Excerpt from a timely Google snapshot
Google Chief Executive Officer Larry Page is clearly looking beyond not just search—still the main cog in its profit-making machine—but software entirely. Here’s why: Apple’s $465 billion-odd market capitalization is currently greater than Microsoft, Google, and Nokia combined, thanks to its ecosystem of tightly integrated hardware and software products. “The line between hardware and software is indistinct and arbitrary, especially in mobile devices,” says Paul Saffo, a consultant with Discern. “You need to control the hardware to control the overall experience.”
If Google hardware takes off—in the form of phones, tablets, TVs, and maybe even visors with Terminator-like information overlays—it would more tightly tie consumers to the company’s products such as search and YouTube. The goal wouldn’t necessarily be to make money on the hardware but to create more ways for Google to serve up the ads that brought in 96 percent of the company’s $37.9 billion sales in 2011. “Google will remain an advertising company, and they’ll use hardware to grow that business,” predicts Aaron Kessler, an analyst with Raymond James Financial.