GOOGL - Google

[Palantir]

I think Google is catching upwards momentum again after their correction last month. I think it is moderately undervalued assuming a 5-6% growth rate, but I believe the real growth rate is higher than 5-6%.

[FrankArabia]

i think over the next ten years, google gets 10% CAGR...they have many platforms that they have yet to fully tap and may not do so for quite sometime...1) android 2) youtube 3) google tv 4) handheld devices and other hardware from motorola

 

most importantly their main driver "internet search" is a fortress at this point.....top 3 idea for me at this point...

[Palantir]

Indeed, Google represents everything I like about the tech sector - capital light, sticky customers, and large growth potential, and in Google's case, the core business is a near global monopoly...80% of global searches are google.

[FrankArabia]

i have seen the 80% figure myself, but where are the 20% going? i look around and i see google used nearly 100% of the time.

[ItsAValueTrap]

In non-English countries like Russia and Japan, other search engines are dominant.  (e.g. Baidu, Yandex)

 

The second factor is whether or not you use Comscore data.  In my opinion, Comscore data is extremely unreliable... it puts Google at about 2/3rds of the US market.

 

statcounter.com is another place to get stats.

[Guest valueInv]

I think Google is catching upwards momentum again after their correction last month. I think it is moderately undervalued assuming a 5-6% growth rate, but I believe the real growth rate is higher than 5-6%.

 

You consider paying 21x earnings for a company growing at 6% moderately undervalued?

[Palantir]

Yes.

[Guest valueInv]

Motorola, still paying off:

 

http://www.idownloadblog.com/2012/12/05/ftc-slams-moto-for-ban/

[mcliu]

I think Google is catching upwards momentum again after their correction last month. I think it is moderately undervalued assuming a 5-6% growth rate, but I believe the real growth rate is higher than 5-6%.

 

You consider paying 21x earnings for a company growing at 6% moderately undervalued?

I guess it would depend on your discount rate?

I think it's only at 18x if you adjust for the cash.

[Palantir]

I think Google is catching upwards momentum again after their correction last month. I think it is moderately undervalued assuming a 5-6% growth rate, but I believe the real growth rate is higher than 5-6%.

 

You consider paying 21x earnings for a company growing at 6% moderately undervalued?

I guess it would depend on your discount rate?

I think it's only at 18x if you adjust for the cash.

 

Yes, you have to adjust for the cash (40B net of debt), and I use OCF in lieu of Income. 14B v 9B. Once you do that the P/OCF comes out to be 12 ish.

[rkbabang]

Google Maps for iOS 6 released:

 

http://www.forbes.com/sites/adriankingsleyhughes/2012/12/13/google-maps-comes-to-ios-6/

 

 

[rkbabang]

These are from: Four Charts That Illustrate The Transformation of Personal Computing.  The first and 4th charts show the dominance of Android as the new way people will be accessing personal computing and communications.  Chart 3 shows how much growth in this area is still to come. And of course Chart 2 shows that pretty soon just about everyone will own a tablet.

 

 

1.) Android smartphones are taking over over the world.

 

http://www.technologyreview.com/sites/default/files/styles/view_body_embed/public/images/MeekerAndroid.jpg

 

2.) Tablets are flying off the shelves.

 

http://www.technologyreview.com/sites/default/files/styles/view_body_embed/public/images/MeekerIPad.jpg

 

3.) Mobile Internet traffic numbers are lifting off.

 

http://www.technologyreview.com/sites/default/files/styles/view_body_embed/public/images/MeekerMobileTraffic.jpg

 

4.) The Windows-Intel combination is quickly losing its position.

 

http://www.technologyreview.com/sites/default/files/styles/view_body_embed/public/images/MeekerWintel.jpg

 

[Guest hellsten]

Statistics or lies?

 

Goldman Sachs: Windows' true market share is just 20%:

http://www.theregister.co.uk/2012/12/13/windows_market_share_just_20percent/

 

Mobile vs. desktop:

http://gs.statcounter.com/#mobile_vs_desktop-ww-monthly-201111-201211

http://gs.statcounter.com/#mobile_vs_desktop-ww-monthly-200901-201211

 

For a more technical discussion see:

http://news.ycombinator.com/item?id=4915382

[Palantir]

GOOG has been kicking a** since the decline, which I believe was merely a short term correction.

[rkbabang]

Statistics or lies?

 

You can certainly argue about the validity of the specific numbers or percentages, but the overall trend is pretty clear.

