Google’s first-quarter earnings beat Wall Street
expectations, aided by a lower tax rate and a research credit. Even though the
stock moved on the numbers, it was what was said on the call that was most
important. CEO Larry Page said on the conference call that it is his job to
make sure that Google and its engineers are working on big, bold bets to not
onlyadvance the company and its
earnings, but society as well. “A big part of my job is to get people to focus
on things that are not just incremental,” Page said during the earnings call.
Google is working on ambitious projects, such as Google Fiber, self-driving
cars and other projects like Google Glass “because no one else is crazy enough
to try.”
Page seemed to take a shot at Apple with the remark
that Google can’t just be content to do incremental improvements on its
existing products; it needs to expand its horizons. Google has spent countless
billions of dollars in research and development, something that has always
concerned Wall Street. The spending issue was brought up again on the call, but
Google has earned the right to spend as it sees fit. Products like Glass, Fiber
and Android have whet Wall Street’s appetite for their potential. They have
only come through years of spending, as well as timely acquisitions, especially
in the case of Android.
There are still concerns about Android
fragmentation, with the operating system available on so many different
handsets, and all of them running a different version with various tweaks.
While Page acknowledged the experiences vary by device, he called it “a pretty
great overall experience.” He noted smartphone manufacturers are doing a lot
with Android, which is leading to innovation and flexibility, giving customers
what they want. This could only be achieved by spending and experimentation,
and Google has shown that spending levels are more than adequate to satisfy
customers’ needs and to expand into other areas to change the world.
On the call, Page revealed that Android will power
Google Glass. The power and reach of Android is expanding and transportable
across devices, and I’d expect that to continue.
Google Fiber may be the most important aspect of
Google’s business when it comes to changing the world. While laying down a
network is a capital-intensive business (currently it’s only in Kansas City,
with plans to expand to Austin, TX and Provo, UT), Fiber offers benefits that
can solve not only tomorrow’s problems, but today’s as well. Google Fiber is
100 times faster than the average Internet connection in the U.S., and Page
noted it’s “about writing next chapter of the Internet. Products like Fiber, we
look at things where we can impact a lot of people’s lives.”
Google has earned the right to spend as
aggressively as it wants, as it continues to move into nascent areas outside of
its core search business. Google may always be focused on delivering ads and
information to users as its primary cash cow, but the company continues to find
new ways to do so, in ways we never thought possible.
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