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Well, Google's top line has been shrinking in recent quarters, in order to maintain their profit margins and propel their (recently waning) stock, cutting cost

Well, Google's top line has been shrinking in recent quarters, in order to maintain their profit margins and propel their (recently waning) stock, cutting cost is the only real option. PPC accounts for ~90%+ of their business despite their inroads in mobile; it's really incredible how Android has yielded virtually nothing for Google. If anything the mobile shift has come as a detriment since mobile ads have lower conversions. I suspect if cost cutting doesn't help pad the bottom line after the top line adjustments investors will start pressuring them to do something with their massive market share...which in the end could come as a detriment to their presence.

melvinmt 11y ago
Mobile ads also account for PPC. And "mobile ads have lower conversions"? I think the opposite is true.
- lallysingh 11y ago
  There are probably some model changes to make between desktop and mobile ad conversions. You may well be right, but users need a different conversion path on mobile.
stvswn 11y ago
In what world is Google's top line shrinking? I think you mean the top line's growth rate is slowing.
- partiallypro 11y ago
  Google has seen Q/Q declines in revenue and net income recently which is a huge cry from it's explosive growth before. YoY growth is still steady, but slowing.
  - magicalist 11y ago
    They've gotten more revenue in Q4 than Q1 for a number of years now (since 2011 maybe?) as Q4 tends to bring in a ton of revenue. I don't really see anything else that suggest a pattern like that.
    - partiallypro 11y ago
      That's not Q/Q. Q/Q is Q3 to Q4, or Q1 to Q2, etc. There have absolutely been some net income declines. YoY would be Q1 2014 v Q1 2015.
      - magicalist 11y ago
        That's exactly what I'm referring to. e.g. Q4 2014 to Q1 2015 (going back to 2011).
meatysnapper 11y ago
I'm continually surprised by Google's total reliance of their core, original business: Search Ads. Google docs presented a neat opportunity to attack Microsoft where it hurts, and Google has more or less pathetically failed, and Google docs continues to suck. I would have expected docs with version control, a big-data capable spreadsheet... not docs. BigQuery at least is somewhat ok. Maps, shockingly, has gotten worse. On iOS the current app sucks battery life, and is unintuitive to use. Microsoft and Apple have more user friendly maps apps, which nobody would have expected upon using the original maps. With Glass, they invented an entirely new way to be a douchebag. Android, nothing. App Engine, nothing.
- dragonwriter 11y ago
  > I'm continually surprised by Google's total reliance of their core, original business: Search Ads. I'm not. With all the venture capital pouring into Silicon Valley, how often have businesses to rival Google's Search Ads business been generated? Is it really surprising that Google hasn't managed, internally, to develop anything else on the same scale?
- nickpsecurity 11y ago
  I agree. It defies the common wisdom against putting all your eggs in one basket. Many of the biggest names in industry did the opposite by acquiring companies in both similar and very different industries. The reason is simple: losses in one might be offset by successes in another. Google should be growing big in other markets. They might also consider acquiring companies that could benefit from using Google technology and infrastructure as a competitive advantage. They get software for free and hardware (esp datacenters) at or right over cost.
guelo 11y ago
Android is a defensive play. Without it their whole business would be at Apple's mercy.
rogerbinns 11y ago
Android has been a lifesaver for Google. If it didn't exist then phones would be in ecosystems from Apple, Blackberry, Microsoft, Nokia, Samsung, plus other up and comers. Each one of those would demand payment from Google for being the default search, maps, video etc. For example Google already pays Apple over a billion dollars a year to be the default search engine on iOS. Apple's change to its own maps resulted in Google losing over 30 million lucrative maps users (power of platform defaults). Being dependent exclusively on others for the success of your own business is insane. Having your own alternatives around (eg Android, Chrome) to keep everyone else "honest" is a very good strategy. Look at it another way - if Android was a non-Google company then Google would be paying them in the ballpark of a billion dollars a year. If Google can develop Android for less than that, then Android is profitable even if it has no direct revenues. User activity is the lifeblood for the Google business. It is what the revenues hang off, it is what improves existing products, it is what lets you measure what is actually going on, and it provides a ready place to introduce products and change existing ones.
- coliveira 11y ago
  This is a false dichotomy. Google has to pay to be in particular platforms because they're viewed as a competitor. Even nowadays Apple doesn't seem to have any interest in search technology. If Android didn't exist, Google could concentrate their efforts in being the known and trusted source for web search and partner with Apple and other companies, the same way this works for Facebook, Twitter, Yahoo, and so many other web-based companies.
  - rogerbinns 11y ago
    > Even nowadays Apple doesn't seem to have any interest in search technology It is called Siri. Also Google isn't the only player in search, maps, video etc so competitors like Microsoft, Nokia, and Facebook could pay for placement. If Google was entirely dependent on other people's mobile platforms, then those platforms can make decisions based on payments, as well as on their competitive views such as not wanting to make Google stronger. The latter would harm Google's business and future prospects.
  - 11y ago
coliveira 11y ago
It is very interesting to see how Android is a pyrrhic victory for Google. As they grab more market share, they are debasing their own products because profit margins on mobile are so low compared to desktop. At the same time, they practically give away the top of the market to Apple, which makes more than 90% of the profits in the smart phone segment. Retrospectively, it would be much better for them to be partners with Apple and other companies in delivering search technology, without any of the costs associated to developing mobile software.
- bduerst 11y ago
  There is typically a cost leader and a quality leader in most markets - e.g. android and apple, Blue Bunny and Haagen Daas, kia and mercedes (respectively). Companies that target the cost-leader position will have thin margins but make up for it in quantity. Google didn't lose anything in the Android victory over the mobile OS market, and falls in line with their strategy of making slim returns on every user (which adds up).
  - coliveira 11y ago
    That makes sense if you're focused on being the cost leader in that segment, such as Kia or Walmart. But Google has no long term desire to be in a market unless it is advertising. I think they will be in a bad situation when cost pressures mount over the next years.
    - bduerst 11y ago
      >But Google has no long term desire to be in a market unless it is advertising. Which doesn't change that they're the cost leader of the market and didn't lose anything. Where do you think the thin margins per user comes from? And the company is starting to diversify away from advertising with Cloud, Play, Express, etc.