[Guest hellsten]

Statistics or lies?

 

You can certainly argue about the validity of the specific numbers or percentages, but the overall trend is pretty clear.

 

The trend is clear, but I wouldn't make any bets on who's going to win.

 

Eric Schmidt says Android is winning:

http://www.iphonehacks.com/2012/12/eric-schmidt-thinks-android-has-already-won-the-platform-war-i-beg-to-differ.html

 

“This is a huge platform change; this is of the scale of 20 years ago – Microsoft versus Apple,” he said. “We’re winning that war pretty clearly now.”

 

How much revenue and profit does Google get from Android compared to Apple and MSFT? What killer apps does Android have that iOS or Windows Phone doesn't have?

[Guest valueInv]

The bigger queetion is what has been Google's earning trend as Android 'wins'?

[Palantir]

Android might "win", but as the platform gains prominence, other companies can fork it, as it is open source.

 

 

Furthermore, we cannot rule out political risk, countries may not want Google to get too dominant.

[rkbabang]

Android might "win", but as the platform gains prominence, other companies can fork it, as it is open source.

 

Furthermore, we cannot rule out political risk, countries may not want Google to get too dominant.

 

I think you can point to iOS as an argument against calling Android a monopoly.  Also like you said anyone can fork it, so the existence of Kindle Fire HD, Nook HD, etc and Google's low amount of profits from Android are all proof that Google isn't going to take over the world and hold it for ransom using Android.  However, can you imagine the position Apple would be in if Android didn't exist?  It would be the 1990s Microsoft all over again.

[Guest hellsten]

Here are a few articles that try to explain how much Google makes on Android:

 

http://www.guardian.co.uk/technology/2012/mar/29/google-earns-more-iphone-android

Google's Android has generated just $550m since 2008, figures suggest

 

http://appleinsider.com/articles/12/03/29/google_earns_80_of_its_mobile_revenue_from_ios_just_20_from_android.html

 

Despite Android being widely used by smartphone makers, Google has struggled to gain traction for app sales in Android Market. Apple's iOS platform continues to eat up around 90 percent of mobile software revenues.

 

http://www.asymco.com/2012/05/15/android-revenues-in-perspective/

 

As various members of the Android ecosystem are rewarded from the 40% revenue share of Android, it would be important to consider the scales involved in these illustrations when considering the influence Google exerts. It could be argued that Google’s spreading of wealth from search creates strong incentives for participation in its ecosystem.

 

However, there is little wealth created. 40% of a little is a lot less.

http://www.forbes.com/sites/darcytravlos/2012/08/22/five-reasons-why-google-android-versus-apple-ios-market-share-numbers-dont-matter/

 

Google’s business model is to give away Android in order to make $10 per device on search and ads, although it is estimated that Google only makes $6.50 per device.  Apple makes an estimated $300 per iPhone, and then sells apps and ads.

 

I'm not convinced Android is a good investment for Google. They spent 12.5 billion on Motorola Mobility… Does Android have a moat versus iOS or Microsoft? I don't think so.

 

Anyway, just thinking out loud. I believe Google is a high quality business that has a wide moat around their ad network.

[DCG]

I'm not convinced Android is a good investment for Google. They spent 12.5 billion on Motorola Mobility… Does Android have a moat versus iOS or Microsoft? I don't think so.

 

Anyway, just thinking out loud. I believe Google is a high quality business that has a wide moat around their ad network.

 

Agreed....at least mostly. Regarding whether Android was a good investment, getting people to use Android gets them to use other Google Services and helps ensure they use Google search on mobile devices, which lets them display more ads.

 

And Google could always decide to start licensing Android (which I think they should do).

[txlaw]

I'm not convinced Android is a good investment for Google. They spent 12.5 billion on Motorola Mobility… Does Android have a moat versus iOS or Microsoft? I don't think so.

 

Anyway, just thinking out loud. I believe Google is a high quality business that has a wide moat around their ad network.

 

Agreed....at least mostly. Regarding whether Android was a good investment, getting people to use Android gets them to use other Google Services and helps ensure they use Google search on mobile devices, which lets them display more ads.

 

And Google could always decide to start licensing Android (which I think they should do).

 

I actually have the opposite view of Android. 

