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Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

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Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#61

Post by adventured »

tommoor wrote: post #56
tma-1 wrote: post #11

Long-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. Some worrying figures[1]: * US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015. * Ad blocking grew by 41% globally in the last 12 months. * US ad blocking grew by 48% to reach 45 million…

They seem to be doing a pretty good job of diversifying? The profits haven't caught up yet, granted, but this is a company with many of the smartest people in the world working on future game-changing tech and sinking a ton of money into research. Still bullish here :)

They are doing a poor job of diversifying. Those side businesses are producing a small amount of revenue. It would be one thing if the profits hadn't caught up, the real problem is there isn't much in the way of sales to begin with. I see no example business of theirs that will get them even moderately diversified off of online advertising in the next five years. And I'm not speaking of technology Alphabet is messing with - what business are they looking to capture in self-driving cars for example? I see no example of an actual business there so far.

Granted, this only matters in the scenario in which their online advertising business contracts meaningfully (whether due to ad-blockers or otherwise). If ad-blockers gain usage at an accelerating pace, Google is unlikely to have much time to diversify (and that takes a long time when you're talking $20b in sales to off-set).

So far Google has been flaky, disorganized and unprincipled about developing other real businesses. They should have a dramatically larger cloud services business for example, but they handled that incompetently and ceded years and tons of ground to AWS.

Essentially Google has to spend the next several years praying that ad-blockers don't rapidly bring their spigot of online ad dollars to an end. That's a real bad position to have put yourself in if you're a $536 billion corporation.

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#62

Post by mwfunk »

bpodgursky wrote: post #59
tma-1 wrote: post #11

Long-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. Some worrying figures[1]: * US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015. * Ad blocking grew by 41% globally in the last 12 months. * US ad blocking grew by 48% to reach 45 million…

If adblocking becomes a serious problem for Google, they can (and will) block the relevant extensions in Chrome. Also, mobile chrome (increasingly dominant worldwide) doesn't, and won't, have adblocking. Yes, I'm ignoring numerically insignificant installs like rooted hosts redirects, firefox mobile, opera, etc. Those aren't going to impact revenue.

That's also not good for them, because it grants a potentially huge advantage to their competitors who do support adblocking. That may or may not be a long term big deal, but it's a risk.

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#63

Post by endtime »

educar wrote: post #51
kumarm wrote: post #41

Earlier quoted context omitted.

>>Email will no see decent progress thanks to gmail. I remember how great email was before GMail: 1. Every few days I had delete emails so that I can get new email. 2. Delete sent mail immediately to make space for new emails. 3. More than 50% of emails received are spam. Yeah right GMail was one that stopped progress of email :)

As I noted, Google makes great products including gmail. My point was that with gmail being free and good enough, there is nobody to compete with gmail. In 2016, nobody will start an email company even though there are lots of advancements that can be made.

It was acquired and shut down, but https://www.mailboxapp.com/ was a thing recently.

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#64

Post by patmcc »

bpodgursky wrote: post #59
tma-1 wrote: post #11

Long-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. Some worrying figures[1]: * US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015. * Ad blocking grew by 41% globally in the last 12 months. * US ad blocking grew by 48% to reach 45 million…

If adblocking becomes a serious problem for Google, they can (and will) block the relevant extensions in Chrome. Also, mobile chrome (increasingly dominant worldwide) doesn't, and won't, have adblocking. Yes, I'm ignoring numerically insignificant installs like rooted hosts redirects, firefox mobile, opera, etc. Those aren't going to impact revenue.

That's an excellent way to get people to switch away from Chrome. I love Chrome, use it all the time, but if I can't have any adblocking? No thanks.

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#65

Post by omarchowdhury »

adventured wrote: post #61
tommoor wrote: post #56

Earlier quoted context omitted.

They seem to be doing a pretty good job of diversifying? The profits haven't caught up yet, granted, but this is a company with many of the smartest people in the world working on future game-changing tech and sinking a ton of money into research. Still bullish here :)

They are doing a poor job of diversifying. Those side businesses are producing a small amount of revenue. It would be one thing if the profits hadn't caught up, the real problem is there isn't much in the way of sales to begin with. I see no example business of theirs that will get them even moderately diversified off of online advertising in the next five years. And I'm not speaking of technology Alphabet is messing…

Advertising will just change form.

