Long-term HotViews readers, or anybody attending my ‘State of the ICT Nation’ presentations over the past five or so years, will know that I am not a great believer in Google’s long term prospects.
In after hours trading tonight, Google’s share price fell by 10%. Top line revenue growth of 28% for Q4 looked pretty good – except that The Street was expecting 31%. But what really spooked investors was a 35% increase in costs – so, of course, margins continued to fall.
By the way, Google’s UK revenues in Q4 were $1.06b – or 10% of the total. UK revenues were also up 28% YOY.
My real beef with Google is that it still makes practically all its profits from one source – sponsored search. Apple is an arch master at ‘focus’ whereas Google seems to have its fingers in every pie going. The ‘problem’ is that those other pies don’t make it any money. Sure, Android is really motoring but, in itself, it doesn’t profit Google. It would, of course, if it sent more and more people to Google search. But actually it just enables them to use ‘archrival’ Facebook. The launch of the massively popular Kindle Fire is another Google own goal. It uses an Amazonised version of Android which basically means that Amazon gets all the ecosystem advantages.
Facebook is the real threat to Google. Larry Page announced tonight that Google+ now has 90m users – most, I suspect, also have Facebook accounts. Problem is that at least 10x that number use Facebook. (Widely rumoured to announce the 1b mark to coincide with their IPO) Facebook has won that bit of the social media race and I just can’t see Google being a serious competitor.
Then Google faces the diversion and costs of integrating Motorola. How many fronts can one company fight on?