Google: Pluses and Minuses

Google’s strong showing in the last quarter, its concerted effort to cut weak products, and the emergence of Google+ all contribute to a rosy future for the search giant.

In last week’s earnings report, CEO Larry Page gushed “Revenue was up 33% year on year and our quarterly revenue was just short of $10 billion. Google+ is now open to everyone and we just passed the 40 million user mark. People are flocking into Google+ at an incredible rate and we are just getting started!” Google’s large bets on mobile and its continuing search dominance are fueling impressive growth and allaying concerns that its core search business is flagging, while the cuts of unpopular products and the rise of Google+ show that Google is still vital in its other offerings.

Google’s investments in the Android platform are translating into advertising revenues despite the fact that people using mobile phones are less responsive to online ads, to the tune of $2.5 billion a year, up from $1 billion a year ago. This combined with a near monopoly on search for all mobile platforms signals that Google’s smartphone presence will continue to earn money. In the general search market however, Google’s share has faltered 0.3% since July while rivals Yahoo and Microsoft’s Bing closed in with gains of 0.2% and 0.3%, respectively. Whether this is a cause for worry remains to be seen, since Google still commands 64.8% of the market compared to Yahoo and Bing’s 16.3% and 14.7% showings.

Another welcome announcement is the culling of many of Google’s least popular products. This includes the widely maligned Buzz feature, which sparked outrage at its 2010 release when it publicized Gmail user’s recent contacts and sensitive information to others without authorization. As a result of the ensuing FTC investigation, Google has agreed to submit to biennial privacy audits for the next 20 years. While Buzz will not be missed, some much-loved but not widely used services such as Google Labs, an incubator for novel ideas, and Code Search, a way to search for pieces of computer code on the internet, will be cut.

Yet the company’s fortunes seem to hinge on the success of Google+, its social networking offering and the successor to Buzz. As Facebook continues to grow, it poses a threat to Google because it has a greater ability to hold on to users and turn that attention into money with advertising. With news that Google+ has 40 million users, it seems that the balances may be shifting once again in the giant’s favor.

Posted By Jan Tabaczynski

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