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#66

Post by adventured »

Steko wrote: post #38
rhino369 wrote: post #29

Earlier quoted context omitted.

>More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. If I were Tim Cook, I'd be at least a little tempted to update iOS and OSX to include adblocking on by default.

Google would have no problem forcing ads into the main SERP hose if it came to Microsoft or Apple blocking by default.

Any attempt to do that, would result in two likely outcomes:

1) It would create a bad product, according to Google's own prior statements on the matter.

2) It would encourage government authorities to look even closer at potential abuses toward consumers (ie what kind of consumer harm is occurring, if any, when a monopoly search provider prevents attempts by consumers to use ad blockers; that would have to be resolved legally). European authorities would likely pounce on such a move immediately, looking for any opening by mistake to go after the company, given how they've handled Google thus far.

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#67

Post by sirkneeland »

educar wrote: post #53
avar wrote: post #45

Earlier quoted context omitted.

Why can't they sell products and be like an Apple, Oracle, Microsoft. Econ 101 on HN again. Aside from what Google's doing. You're assuming that the value someone personally derives from using something is the value other people derive from pushing it to them. I.e. you have ads on Google, some of which cost >$10. To the companies paying for them that makes sense, because they might be selling a product that costs $50…

Nobody was questioning the economics, it's obvious why they do what they do. I was questioning the kind of company Google wants to be. It can be greater (in my eyes anyway). For example, Apple can still generate phenomenal profits just on the basis of their product and doesn't need to resort to putting ads everywhere.

When you have optimized your company structure, culture etc for one type of output, it is not easy to do things that are entirely different. It will either deliver a compromised "new" output, or (even worse), compromise the output that is the mainstay of the company.

Google could not just become a wildly profitable Apple-style "hardware first" company overnight (or, arguably, ever).

Conversely, we have all seen Apple struggling to deliver cloud services that are reliable and desirable (beyond their integration into Apple's ecosystem) since the days of iTools and MobileMe..

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#68

Post by what_ever »

mmanfrin wrote: post #13
tyingq wrote: post #8

"Paid clicks for Google were up 29 percent year-over-year for the first quarter" I'm amazed this trend continues. Page views almost certainly were NOT up 29% yoy. Meaning that clicks are growing faster than page views, in a big way, every single quarter, for years. That's what sets the investor expectations, but I don't see a way this trend continues forever. There's only so much room for additional ads, ad optimizat…

I imagine part of it is explained by the fact that when I did a search on a mobile device, nearly 90% of the front fold was ad. http://i.imgur.com/S5nClc4.png

You should check hotels related search on mobile. Page 1 is ads, scroll to 2nd page and it's Google's own hotel booking module which I would argue is ad as well.

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#69

Post by [deleted] »

russell_h wrote: post #49
nightski wrote: post #40

Earlier quoted context omitted.

This would be a good thing in the long run. It would open the door to paid services that could be competitive. Currently YouTube is free and there are no consequences for blocking ads. It's funny, I didn't even realize that YouTube had ads until I turned off my ad blocker one day. I was amazed at how awful the experience was...

I think you can pay to disable ads on YouTube: https://www.youtube.com/red

[deleted]

Re: Alphabet slides 5% after missing earnings expectations on revenue of $20.3B

#70

Post by pianoben »

educar wrote: post #51
kumarm wrote: post #41

Earlier quoted context omitted.

>>Email will no see decent progress thanks to gmail. I remember how great email was before GMail: 1. Every few days I had delete emails so that I can get new email. 2. Delete sent mail immediately to make space for new emails. 3. More than 50% of emails received are spam. Yeah right GMail was one that stopped progress of email :)

As I noted, Google makes great products including gmail. My point was that with gmail being free and good enough, there is nobody to compete with gmail. In 2016, nobody will start an email company even though there are lots of advancements that can be made.

I'll note here that the email startup Acompli, started in 2013, was acquired in 2014 for $200m. Their product is now Outlook Mobile.

Gmail hasn't had nearly the stifling effect that one might assume!

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