Google Profits Soar to $2.5 Billion in 2nd Quarter
The financial results of Google for the last quarter have been published and show net profit rising to $2.5 billion and revenue rising to $9 billion.
These gains are significantly higher than in the same period last year, 36% up on profit and 32% up of revenue. They are the first to be published after Larry Page took over as the Google CEO from Eric Schmidt in April after he had led the company for 10 years.
The results were well ahead of wall street market expectations and shares rose sharply on the news, they had feared that aggressive spending would curtail Google’s profit margin.
While it was true that operating expenses rose sharply, it was more than compensated for by large increases in sales.
Google is no longer just the internet’s search giant, it now has a large operating system presence with over 135 million smartphones and tablets running it’s Android OS.
It is the owner of YouTube, dominating the online video market which is growing year on year, and recently it announced the Google+ social networking platform which marks it’s intentions to draw users away from Facebook.
All of these services are free to use but allow them to get eyeballs to their revenue driving ad network which is a thriving business.
It is a business model that other sectors of business might want to look into, there is no doubt that the biggest players in the online world all follow this model, Facebook, YouTube, Google, Spotify, Android, Zynga etc. They all make their profit on the back end while giving away services and products on the front end.
Yet we constantly see resistance to this model from established businesses, see this article about the free music streaming service spotify. If you are thinking of starting a silicon valley project it is a business model that can succeed, if you can make it work, Google is proof that it will pay off handsomely.
0 Comments
Trackbacks/Pingbacks