Google’s Endless Ambition

It’s an exciting time for Google investors. Over the last few years, the company has positioned itself brilliantly. And it’s starting to pay off. Not only did they maintain their massive lead in search, they managed to grow it. And management made shrewd investments in other key areas. For example, in 2005 Google bought a little startup named Android. In 2005, most of us didn’t realize how quickly the smartphone market would take off. Google did, apparently. They moved into the space at just the right time. Google’s latest branded phone, the Nexus S Here we are five years later, and Google’s early investments are paying off in spades. Every day, 200,000 new Android devices are activated worldwide. Units sold rose 1373% in Q3, compared with the same period a year ago. That’s 20 million units sold last quarter, versus 1.4 million in Q3 of 2009. That is simply explosive growth. Dozens more Google-powered gadgets are in the pipeline at big manufacturers like Motorla, HTC, and LG; smart phones, e-readers, and tablets. They also just announced the Nexus S — their second Google-branded smart phone — a follow-up to the mediocre Nexus One . The new phone is the product of a partnership with Samsung. It does some unique tricks, like 3d graphics and some Nintendo Wii-like sensor functions. It’s slick-looking too, vastly more polished than its predecessor. Having a slick product is critical, as Apple has taught us. Tech retail isn’t easy, but Google is learning fast. PC World has a nice writeup on how the Nexus S stacks up against the iPhone 4 here . The S will be sold directly by Google, as opposed to most Android-powered phones, which are marketed independently. Best Buy secured the exclusive deal to sell the phone. I expect it to do well, especially with all the recent attention Android’s been getting. Google stands to make money from each Android-powered device sold by partners, as well. What’s that you ask? If Android is open source (free), how will they make money off it? Good question. Mobile ads, for one. Smartphone ad revenue will top $1 billion this year, and is growing at an incredible pace. With their dominant Adwords search platform, and their recent acquisition Admob, a leader in mobiles ads, Google was already set to dominate this market. Android’s success expands their reach in the space even further. Their apps marketplace will be another revenue driver. Apple has been making a killing selling apps and games for years, and Google is finally catching up. Android will drive revenue in other ways, too. But Google isn’t getting greedy, they’re focused on grabbing the most market share possible. Smartphones are still a young market, hard as that is to believe. Android could be a significant growth driver for decades to come. Getting the lead early, and keeping it, will be critical. Don’t think they forgot…

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Google’s Endless Ambition

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