melvinmt 11y ago

Mobile ads also account for PPC. And "mobile ads have lower conversions"? I think the opposite is true.

lallysingh 11y ago
There are probably some model changes to make between desktop and mobile ad conversions. You may well be right, but users need a different conversion path on mobile.

stvswn 11y ago

In what world is Google's top line shrinking? I think you mean the top line's growth rate is slowing.

partiallypro 11y ago
Google has seen Q/Q declines in revenue and net income recently which is a huge cry from it's explosive growth before. YoY growth is still steady, but slowing.
- magicalist 11y ago
  They've gotten more revenue in Q4 than Q1 for a number of years now (since 2011 maybe?) as Q4 tends to bring in a ton of revenue. I don't really see anything else that suggest a pattern like that.
  - partiallypro 11y ago
    That's not Q/Q. Q/Q is Q3 to Q4, or Q1 to Q2, etc. There have absolutely been some net income declines. YoY would be Q1 2014 v Q1 2015.
    - magicalist 11y ago
      That's exactly what I'm referring to. e.g. Q4 2014 to Q1 2015 (going back to 2011).

meatysnapper 11y ago

I'm continually surprised by Google's total reliance of their core, original business: Search Ads. Google docs presented a neat opportunity to attack Microsoft where it hurts, and Google has more or less pathetically failed, and Google docs continues to suck. I would have expected docs with version control, a big-data capable spreadsheet... not docs. BigQuery at least is somewhat ok. Maps, shockingly, has gotten worse. On iOS the current app sucks battery life, and is unintuitive to use. Microsoft and Apple have more user friendly maps apps, which nobody would have expected upon using the original maps. With Glass, they invented an entirely new way to be a douchebag. Android, nothing. App Engine, nothing.

