I don't think that he's succeeding at the innovation part but that won't matter as long as their financials look good.
Arguably, Google still has a lot of in-house talent, but optimizing for the financial aspect usually ties talent down sooner or later.
See also the Innovator's Dilemma.
Ads is down to 85% of their revenue - they have created vast non-ads businesses which are still dwarfed by their 20% YoY ads growth.
If Google Pay/Checkout/Wallet/etc had been as successful as Stripe, would anyone have noticed? Stripe is worth $35B - 3% of Alphabet. It would just be lumped in the above 15% non-ads business and people would still say that they can't do anything but ads.
I’m not talking about market value. If market value was a good stand in first sound business model neither Netflix (with negative cash flow) nor Uber or Lyft would be worth as much as they are. I’m talking about profit.
Netflix is also borrowing money for an “asset” that is worth less over time - content.
Every company has lots of smart people, it is how it utilizes them that concretely matters.
Like the difference between trying to use a bunch of dutch style windmills, lodestones, and copper wire to try to generate baseload power as opposed to modern escalatingly large wind turbines.
On the other hand, I truly believe Nadella was left with a golden basket. A lot of what Ballmer and Muglia left behind actually paved the path for what MSFT is today. Nadella has been excellent in executing the strategy, but in general I feel many people give him a lot more credit than he was responsible for.
Ballmer pushed hard for Xbox, was a big proponent of cloud and, most importantly, placed a huge emphasis on enterprise customers. A lot of the fruits of his labor were reaped under Satya's tenure.
More interestingly, it could be argued the biggest cloud evangelist in Microsoft at the time was neither Ballmer nor Satya, but rather Bob Muglia (the SVP of the servers and tools division). Muglia was notoriously hated by Ballmer and prevented his probable rise to CEO (he was fired by Ballmer and his position was filled by Satya).
He's a McKinsey guy. That's all he knows: to make the financials "look good".
Look at the Google search results page. It's chock full of ads if the query even remotely looks commercial. Gone are the days of the "10 blue links" and "get you out of here as quickly as possible". Now they want to keep you on Google's O&O properties, so they can sell you more stuff, as each pageview is looked at as an opportunity to show more ads to you.
Then I wonder which product person is suitable to lead behemoth like Alphabet. On top of that, do the board trust a product person to become CEO of Google? I think, in mature stage of company, board trust MBA people more than engineers or product people unfortunately.
I think it is convenient here to blame the pandemic but it will be interesting to see how it plays out.
Did you intend to imply that the revenues would have declined without the pandemic? That seems unlikely.
https://www.statista.com/statistics/507742/alphabet-annual-g...
Sorry if I've read you wrong but that is the typical meaning of "convenient" in a sentence like the one you wrote.
I've been watching Google's financials fairly close from when I joined the company in 2006 onward (I left in 2010). The driver of Google's profits has always been search advertising, nothing else in their portfolio has the margins that search ads had at one time. At the time of Bing's introduction (2011) Google's search advertising margin started to fall just as Bing's was increasing. That has continued to this day.
To counter that, Google first started taking revenue away from their AdSense sites, then they started adding more paid placement and ads on their own sites, then they started "pre-showing" content in the search results that kept people from going to a web page that might be showing ads[1]. They introduced additional "taxes" (really fees) for people selling things to insure that they appeared in the top third of Google's search results even if they were the best organic result for the product being sold.
All of these moves have kept the revenue growing at the cost of increasing user dissatisfaction with the quality of the service. Left to their own devices, users would migrate to other services but here Google has been aggressively paying for search portals (whether explicit "web search" pages, or implicit like a search bar on your phone) to send them traffic rather than send it to Bing. They have spent a record amount of money over the last year buying this sort of traffic.
They can't keep paying more for traffic, eventually that gives them negative margins on search ads. While as Bing's cost per click grows they can pay more for traffic and still make their numbers. Google is having a harder and harder time squeezing more ads onto their pages without completely destroying the user experience.
This trend means that eventually, they are going to run out of options, and their revenues are going to go down. Look at their financials and they don't have another business unit that can pick up the slack.
There hasn't be a particularly novel improvement to search engine ranking over the last 10 years at least, and existing patents on maximizing ad revenues are reaching their expiration date.
If Google doesn't find a way to re-invent itself it will go the way of tech giants before it, build a shiny headquarters monument to itself and then expire in a slow and painful death.
I used to remind people when I was there that the "plex" was the headquarters for SGI, a Tech Giant before it was dead :-). It will be sadly poetic if Google has to sell off their shiny new headquarters to stay alive another couple of years down the road.
[1] Since Google gets paid significantly less for ads on third party pages, even if they supply them, it is a win for them to keep people on Google's internal sites.
They also have a history of burning through money (both opex and capex) which makes them very very susceptible to revenue dips.
So my expectation has always been they would post some record revenue one quarter, and then the gas would run out of their various tricks and they would post flat to down revenue the next. That it went from record to year over year down in a single quarter, sure. But during the "Great Recession" in 2009 they didn't even go flat, so perhaps a more accurate statement is that their resiliency has been removed.
I'll put a prediction here we can come back and look at and see how wrong I was :-). If they have more than two quarters that are down year over year, they will have a significant cost restructuring activity of either a layoff, or selling off one of their sub-businesses, or both.
Why do you say this? Recent innovations include work in machine learning, Deepmind, a self driving car program, K8s, Go, Flutter, quantum computing chips, and more. Are these too old to count as recent?