Google, more powerful than Apple!
In a significant development, Alphabet, which is the company the holds Google, has become the most valuable company in the world, having surpassed Apple, which held this position since 2010. Alphabet has released its latest earning report where it stated that it had made a profit of $4.9 billion for the fourth quarter of the year, up from $4.7 billion a year ago.
The big announcement pushed Alphabet’s share price to over 9%, to $752, which has pushed its market capitalization to $568 billion – slightly higher than Apple’s market cap, which is $535 billion.
This is a remarkable turnaround for Google, which restructured the company to become Alphabet around 6 months ago. Since then its market cap has risen by over $200 billion.
What’s astonishing is that in spite of the major rise in its valuation, Google’s products remain pretty much the same – there hasn’t been a single important new addition to its product range and there hasn’t been any major difference in its finances either. It’s just that the market has realized that Google is a good, solid business, which will create a steady stream of billions of dollars in revenue over the next few decades.
Alphabet is still the same Google. Alphabet’s revenue comes from search, YouTube, maps, Android and advertising – all of which are Google products. Alphabet’s new chief executive is the Indian born Sundar Pichai.
What explains Google’s extraordinary rise? It’s the simplicity, more than anything that makes Google such a special company. A simplicity that you can see in its search engine. Marissa Mayer, a former Google employee who is now CEO of Yahoo explains Google success here:
“Google has the functionality of a really complicated Swiss army knife, but the homepage is our way of approaching it closed. It’s simple, it’s elegant, you can slip it in your pocket, but it’s got the great doodad when you need it. A lot of our competitors are like a Swiss army knife open – and that can be intimidating and occasionally harmful,” Ms. Mayer said.
An top analyst, Neil Doshi managing director of research at Mizuho Securities says, It looks like Google continues to execute on mobile [advertising]. Two or three years ago mobile was a big head wind for Google. There were concerns that it [had] a negative impact on its desktop business, but as mobile takes over for more searches, mobile ads are becoming closer in value to the desktop ads.”
The difference between Google and Apple is that Apple is not showing any ideas about the future since Steve Jobs’ untimely death. Apple did make $16.3 billion in the previous year, but lost $3.6 billion on new projects. Google’s experimental ventures such as self-driving cars and internet balloon programs have been extremely successful so far and its operating income has risen to $23.4bn largely because of the growth of online advertising.
While the market has been punishing Apple for not coming up with anything new or different, it has been rewarding Google for spending big on its many technology gambles.
Author: Raghav Hegde – India
source photo: pinterest