Google is NOT a one-trick pony

by Bocar Dia

Google recently reported a very strong quarter with an impressive 23% jump in revenue from last year.

In a statement, CEO Eric Schmitt cited strength in the company’s core search business and disclosed that Google is now doing $2.5 billion of “non-text” revenue and $1 billion in mobile revenue. “Our core business grew very well, and our newer business – particularly display and mobile – continued to show significant momentum,” he said.

Critics were quick to do the math and estimated that only a very small portion of Google’s profits actually comes from other segments. They contend that the $1 billion of mobile revenue is still “search” revenue. Google likely passes at least 50% of its $2.5 billion of non-text ad revenue through to content partners. This means that, on a “net revenue” basis, Google’s non-text ad business generates only $1-$1.25 billion of revenue, or only about 5% of Google’s total revenue.

While I can’t argue with the maths behind this report, I very much disagree with the conclusion that Google is a one-trick pony. It’s like saying that “Microsoft is a one-trick pony because they make most of their profits from Windows” or that “Subway makes most of its profits from selling sandwiches”.

I am not a Google fanboy, some of you might already know this from my previous articles, but I have a lot of respect for Google as a company and its agenda for innovation. I am not naive enough to believe that “search” has nothing to do with Google’s other initiatives such as Android, Google Docs, GMail or Chrome. In fact I believe that most of these activities are very much geared towards a strategic positioning of Google’s search and advertising business – Google is still a business after all and they have shareholders to report to.

What I admire is that Google figured out a way to do what they have to do to fund what they love to do – and the value they have created for the rest of us is not measurable by earning reports. Tim O’Reilly talks about great innovative companies as companies that create more value than they can capture. Google is a great example of that just as Facebook, Microsoft or Apple. Regardless of the business agendas behind these companies they have undeniably contributed to making the technology world what it is today – they all have created and/or innovated in ways that brought more value to the world that they could ever capture.

Waterloo, Ontario, Canada

Google's mission is to organize the world's information and make it universally accessible and useful. As a first step to fulfilling that mission, Google's founders Larry Page and Sergey Brin developed a new approach to online search that took root in a Stanford University dorm room and quickly spread to information seekers around the globe. Google is now widely recognized as the world's... more

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Bocar Dia

Bocar Dia

Bocar is a social media and Tech blogger based out of Vancouver, BC. He is passionate about analyzing and interpreting the latest trends in information technology and how they affect the ways in which we do business. His areas of expertise are in sales and marketing. Originally from Senegal, West Africa, Bocar has lived in France and Italy before coming to Vancouver to study Computing Science... more

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