Google had a stunning quarter result with $6.55 billion of revenue and $2.5 billion in net income. Google's Page was "super excited" about virtually everything that is going on at Google right now and everything he talked about. I don't really want to rain on Google's party, but what about those things - those obvious topics - Page did not talk about?
It's what left me entirely confused - and I don't refer to Google's increasingly complex product portfolio that does not even fit in an hour-long conference call anymore. I am talking about topics that are touched, but then left to drown in silence. Here are a few notions and some food for thought.
A Change In Advertising Growth
Is it just me or did Google just re-channel some of its advertising revenues? Partner sites typically have been growing stronger in advertising revenue than Google's own sites (and outgrew Google sites in all of 2010) However, in the most recent quarter, Google sites ad revenue jumped by 39 percent, while partner sites climbed by only 20 percent. This may be a one-time occasion, but it will be an interesting trend to watch. As focused as Google is on its ad sales - every Google product has some relation to Adsense ad sales - and as perfectly Google has been executing lately, it is unlikely that this reversal of growth was an accident.
So, is this a sign of things to come? Page may get away with such news in one quarter, but it won't work in another. There is just too much room for speculation why Google is suddenly able to grow much faster than its partners. It is particularly noteworthy that this trend has not been mentioned by the executive staff on the call.
Android vs. Google+ vs. Chromebooks
We know that companies pride themselves in successful product launches and numbers are quickly thrown around to highlight their success. Android was on this path for a while now, and we are hearing that 550,000 devices are now activated per day, which, if my math is correct, is more than twice the 230,000 iPhones Apple activated per day on average in Q2. Google+ also had a decent launch, with more than 10 million people using the network already (a search for people's names including the letter "a" actually delivers more than 26 million hits). So, what about Chromebooks? Well, they launched in seven countries and we heard that Chrome now has 160 million users. But how many Chromebooks were sold? Your guess is as good as mine.
Page did not talk about Chromebooks. We do hear news that Chromebooks may be selling very well, if we are simply considering Amazon's best seller charts, but one could also assume that they are not the big success Google has hoped for. Given the relevance of Chrome OS for advertising sales, the silence around their shipments is at very least suspicious. If you ask me, Chrome OS was probably not positioned very well, it lacks close ties of interaction with Android and suffers from the perception that it is just a browser. If Google can't use Chrome OS to achieve a much more integrated environment between ultra-mobile devices and traditional notebooks and desktop computers, this may be one for the chopping block. If there has been criticism that Android and Chrome OS cannot co-exist, the stark difference in the presentation of the two in the earnings call are enough to fuel another round of speculation.
To me, Page did not deliver a sense of confidence that Chrome OS is going to be around for a long time.
Google = Microsoft?
Is Google+ conclusive? There is so much enthusiasm behind this googlified Facebook, but essentially does exactly what Facebook does. The innovative thought of how Google+ is different from Facebook is very limited: All right, there are Hangouts, but we also know that video calls won't be a blockbuster. Circles is nice, but may not be a must-have killer feature: are we really willing to maintain two social networks side-by-side when both Facebook and Google are doing everything they can to kill user efforts to consolidate their social network engagements?
I somehow feel that Google is reacting to Facebook a bit like Microsoft reacted to Google for a very long time. Google missed the train of a trend, sees its (advertising) revenues threatened and now comes up with a directly competing product. Microsoft has tried to copy Google products in the past - with little success - but now seems to be looking for more innovation and differentiation again.
There are 750 million Facebook users and Google surely has the reach to users via its search engine, but Google+ has a long way to go. I don't know about you, but with Google+ being a part of my daily routine, I already feel some social networking fatigue. I don't have the time to spend on another network. While Google+ is growing, I don't believe that Google+ has enough compelling reasons to deliver what Google is looking for - protecting Adsense from a quickly growing Facebook assault. Google has little experience in successfully copying products, but has been tremendously successful in innovating around its core revenue source. Google should not abandon this talent. It doesn't fit the innovative spirit of the original Larry Page and Sergey Brin and I don't think that the Google+ and the current enthusiasm behind it, especially when Page talks about a long-term investment, makes a lot of sense.