dragonwriter 11y ago
> I'm continually surprised by Google's total reliance of their core, original business: Search Ads. I'm not. With all the venture capital pouring into Silicon Valley, how often have businesses to rival Google's Search Ads business been generated? Is it really surprising that Google hasn't managed, internally, to develop anything else on the same scale?
nickpsecurity 11y ago
I agree. It defies the common wisdom against putting all your eggs in one basket. Many of the biggest names in industry did the opposite by acquiring companies in both similar and very different industries. The reason is simple: losses in one might be offset by successes in another. Google should be growing big in other markets. They might also consider acquiring companies that could benefit from using Google technology and infrastructure as a competitive advantage. They get software for free and hardware (esp datacenters) at or right over cost.

guelo 11y ago

Android is a defensive play. Without it their whole business would be at Apple's mercy.

rogerbinns 11y ago

Android has been a lifesaver for Google. If it didn't exist then phones would be in ecosystems from Apple, Blackberry, Microsoft, Nokia, Samsung, plus other up and comers. Each one of those would demand payment from Google for being the default search, maps, video etc. For example Google already pays Apple over a billion dollars a year to be the default search engine on iOS. Apple's change to its own maps resulted in Google losing over 30 million lucrative maps users (power of platform defaults). Being dependent exclusively on others for the success of your own business is insane. Having your own alternatives around (eg Android, Chrome) to keep everyone else "honest" is a very good strategy. Look at it another way - if Android was a non-Google company then Google would be paying them in the ballpark of a billion dollars a year. If Google can develop Android for less than that, then Android is profitable even if it has no direct revenues. User activity is the lifeblood for the Google business. It is what the revenues hang off, it is what improves existing products, it is what lets you measure what is actually going on, and it provides a ready place to introduce products and change existing ones.

coliveira 11y ago
This is a false dichotomy. Google has to pay to be in particular platforms because they're viewed as a competitor. Even nowadays Apple doesn't seem to have any interest in search technology. If Android didn't exist, Google could concentrate their efforts in being the known and trusted source for web search and partner with Apple and other companies, the same way this works for Facebook, Twitter, Yahoo, and so many other web-based companies.
- rogerbinns 11y ago
  > Even nowadays Apple doesn't seem to have any interest in search technology It is called Siri. Also Google isn't the only player in search, maps, video etc so competitors like Microsoft, Nokia, and Facebook could pay for placement. If Google was entirely dependent on other people's mobile platforms, then those platforms can make decisions based on payments, as well as on their competitive views such as not wanting to make Google stronger. The latter would harm Google's business and future prospects.
- 11y ago

coliveira 11y ago

It is very interesting to see how Android is a pyrrhic victory for Google. As they grab more market share, they are debasing their own products because profit margins on mobile are so low compared to desktop. At the same time, they practically give away the top of the market to Apple, which makes more than 90% of the profits in the smart phone segment. Retrospectively, it would be much better for them to be partners with Apple and other companies in delivering search technology, without any of the costs associated to developing mobile software.

bduerst 11y ago
There is typically a cost leader and a quality leader in most markets - e.g. android and apple, Blue Bunny and Haagen Daas, kia and mercedes (respectively). Companies that target the cost-leader position will have thin margins but make up for it in quantity. Google didn't lose anything in the Android victory over the mobile OS market, and falls in line with their strategy of making slim returns on every user (which adds up).
- coliveira 11y ago
  That makes sense if you're focused on being the cost leader in that segment, such as Kia or Walmart. But Google has no long term desire to be in a market unless it is advertising. I think they will be in a bad situation when cost pressures mount over the next years.
  - bduerst 11y ago
    >But Google has no long term desire to be in a market unless it is advertising. Which doesn't change that they're the cost leader of the market and didn't lose anything. Where do you think the thin margins per user comes from? And the company is starting to diversify away from advertising with Cloud, Play, Express, etc.