Peak Google? Because iPhone is now worth more than Google ($GOOG).
After a decent quarter, but one where the CEO made the cardinal mistake of managing Wall Street expectations, $GOOG has now fallen to $587.27. It is down over 8% just today.
Since taking over the CEO post at Google, Larry Page, for all his talk, all his focus, all his spending -- on people, patents and acquisitions -- has failed to move the Google share price. In that time, since 4 April 2011, $AAPL is up over 20%.
As I write this, Apple ($AAPL) is worth just over 2X Google ($GOOG). In fact, despite all the "super excited" success of Android, just the iPhone business line -- not iPad, not iPod, not iTunes, not retail, not Mac, just iPhone -- is worth more than all of Google, including all of Android.
Why?
I think in this case we should not look to Apple, which has created the world's most popular smartphone, along with snatching the majority of the profits in the smartphone industry, but instead look straight at Google.
This is a failure. Why? I believe because of the fundamental disconnect between *customers* and *users*. In Apple's case, for example, nearly every user is a customer for every product. Not fully, of course, as Apple sells iPhones and other devices to carriers and the like but for the most part the relationship is based on this notion that the user is the customer, the customer is the user.
Not so for Google. The user of Google services is not the same as the customer. Google is not collecting money from its users. I suspect that in incalculable ways, this disconnect is reflected in all that they do and the user is perceptive enough, instantly, to realize this. This limits the time the user is on a Google property and limits their engagement.
Android crushes iPhone in user numbers but what is the *engagement*? Despite the massive user numbers that CEO Page loves to tout, most ad clicks come from iPhone. Most Google searches come from iPhone. The Android device simply doesn't engage the user on a similar level as iPhone. In a fairly short time, Google has taken Android from 0 to 250 million (sanctioned) activations. That's about the same as the number of iOS devices.
But the customers are using those iOS devices! They were *explicitly* designed for them. Not so, Android, which is first and foremost a means of herding "users" toward Google services. (Again, open/closed has nothing at all to do with Android. Nothing. It is a platform, like Chrome, to simultaneously capture more user data and drive users toward Google advertising).
It's the same with Google+. Page cheered the "90 million" users of the service but we all know that number is almost irrelevant. I'm considered a Google+ "user" and I bet I've spent less than a combined 10 minutes on the service since its debut. Six months from now that number probably won't even have doubled.
Page stated the following:
“I am super excited about the growth of Android, Gmail, and Google+, which now has 90 million users globally – well over double what I announced just three months ago. By building a meaningful relationship with our users through Google+ we will create amazing experiences across our services.”
If there was a "meaningful relationship" with users than perhaps those 90 million would come back, as they do again and again with Facebook and Twitter. Only, the vast majority do not. Again, I suspect that it's not simply because Google+ came years after Facebook and Twitter or because it's complicated. Rather, somehow "users" are picking up on the fact that it's a false playground; designed for nothing more than to capture our identity, link it to their database and show us more and more ads -- from their customers.
Google serves its advertising engine, not its users and this is revealed in its products. I would not be surprised to learn that already Kindle Fire (Amazon Android) has more engaged users than those few sad souls with Google-approved Android tablets.
Of course, "engagement" is not the only concern for Google. Yes, they botched the earnings and let Wall Street assume a higher number than came in. Still, they make billions.
Problem is, those billions continue to come from the old world wired web.
I repeatedly ask Google to break out costs and revenues of Android. Every quarter, they refuse. Costs are nearing $20 billion, once the Motorola acquisition goes through.
Where are the revenues?
During yesterday's earnings call, Google once again proclaimed that there are 700,000 Android activations *every day*. You think if any money was actually flowing from Android that they'd really keep that quiet?
Except, I still don't think this is their biggest concern. Yes, iPhone is superior to Android. Yes, Facebook and Twitter are superior to Google+. Worse, giant web companies such as Facebook and Twitter, even Apple, are actively sealing off their data from Google, knowing that once Google grabs it only Google makes real money from it.
The problem is that at the start of 2012, all Google's money comes from the PC and wired web. This is a fundamental problem. Despite what Microsoft wants us to believe, that the smartphone is a supplement to the PC, the smartphone is the computer. In countless ways more and more of what we do on the web, digitally, will take place on our smartphones.
All Google's revenues continue to come from the PC. In their earnings call, Page and company talked about text-based ads and the growth of Youtube advertising, and the display ad business.
None of it is via mobile. Mobile is not *supplemental*. Evenutally, very soon I suspect, mobile will be the primary focus of our online lives. And despite spending tens of billions, Google still can't figure out how to make actual reportable revenues off mobile.
In their earnings statement, though they once mention Android, of which Larry Page is super excited about the growth thereof, there is not even a single mention of 'mobile'. This is the biggest issue facing Google.