The Role of Innovation in Google’s Market Position
Muhammad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Google (NASDAQ: GOOG) has learned the true secret for long term survival in the market and continuous growth: innovation. The current market capital of the company stands at $219.82 billion, and the share price of the company is staying within a fairly stable range of $668 - $670. The company is highly profitable, with profit margin of 22.2% and operating margin of 28.06%. Although the figures are already strong, the profitability of the company is expected to grow even further.
There are a number of factors that add substance to that expectation; one of the factors is Google’s ability to compete against the most valuable company in the world, Apple (NASDAQ: AAPL). The wide portfolio of services and products by Google has launched the company on the path to becoming the next big thing. The company’s search engine is already more popular than any of the other existing search engines. The company’s smartphone and tablet-related products and services are continuously growing and gradually taking the lead in the market. Google’s map, email, and advertising services are also leading their respective markets.
Google and Apple
Google’s smartphone operating system, Android, is immensely popular all over the globe, and its growing in popularity by the minute. Android is direct competition for Apple’s iOS, which seems to gradually be losing its market share. According to experts, the day is due when Google takes over Apple and becomes the market leader of the smartphone industry. Apple can be observed trying to protect its territory on the basis of legal wars, rather than innovative products. On the other hand, Google has been coming up with products and services that have been widely accepted in the recent past. Some of the most recent successful products by the company include the Nexus 7 tablet and a newly launched Nexus 4 smartphone. However, Apple has only launched upgraded versions of its older products recently.
Apple’s iPad Mini is being compared to Google’s Nexus 7, and in certain aspects Nexus 7 has been declared the winner. For example, the screen resolution of Nexus 7 is significantly better than that of the iPad Mini, and the Nexus 7 is very reasonably priced when compared to the iPad Mini. Such factors strongly indicate further growth of revenue for Google in the prospective periods. These successes have also strengthened investors’ confidence in the company.
Google and Facebook
Facebook (NASDAQ: FB), the world’s largest social networking website, is also in direct competition with Google in a number of aspects. One of the major ways is advertising. Google continues to generate high revenues from its creative advertising opportunities, and it continues to do so. On the other hand, Facebook is still developing its advertisement operations. Facebook is intent on developing its mobile platform and optimizing this for advertising.
Google and Innovation
Google has evolved from being a search engine to a major player in the smartphone industry. This evolution has taken place over a very small period of time, and Google has achieved in a few years what other companies take decades to do. Google attributes a very high value to innovation, and this is the reason why each employee of the company is encouraged to work on independent projects. The project that is considered to have potential for revenue generation is picked up by the senior officials, and the company allocates its resources for work on the project. This is just one of the ways that have helped the company in maintaining a permanently evolving dynamic organizational culture.
Google keeps updating its existing products and services, making sure they are interesting and user-friendly. Relatively new services like Google Play and Google Shopping have already found a permanent spot in their respective markets. One of the most prominent examples of Google’s continuous improvement is its maps service. The service has improved exceptionally since it was launched.
In my opinion, investors should buy Google’s stock, as the company’s prospects seem very positive. With a number of new launches and market acceptance, the revenue of the company is bound to grow. Also, with increased market share won against Apple, the scope of Google’s sales is expected to increase as well. It is an opportunity for long term investors, as the company’s financial performance indicates that it will continue moving upward.
muhammadbazil owns shares of Google. The Motley Fool owns shares of Apple, Facebook, and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Apple, Facebook, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!