Why? It's obvious that is where they are going.
A much more cynical way to look at it is, judging a company based on its aspirations means judging them based on their marketing rather than their products, services, or actions.
Think of how differently Comcast would be perceived if everyone wanted to talk about the company Comcast wishes it was, rather than company that it is. Or any company you don't like for whatever reason.
Sure, but even so (except for the way some people treat Google), we typically call companies that make their money by placing ads in a service or media offering an "X company" where X describes the service or media offering, not "advertising".
From that perspective, Google is an online services company, with AI playing an important role in some of its services.
Calling Google an "AI company" seems like calling Ford in 1962 "a streamlining company" - which is does violence to the concept even if Ford in 1962 maybe some money with streamlined cars.
I've had to un-learn my search query habits from the past. I used to attempt to express queries in ways that I thought would help the search engine (limit it to keywords, suppress keywords that are likely to produce false positives, etc.). Now, it seems better to put in sentence fragments, and the old way of a few specific thought out keywords is actually worse at producing the result I want.
The difference is small to the average HN user (most of us are just as capable of expressing queries both ways, and we'll find what we're looking for) but the latter kind of query is far more accessible to the average person.
eh, either way Google is described it's just trying to be a cute soundbite with next to no information.
You can call them an advertising company, but they create the products that most of their ads are seen in, so really they're an advertising company and a software company. They build the data centers all that software runs on or comes from, so they're also a data center company. And if they're using AI in most of their products these days (no idea), you could fairly add AI company on there too.
So what is the X in "they're an X company"? A better question is why does it matter what the X is? You don't gain any insight by filling it in.
Instead we could go crazy and use like two, even three sentences to describe what a company does, what its incentives are and where its constrained.
What would be your "crazy" characterization of Google?
The business focus matters because the ad market is in trouble, and unless Alphabet has something in the pipeline to replace ads, five to ten years from now the company is going to be where Yahoo is today.
This seems hard to imagine now, but no one expected DEC to fail, or HP to turn into that thing it turned into, or Microsoft to sit on a grenade labelled "Windows", or IBM to drift off to the margins of the web - and so on.
What evidence shows the ad business in trouble? Alphabet recorded revenue and profit in the quarter.
Sure, but for every unexpected floundering there are many more predictions of failure that never occurred. I'm not sure how unexpected failures in general give any insight beyond that they exist.
It doesn't necessarily mean that.
It's more common to associate "X" with their business competency.
If we always insist on X to be only defined by revenue, we then get the following type of soundbites that we pat ourselves on the back for:
- McDonalds is actually a real estate company and not a hamburger company because they make more money from rent than from food
- General Electric is really a bank because GE Capital has higher revenue than GE Aviation or GE Energy
- Harvard University is really a hedge fund and not a school because the endowment income is greater than the tuition paid by students
- Lebron James is actually an advertising spokesperson instead of a basketball player because he gets most of his money from corporate endorsements instead of the NBA player contract. Same thing can be said for NASCAR drivers and Olympic athletes.
Are the twisted examples above really how we categorize companies/celebrities? We don't label NY Times, National Geographic, and NBC/CBS/ABC/Fox as "ad companies". Instead we respectively call them "newspaper", "magazine", and "tv networks". Being a conduit for ads does not define each of them as an ad company.
It's much more reasonable to think of Google Inc as a AI/search/maps/cloud company that happens to get most of their revenue from ads. They are not an "ad company".
We don't compare McDonalds with Donald Trump development properties. We compare McDonalds with Burger King. We also don't compare Google Inc with Omnicom Group; instead we compare Google Search with MS Bing, and Android vs iPhone, and other technologies.
- McDonalds is a real estate company
- General Electric is really a bank
- Harvard University is really a hedge fund
- Lebron James is actually an advertising spokesperson
Are the twisted examples above really how we categorize companies/celebrities?
It makes no sense to categorize McDonalds as a real estate company because its cost structure, hiring policies, marketing efforts, and everything else about the company in no way reflect the components of a traditional marketing company.
If "LeBron James" was a publicly traded company and you categorized him as an advertising spokesperson, would you then take him out of the gym and have him spend 4 years pursing an MBA?
No. Neither would the shareholders. Also, he's a lot more successful than a lot of MBAs. The whole point is that maybe the preconceived notions and categorizations aren't all there is to it.
I find this interesting. Are McDonalds making most of their revenue from real estate rents from their franchisees and/or those involved in their supply chain, or is the bulk of this land outside their hamburger business?
Dollars wise McDonalds does make more in rent than in selling food (by about 2x).
Search, Gmail, Android, Chromebooks, Nexus, Pixel, Youtube, Maps etc. everything is about selling advertisements after scanning user provided data.
The rest are either loss leaders or moats, or ones with unclear monetization scenarios like Fiber. One exception is GCE and GAE, but I don't know how much profit/revenue they're making. I would count Google Apps, but until recently they were scanning even paid Google Apps for Business accounts for ad tracking purposes.
The reason why it's not incorrect to call Google an AI company is that Wall Street thinks they'll be able to shake out ever more cash from their machines in the future because of their position in ML and AI. It's their competitive edge and one that becomes more and more valuable as software continues to eat the world.