, before the acquisitions, Google already had much more in-house expertise on ads than Apple. One could put it this way: 50 % of iAd was enabled by Quattro, but only 25 % of Google's current mobile ad business was genuinely created by AdMob, in terms of expertise and technology. What Google bought was market share, and that now turns out to be fleeting.

    I wouldn't say that Apple tricked Google into this. It's just clearly a bad business decision made by Google.

  • Rob Anderson

    Apple filed for their first OS/Advertising patent 20090265214 in April 2008

    This clearly shows Steve Jobs was well on the iAd path before purchasing Quattro or considering AdMob. The purchase of Quattro was a fast and easy way for Apple (with is 30+ billion cash reserves) to employ and implement their vision of how adverts would be displayed on the iPhone and iPad.

    AdMob had their head up their ass and wanted huge money and Apple told them where to go. Given the Patents nobody else (read Android) can implement the in app / controlled by os version of adverts the same as iAd.

    Steve simply wanted somebody who was able to quickly bring his mobile advertising platform to market. $250 million for Quattro is a lot better value than $750 million Google paid for AdMob. You just don't pay top dollar for a business that is going to implement your patented vision of how advertising will work on your own devices.

    Google where tricked into thinking the value was in the established company with experience in the mobile advertising business. Apple always knew they would be controlling the SDK which would implement their advertising in the os and they would gain 50%+ of all iOS device advertising as soon as they launched their "patented" platform.

    This was a long game play which started back in early 2008 or before. The expiring AdMob deal and Google's "coup" must have had Steve Jobs sending Eric a typically terse email.."$750m for AdMob! lol"

  • Tom Ross

    Rob, so do you think Steve is not truthful when he said that Google started the war, not Apple? Some Apple patents may be incidental, not intentional. You work on a project, you happen across a cool innovation that has little or nothing to do with your project, but you patent it anyway and put it on the shelf.