 

Android is very low cost (despite the patent issues) for hardware manufacturers, and the difference between it and that other OS (I own an iPhone 5 btw -- it's great!) is increasingly getting smaller and smaller.  Most importantly for Google, though, is that Android is absolutely, positively designed to fit with Google's mission to be the dominant search and augmented reality company. 

 

So it doesn't matter much if they make any direct revenue off of Android -- I think they've already made their money back on it by displacing MSFT and making sure that GOOG search stays number 1.  I think it's highly likely that they will write case studies about the Android strategy in the future, even if Android fades away and something else replaces it (e.g., another GOOG OS: ChromeOS).

[rkbabang]

I actually have the opposite view of Android. 

 

Android is very low cost (despite the patent issues) for hardware manufacturers, and the difference between it and that other OS (I own an iPhone 5 btw -- it's great!) is increasingly getting smaller and smaller.  Most importantly for Google, though, is that Android is absolutely, positively designed to fit with Google's mission to be the dominant search and augmented reality company. 

 

So it doesn't matter much if they make any direct revenue off of Android -- I think they've already made their money back on it by displacing MSFT and making sure that GOOG search stays number 1.  I think it's highly likely that they will write case studies about the Android strategy in the future, even if Android fades away and something else replaces it (e.g., another GOOG OS: ChromeOS).

 

That is my opinion as well.  I don't think Google cares if it ever directly makes a penny from Android, nor from its fiber to the home business.  What Google wants is for every human being to be connected to the internet all the time with as fast a connection as possible.  If Android didn't exist, many fewer people would have smartphones.  Right now the iPad dominates (just like the iPhone dominated at first), but I predict that a few years from now inexpensive Android based tablets will outsell iOS tablets.  Sure Apple will make the margins and people will scream that Google isn't making any money off of it, but it will put tablets into the hands of countless people who would never spend the money to get an iPad, just like there are tons of people world wide who are walking around with Android phones who wouldn't have a smartphone at all otherwise.    How much more difficult would it be for Amazon, or Barnes&Nobel, or Acer, or HTC, or Samsung, to compete with Apple if it weren't for Android?  Would mobile web traffic be 14% off all web traffic today if Android never existed? No it would be much smaller.  IMHO, this is all Google is trying to accomplish here.  Google is looking for ways to get more people online, get them online with faster connections, and getting them to stay online more of the time.

 

[rkbabang]

I also want to add that Google doesn't care much about Android users buying apps, as long as they use Google's free apps, (gmail, maps, calendar, etc...).

 

 

I have an ipad and have noticed that even in the Apple environment, most of the really useful apps are free.  Only the games and other mindless distractions that you could live without anyway cost money.  I paid nothing for the Gmail app, or the Apple Calendar app (that I use to interface with my Google calendar), or Facebook, my bank's app, Fidelity's app, my RSS feed app, etc, etc, etc....  So what? People buy more games on iOS than on Android, that is just a function of people who use iOS having more disposable income than those who use Android (we knew that already), but that doesn't mean that people who use Android don't get just as much done as people who use iOS, because all of the most useful apps are free.

 

[Guest valueInv]

I'm not convinced Android is a good investment for Google. They spent 12.5 billion on Motorola Mobility… Does Android have a moat versus iOS or Microsoft? I don't think so.

 

Anyway, just thinking out loud. I believe Google is a high quality business that has a wide moat around their ad network.

 

Agreed....at least mostly. Regarding whether Android was a good investment, getting people to use Android gets them to use other Google Services and helps ensure they use Google search on mobile devices, which lets them display more ads.

 

And Google could always decide to start licensing Android (which I think they should do).

 

I actually have the opposite view of Android. 

 

Android is very low cost (despite the patent issues) for hardware manufacturers, and the difference between it and that other OS (I own an iPhone 5 btw -- it's great!) is increasingly getting smaller and smaller.  Most importantly for Google, though, is that Android is absolutely, positively designed to fit with Google's mission to be the dominant search and augmented reality company. 

 

So it doesn't matter much if they make any direct revenue off of Android -- I think they've already made their money back on it by displacing MSFT and making sure that GOOG search stays number 1.  I think it's highly likely that they will write case studies about the Android strategy in the future, even if Android fades away and something else replaces it (e.g., another GOOG OS: ChromeOS).

 

They paid 13B to 'defend' Android in addition to losing 1B per year at Motorola. I think it does matter how much money they make offa Android.

 

BTW, they are also the search provider for iPhone. They would have made the same amount of money without Android.

 

Android isn't about money. It's about egos and empire building.