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:
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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Google's Adsense revenue in Q1 was 2.1 Billion. Which was about 30% of total revenue. Did they really not make a profit from this business? Furthermore while mobile search volume is still only a small fraction of the search market it is growing rapidly. I have yet to see an iPhone user who uses Yahoo for search. Google his many issues, but so did Apple back in the 90s. FaceBook seems unstoppable but alas they don't make much money at all and likely never will. Things change, I hear YouTube display ads are doing well, Adwords keeps improving too while MS and Yahoo are in limbo for the next 8 months until their merger is complete. Weren't you the same guy touting Internet stocks back in 1999? And now you are telling us its all over for Google? For the readers of Huff Post I will offer some candid advice. BUY GOOGLE. Stock has 83 dollars a share in cash. Has a stellar brand and is selling at a forward PE of 16. Compare that to Amazon.com or Salesforce.com that trade at twice the multiple. You see you have to buy low to make money, and they way stocks get low is that things look pretty bleak. Google is run by some very smart people, people who built a 100 billion dollar market cap company in 6 years.
vis a vis
1. Bing's faulty privacy policy
2. You Tube's constant disdain for rights
3. Expecting never to need a customer service phone ##