Three Basic Theories That Explain Google’s Profit Explosion

There is only one company more valuable than Google in the world. Apple sells smart-phones and other electronic devices; Google does not do much selling, besides letting you sell you self on its search engine website. The search engine’s parent company, Alphabet, reported that its quarterly profits increased by 33 percent in the last quarter.

Larry Page and Sergey Brin’s gamble on building a website for finding other websites was not expected to be the multi-billion dollar empire it has become today. In the twenty-one year period since they started it as a project while on their PhD at Stanford, only Amazon has managed to have the kind of growth and profitability enjoyed by Google. What is the secret to this ever increasing success that seems to show no sign of slowing soon?

1. MORE WEB USERS, MORE GOOGLERS

This is really very simple. Google becomes more valuable as long as there is more stuff added to the internet every minute. There were only about 100,000 websites when Google was created; compare that to over 1 billion today. It has become inevitable to enlist the help of Google to find something on the internet that the very act of searching up stuff online is now called Googling. The other players in the business of search engine – Ask.com and Bing – are still up and running but to trust if those can get you what you need, you would have to Google them first. Google remains the most visited company in the world based on Alexa rankings. To confirm, Google it!

2. GREATER NEED FOR ADVERTISING

Every new business wants to be found as quickly as possible and most are more than willing to pay for this. While revenues from advertising have dropped considerably from recent years, Google’s main revenue still comes from giving businesses and web pages visibility. Google and Facebook own, by far, the largest percentage of all online advertising revenues, but Google makes more than Facebook and the other companies (Twitter, Baidu, Weibo, etc) combined. ‘The Keyword’ is the main product by which this sells for pages that wish to be discovered on Google searches, while Google’s ownership of YouTube has also given it ownership of all those ad revenues that come before videos are played. Yes, Google shares its revenues with content creators through Adsense (for bloggers) and YouTubers with large subscribers. But the more it shares, the more it makes: for every dollar spent on the internet on advertising, Google makes thirty cents. Imagine that.

3. VERSATILITY

Want to succeed in tech? Don’t. Stay. A. Dinosaur.

Google does not just want to be a search engine company that leads to other websites; they want you to find what you want directly on Google. So information ranging from live scores of football matches and currency and time conversions, to latest events in a city close to you and updated results from US elections (last year), Google does not just let you find sites from it but know stuff on its site. This has become important because many persons could stay on Twitter and Facebook get substantial amounts of the information they want. The company now creates its own way of giving instant information about Googled things and not just producing a list of sites where those could be found.

Google also makes devices, even if its flagship smartphone series, Nexus, continues to lag behind everything Apple produces. The Google glass and other personal devices in Google’ VR unit are competing well with products of rivals, such as Facebook’s Oculus.

Then, there is the other matter of Google owning Android, the Operating System on which virtually every smart-phone runs on except those made by Apple. With your Google account, you can see every action you have taken on your Android device. It’s really Google’s world isn’t it?

Featured image: Google

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