From a financial perspective, Google is still a one-product company (search).
The amount of profit -- profit, not revenue -- contributed by Google's non-search products like AdSense, Apps, YouTube, et al, is basically a rounding error.
The growth of Google's search business for the past decade, meanwhile, has been driven by three factors:
- Growth of searches, as people spend more time online and more time searching
- Growth of revenue per search, as Google gets better at monetization
- Share gains, as Google ate the lunch of Yahoo, AOL, and other once-dominant search engines
But now, in the biggest and most important market on earth (responsible for almost half of Google's revenue), Google's share gains have flatlined.
A year ago, Google had 65% of the US search market. Last month, Google had 64.4% of the US search market. This after an amazing decade in which Google gained about a point of share per month.
Most Google bulls expected Google to eventually own considerably more than 65% share of the US search market. As Google's competitors collapsed, it seemed Google would eventually be able to gain the 80%-90% share that Google has in many other countries worldwide. Based on Google's flatlining in the past year, however, this incremental 15-25 point market share gain now seems like wishful thinking.
Internationally, meanwhile, Google's share gains have also likely peaked, especially now that it has pulled out of China. Google is so dominant internationally that there just isn't that much more share to gain. So Google won't be offsetting the loss of US share gains by gaining share internationally.
So what does this mean for Google's future growth?
It means that Google just lost one of its three major growth engines.
Yes, Google can continue to grow via increases in search usage and revenue per search. But these gains are likely to be incremental rather than explosive. And they will likely disappoint investors used to gangbuster year-over-year growth.
Meanwhile, Google still has yet to find another major product to pick up growth where the search business leaves off.
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