[solso]

That's not a problem per se, it's just unlikely to happen because of the insane amount of the bill, and the roi is not that good anyway.

For instance, Google pays Apple 9 billion/year to be the default search engine (incredible but True). On the account of 20-30% to user acquisition that means that Apple users can be monetized by Google at around 30B/year (9B/0.30). Google is extremely good at monetizing people, right, a competitor might not be as efficient, let's say half. That gives you 15B addressable revenue.

Now the question. Would you pay Apple 10B to gain, at best, 15B? No one that crazy has this kind of money :-) On top of that, who prevents Google to pay 16B next year?

[jldugger]

> Would you pay Apple 10B to gain, at best, 15B?

30% APY Seems like a good deal to me!

EDIT: more seriously, you don't start with iPhone. You start outbidding Google on the margins where your budget constraint less a factor.

> On top of that, who prevents Google to pay 16B next year?

Profit margins. Google's budget is not unlimited, after all.

[scarface74]

On the margins are also where the less attractive customers are from an advertising perspective. How much are customers worth who are buying a Blu R1 HD phone for $70?

[jldugger]

Well then it's even cheaper to get started =)