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Comment by ajcarpy2005 | Hacker News Reader

ajcarpy2005

There seems to be a push to diversify and expand Google's income recently. Google Play Music All Access, Google Helpouts (20% cut), this stock change, Google fiber (while competitively priced, I expect there will be long-term profits), Google Glass, etc.

I have been noticing this and assume it's meant to help them fund their robotic and autonomous car projects. These are likely capital-intensive segments of the company.

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Google have been trying to find something apart from advertising since pretty much day dot. It's a strategy pioneered by Microsoft, I call it "spaghetti cannon". Turn your free cashflow into spaghetti, fire it at a wall, hope something sticks.

It's sorta-kinda worked for MS. They have 4 or 5 distinct lines of business, each of which could qualify as an F500 alone.

Google don't have that. They have 1, and only 1, line of business sustaining every outlay they have. They've only ever had 1, and only 1, line of business, right back to their first public reports.

Well I wouldn't say they have only a single line of business. Yes, they make pretty much all of their profits from advertising. However they no longer just do searches. They do email, file hosting etc. You name it and they probably do it. They do make money from ways other than advertising too. They have quite a few pay to use services. Like business emails or Google Drive.

and yet none of them make money except search advertising. it's almost all of their revenue on a percentage basis.

edit: i do believe they make a bit of money with youtube now, but it is still advertising. they haven't successfully SOLD anything to date.

> and yet none of them make money except search advertising.

I actually think lots of them make money -- over $5 billion in non-advertising revenue in 2013 [1]-- its just they are dwarfed by the scale of the revenue from search advertising ($50 billion in 2013.)

> they haven't successfully SOLD anything to date.

If they haven't sold anything but advertising, they must have just conjured that $5 billion in non-advertising revenue (and that total, and the proportion of non-advertising revenue to total revenue -- has been growing every year) in 2013 out of thin air. Which, you know, would be even more impressive than selling stuff.

91% of their business is advertising, 9% is other stuff including android apps, chromecast, chromebooks, fiber, app engine. The actual number is 4.927 billion for 2013[1].

They have not really had a successful product outside of advertising. Chromecast is probably the closest thing to a success out of all the other things they do. Seeing as how they don't have a single business line over a billion, I'd consider all of them hobbies at this point for a company the size of google.

Apple TV is a > 1 billion product now, and it is absolutely a hobby for Apple. Yet they have 4 different product lines that are huge businesses. Microsoft has a lot of huge business lines. Google has advertising and a bunch of hobbies. Hopefully at some point they turn into something. I'm specifically rooting for Fiber. But that doesn't mean it's true right now. It's just not.

[1] http://investor.google.com/financial/tables.html

Well hobbies to Google or not they're still big businesses compared to most (and most are growing). Actually having a lot of small "hobbies" seem quite a good way to diversify. Although they still make most (I think) of their profits from the main search they're clearly still making a lot from all the other things that they do. It's not like they lose money on them all or anything.

Google is a media company, like TV or publishing.

It's not like deriving income from advertising is a strange way to do business.

At least Google is a bit more diverse with how they spend their money.

I do wonder sometimes what Android could have meant to them if they had kept it more close hold and made and sold their own devices.

Sure they got lots of other companies to do the expensive hardware R&D, manufacture and marketing, but in the end, what's a multi-billion dollar market in devices is still just a funnel into line-of-business #1.

not only that, but they already had that funnel wrapped up with their partnership with apple. this only gave them slightly more control over the funnel, with no real profits to show for it, while hurting apple (which from a google perspective might be worthwhile in and of itself? I'm not sure apple had any plans to go into search, but maybe).

Hardware is a hard battle.

Windows and Office have locked users in for many years. But hardware cannot. Many years ago I was a Dell user, then I am now a Mac user. A few years back I was Nokia and then Sony Ericson and then Samsung, Motorola and now Apple. I think Google made a smart move to only make very limited hardware product on their own.

Even when they work with external suppliers (and a few of them for some reason) for items such as the Nexus devices, they still have failings such as very flat shapes that are hard to hold comfortably without dropping and smashing (like the older Nexus phones).

If they had attempted to do their own hardware, it would have been a horrendously uphill battle against the phones in the market at the time (Apple had tiny share, Nokia colossal).

Putting out the OS meant that hardware manufacturers could compete with different features whilst still (theoretically) having a common OS that users could mostly navigate around and app developers could write for. Contrast this with Nokia at the time, where S40 etc. worked wildly differently on different phones, with different JSRs supported by the J2ME runtimes on each phone, and where they essentially competed with their own other Nokia phones for specs; Nokia did a massive range of phones that were mostly the same but looked different or had very mild changes - it was too much choice!

This way Google could carry on doing software and leave the hardware to external companies that were used to doing hardware. I still have my TMobile G1 though, for history's sake. Don't use it though - it practically has no RAM left over after boot.

Google has multiple billion-dollar business lines. But mostly they have been effective in building products that drive revenue to the main one.

They have multiple divisions. They have only one thing that people pay them for in any significant volume.

You are never really in the business of your expenses. A farm is not in the diesel and fertiliser business.

Huh? Google has multiple billion dollar REVENUE businesses.

They have two businesses of billion-dollar scale.

One of them is advertising. It is 95% of revenue. If it stopped, Google would effectively die.

The other is Motorola Mobile, which is a side-effect of buying it. If it stopped, I am not sure there would be much more said than a few B-mag retrospectives.

So I guess I am wrong, Google is only 95% an advertising company.

how does the stock split affect income? afaict it is purely about governance

Correct, they (or anyone else) are not making money directly off this. Just like a regular stock split, when there is a 2 for 1 split each share is instantly worth 1/2 and no one is richer.

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