Google Expanding Beyond “Search”

Google’s built a multi-billion-dollar empire largely on the strength of search ad sales. But that’s starting to change as the years Google has spent nurturing side businesses that have nothing to do with search are beginning to show small, but growing returns.

When Google announced its earnings for the last quarter of 2013, investors and analysts were generally pleased. The company blew past most expectations, with revenue 17 percent higher than during the same period in 2012.

Although the company’s earnings-per-share missed analyst expectations, Google had a boffo quarter. Revenue was up, owing to higher Google-owned site revenue and more paid clicks, and although traffic acquisition costs — what Google pays to its partners — were up, too, their percentage of revenue dipped 1 percent. The company announced a stock split coming this spring.

But here’s a remarkable number that received relatively little notice: Google derived 10 percent of its “Google segment” revenue, about $1.65 billion, from a category it calls “Other.” The vast majority of this represents Google’s cut of app sales, and in-app sales, from the Google Play Store. Sales of various Nexus devices and the Chromecast streaming media device contributed as well.

“Google Play traction is real, and is approaching the volume that Apple is getting on applications,” said George Geis, a University of California at Los Angeles adjunct professor at the Anderson School of Management who specializes in teaching about technology company mergers and acquisitions. “And that’s a good margin business.”

Chromecast, meanwhile, represents a small but growing portion of that number. “I’d guess that Chromecast is generating $300 million at this time. They sold around 2 million units. It’s still small, but it’s of interest,” Geis said.

This article was originally posted on CNet.  Click here to read the full story.

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