The Future of Google (Spoiler: It’s Pretty Bright)Posted: March 27, 2015 | Author: hongkongblogger | Filed under: Uncategorized | Tags: ad revenue, android, china, cloud computing, google, IoT, IT Pro Hong Kong, Ovum, public cloud, Quocirca, smartphones, strategy, wearables, youtube |Leave a comment
I’ve just finished a piece on Google’s uncertain future. Bit odd, you might think, given it’s one of the world’s biggest and most profitable companies.
Well, the initial brief was based on the web giant missing analyst expectations for Q4 2014. Which it didn’t do by a long way, but there you go. Although it has since bounced back with a storming start to 2015, there’s still enough latitude to ask where the firm might be headed over the next decade. Where are its core strengths, and how it will cope with the slow down in ad spend, increasing competition from the likes of Facebook and the move of more ad dollars into mobile, etc etc.
Google is in a lot of ways a company of two parts: the shiny, innovative, envelope-pushing start up putting huge amounts of cash into cutting edge technology projects that could transform the world in years to come; and the cash-hungry advertising behemoth. The problem it has is that the former relies on revenue from the latter to continue, although this is declining. The key I think will be Google’s ability to pull in more revenue from new streams going forward.
One of these will be video.
“I think for Google YouTube will remain a key strategic play and over the long term a strong source of revenues. YouTube combines two major digital advertising channels into a single location – search and video,” Ovum analyst James McDavid told me.
“Ovum’s forecast data shows that search is still the single largest segment of digital advertising spending but video is the fastest growing. Google having market leading plays in both sectors bodes pretty well for their future.”
Another key area is likely to be mobile, and Android is well placed with a market leading share. Google has a great opportunity to increase sales of services, ads, licenses and devices as well as peeling off a healthy cut of app sales. Only the huge market of China, where Play is locked out, and the potential fragmentation of the OS, threaten it here.
Quocirca founder Clive Longbottom agreed that Android represents Google’s best opportunity platform wise going forward.
“Chromebooks have been a bit of a disaster: a hell of a lot of work is required to make Chrome into an OS that works effectively and brings all the other Google services together in a way that really works,” he told me.
“Android, however, has been a runaway success – it is probably better for Google to concentrate on Android as the OS with a Chrome layer on top in a looser way than it has tried to date.”
I’ve only just had time to scratch the surface here; there’s also a great opportunity in cloud services, IoT and wearables and more for Google. It’ll just be interesting to see how it gets there – and whether any others can realistically challenge the Mountain View giant over such a wide sweep of product and service areas in the future.