How Much $1,000 Invested In Google When It Bought Android 18 Years Ago Is Worth Now

One of the smartest moves of Google, which is now part of Alphabet Inc. GOOGL GOOG, is its purchase of Android on May 11, 2005.

The Steal Deal: After Samsung and HTC decided to give Android a pass, Google stepped in and bought the company, known for its mobile operating system, by paying a paltry price of $50 million.

Incidentally, Google paid a hefty sum of $1.65 billion in 2006 to buy YouTube, which has also evolved into a major profit center for the company over the years.

Later, in 2010, Google's then vice president of corporate development, David Lawee, said the Android buy was the best deal ever.

Android Inc. was founded by the quartet of Andy Rubin, Rich Miner, Nick Sears, and Chris White in Palo Alto, California, in Oct. 2003. The company originally set out to create the OS for digital cameras and then realized the business was not lucrative.

Then, the company decided to try its hands on a handset OS that would take on Nokia's Symbian, the market leader then, and Microsoft's Windows Mobile OS. The Android founding members joined Google when the latter bought the former.

Google Grows With Android: Google, which was known merely as a search company, entered the mobile communications market in Dec. 2006. Apple's iPhone launch in 2017 meant Google had more work to do to bring out a compelling product to the market. The first commercially available smartphone armed with Android OS, the HTC Dream, was announced in Sept. 2008. Since then, Android has rolled out numerous updates that finetuned and improved upon the previous versions.

A fun fact is that Google names each update alphabetically after a dessert or sugar treat, with the first version named Cupcake.

Google then went on to launch its own phone in Oct. 2016 under the brand name Pixel.

The latest data from StatCounter, a web traffic analysis website, shows Android had a 70.9% share of the mobile operating system market as of July 2023 compared to 28.36% for Apple, Inc.'s AAPL iOS. Google revealed in May 2022 that there are over 3 billion active Android devices globally.

Android 14, the latest OS, will incorporate the company's advances in generative AI that will help personalize Android phones, Alphabet said on the second-quarter earnings call last month.

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How Google Makes Money From Android: Android apps and services fetch Alphabet money as the company pockets a portion of these sales through the Google Play Store. The OS indirectly leads users to spend time and money on other Google services like YouTube.

Android also helps Google avoid costs incurred for being the default search engine of any other OS. Incidentally, Google reportedly paid Apple $15 billion for retaining Google as the default search engine in devices powered by the tech giant’s iOS.

Returns From Investing In Google: A $1,000 invested in Alphabet, then known as Google, on the day of the Android buy would have fetched the company 173.6 shares. The stock closed the session on May 11, 2005, at $5.76 on a split-adjusted basis. The same 173.6 shares would be worth $22,689.2 now. Alphabet's Class C shares traded under the ticker GOOG closed Friday's session up 0.21% at $130.69, according to Benzinga Pro data.

This suggests Google returned 2,270% over the 18 years compared to the S&P 500's 276% gain and the Invesco QQQ Trust's QQQ 1,069% advance.

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