Infotech Lead India: Google’s focus remains on its Android ecosystem, as well as its core search and display advertising businesses.
The Android ecosystem outperformed Apple and Samsung in terms of volume in 1Q13, maintaining 70 percent of global smartphone market share. Google will continue to lead the market, increasing the number of devices from which it can garner Internet search revenue.
Advertising remains a chief focus for 2013. The company is revamping advertising campaigns to better monetize the shift to a mobile-centric world, reducing the negative impact on margins and decline in average cost-per-click.
Google’s vision for Connected World will drive ad revenue
Google’s multiscreen environment initiative is driving the company’s targeted advertising and search platform investments. The company is making improvements to its AdWords platform, integrating Adwords’ Enhanced Campaigns to further its vision for a Connected World and seamless interaction across multiple devices as the company seeks to become a network player.
The prevalence of global mobile devices requires that Google adapt its advertising system to capitalize on mobile advertising opportunities, a channel where campaign development has traditionally fallen short. Google successfully transferred 1.5 million advertising campaigns onto its new Enhanced Campaign platform in 1Q13 and will shift the remainder by the end of 1H13.
Boosting Internet speeds will increase frequency of Web searches
Google’s decision to expand its Fiber build to new cities (Austin, TX and Provo, UT) indicates that the company plans to continue its network build out in select cities. The ultimate goal is to drive ad revenue, because if end users can access pages more quickly, it increases the frequency of Internet searches and expands the opportunity for Google to grow its ad revenue. In 2013, Google will accelerate the rate at which it announces cities for Google Fiber rollout.
Slated to launch in 2014, TBR believes the new Fiber cities will gather strong traction with enterprise customers, including schools and hospitals, as well as companies deeply entrenched in cutting-edge technologies. Consumers will leverage the super-fast networks to visit more Internet pages, which would have a positive impact on the number of YouTube videos consumers could access as well as other Google and Partner websites.
Motorola’s financial losses weigh on Google’s core search and display business
Motorola will continue to weigh on Google’s balance sheet as the company underperforms compared to the company’s core search and display business. Google will combine engineering and supply chain management resources to develop a flagship device aimed at rivaling Samsung and Apple’s leading smartphones. While Google restructures Motorola to grow the business to profitability, Motorola Mobile headcount will continue to fall, which was down 11.3 percent sequentially in 1Q13 (1,131 employees).
Eric Costa and Jessica Paterson, research analyst, TBR’s Networking and Mobility Practice
