Oh, how the mighty have fallen. That is, the GOOG share price fell 13 percent this year. Investors and analysts have since been skeptical, afraid that Google wouldn't find the right combination for a revenue stream outside of advertising. But then, after trading hours on Thursday, Android came in with a Q3 swan song and boosted the company's reported profit into a much friendlier bracket.
Google's been known to keep its mouth shut when it comes to the financial details of its non-search related efforts. Such tight-lipped behavior has lead many to believe that the profit's been nothing to speak of, but ON THE CONTRARY, it turns out Android's revenue is at US$ 1 billion per year. Word on the street is that YouTube is also making a decent amount of money, although none of those numbers have been nailed down. Meanwhile, Google's display advertising unit is now a US$ 2.5 billion business.
Gartner predicts the Android operating system will continue on to own 17.7 percent of the global mobile device market by the end of the year, placing it second in the race for the best selling smartphone OS. Nokia's Symbian OS sits comfortably at the front of the line, while Apple's got bronze status.
"Android is much bigger than I could ever have hoped for," said Eric Schmidt, Google's CEO. "Android can become a hugely profitable business for us. Search on mobile will eventually exceed that of PCs ... so, eventually, mobile will be a very, very strong revenue stream in comparison to PCs."
Microsoft's Comeback and Facebook's Approval
Speaking of the market, both Google and Microsoft's Bing continue to fight for slices of the search engine pie. According to ComScore, Google's share of the 16 billion explicit core searches increased 0.7 points in September from August, and accounted for 66.1 percent of the market. Microsoft went up 0.1 points, grabbing11.2 percent.
It might not seem like a big win for Microsoft (not to mention Yahoo, which is trailing way, way behind), but the recent integration with Facebook may very well be the factor that gives the company the juice it needs to one-up Google.
In case you missed it, Microsoft and Facebook announced a joined effort to make Internet searching more social. Now, when someone uses the Bing engine for recommendations on, say, nearby restaurants, he or she can see which ones their Facebook friends "liked" in the results.
In case you were wondering why the number one social network picked Microsoft over Google, Facebook's founder and CEO, Mark Zuckerberg, offered a half-baked explanation at a recent Bing event: "They're just trying to rapidly gain share by doing awesome stuff. They're really the underdog here."
Meanwhile, Big G remains the interested reject. "The best thing that would happen is for Facebook to open up its data," said Google chief Eric Schmidt. "Failing that, there are other ways to get that information."
"We welcome competition that helps deliver useful information to users and expands user choice," added Gabriel Stricker, a Google spokesman. "Having great competitors is a huge benefit to us and everyone in the search space. It makes us all work harder, and at the end of the day our users benefit from that."
And finally, Zues Kerravala, an analyst at Yankee Group Research: "Let's face it, Bing has been a big disappointment, but this could act as a differentiator. People prefer Google to Microsoft, but they prefer Facebook to Google. If the partnership makes Facebooking better, then it could pull users away from Google."
In other news, Marissa Mayer is fabulous for a few reasons. Number one, she is Google's first female engineer. Number two, she is now taking control of Google's location-aware services and local markets. She'll also be joining Google's operating committee, and working right alongside CEO Eric Schmidt and co-founders Sergey Brin and Larry Page.
Not enough fabulousness for you? She has also been featured in Vogue. As in the magazine. Seriously.
"Marissa is moving over to an exciting new role covering geo/local, which is crucial to our users and the future of Google," said an official Google statement. "Marissa has made an amazing contribution on search over the last decade, and we're excited about her input in this new area in the decade ahead."