Google announced it brought in US$14 billion in revenue in the second quarter this year, and while executives focused on big initiatives like Google Glass and Balloon, most eyes were on Motorola, and the success of the Enhanced Campaigns for AdWords.
Mobile Ads, X Phone Sales Could Drive 2013
One of the biggest changes overall to come out of Google this year is the Enhanced Campaigns change to AdWords. Allowing people to start a product search on one device and finish it on another could give advertisers even more customer data with which to target them, but Q2 results showed the cost per click rates on Google's network went down 6%.
As the entire Google AdWords network completes its transition to Enhanced Campaigns by the end of July, Google CEO Larry Page tried to assure analysts that number was not worrisome, instead focusing on the success of the companies' hardware initiatives.
The success of Google's Chromebooks and Nexus devices were pointed out by Page, and the upcoming Motorola smartphone often referred to as the X Phone could also impact the rest of the year for Google. We don't know how successful a Google owned Motorola phone will ultimately be, but advertising made up 92% of revenue in the second quarter, so even a tiny drop in things like CPC equals tens of millions of dollars.
An extremely successful X Phone could of course make an impact on the hardware side of business, and on things like Google Play, but hardware is just a small percentage of Google overall.
Google Hedging on Hardware + Apps
When a business is so dependent on one single segment, it branches out into other services, a tactic Google clearly relishes. The company has invested plenty of cash into its server infrastructure but that's a core piece it needs to conduct business.
Google needs it other services, like hardware, to start becoming a larger part of the overall business, and Page and Patrick Pichette, SVP and CFO, both repeated during an earnings call they were focused on long term goals. They were referring to expanding business outside of ads, to things like Google Glass and Fiber.
When asked how long Motorola would have to turn itself around on the hardware side, Page demurred, as executives often do during these kinds of events. The other areas the executive team were excited about were Google Play apps and Google Apps in the enterprise. Half of fortune 500 companies use at least one Google App, Nikesh Arora,Google SVP & CBO said.
The rest of 2013 will one of the most interesting in Google's history as the Enhanced Campaigns really kick into high gear, and the potential X Phone debuts. Anyone want to place bets on how successful Google's Motorola phone or Google Glass will be?