Google is Now Officially Like No Other Company on the Planet
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Google (NASDAQ: GOOG) has been on a tear, buying up other companies and/or breaking in to new markets since it was founded in 1998. Now, with its recent announcement that it will be providing ultrafast cable and internet service, Google can boast being in just about every major technology space there is. That feat belongs to no other company on the planet.
This is all fine and good, but you can’t help but wonder how all of this will affect the company’s overall financial health.
Last week, the internet search giant announced that it is rolling out its own high-speed internet and television service in Kansas City, Mo. beginning in September. It’s called Google Fiber, and it’s fast. And when I say fast, I mean fast – 1 gigabit. That means download and upload speeds of 1,000 megabytes per second. To be even clearer, the service will be 100 times faster than the average broadband connection.
This foray into a new market comes on the heels of key moves the company made this year that further solidify its position in offering myriad technology products and services. There was the purchase of Motorola Mobility in May. Google execs say the company has no plans to begin making its own smartphones at this moment, but you can’t help but believe that such a product is just around the corner. What better way to enter the market as a seller than to buy a handset manufacturer? In the case of Google, buying Motorola for $12.5 billion made for the largest acquisition in its history.
While it has already been enjoying the success of its Android operating system powering Samsung smartphones and tablets, Google decided it was a productive move to make its own tablet. This led to the introduction of its Nexus 7 tablet, which is being rolled out now, marking another major move by Google this year.
So, let’s count the businesses Google is now in – I won’t be able to count them all in this story, but I have to start somewhere. First, it’s the leading search engine provider; it has its own tablet; it has its own operating system (Android); it has Google+ , a social network; it has its own browser (Chrome); and now it provides internet and TV service. What other company can boast being in all of these businesses all at once?
Impressive, to say the least.
Having all of these products and services brings Google to being just about as complete as it can be right now in its mission statement: “Google’s mission is to organize the world’s information and make it universally accessible and useful.”
After reviewing its fundamentals, Google’s many endeavors don't seem to have had an extensive adverse effect. Take its profit margin for example. The lowest it’s been was in 2008 when it was 6.71%. The highest it has been is 30.13% in 2010. It averages 25.33% and is currently 22.8%.
That’s in line with its rival Apple (NASDAQ: AAPL). It too has been aggressive in rolling out new products, many of which, like the iPhone and iPad, compete directly with Google. Its profit margin averages 20.91% and is currently 25.19%.
Other players that offer a multitude of products and services include Amazon. Its Kindle Fire is a direct competitor to Google’s Nexus, and now it must also contend with a new tablet called Surface that will be introduced by Microsoft within the next few quarters. And to go back to Apple, it is still thought that the software developer will introduce a mini iPad that will be priced to compete with Kindle, Nexus and Surface.
Rumors of a Facebook (NASDAQ: FB) smartphone continue to swirl about, with the latest pegging the rollout for summer of next year. However, CEO Mark Zuckerberg quashed the rumor during the company’s second quarter earnings call, saying the endeavor didn’t make sense for the company right now.
As these companies jockey for position in the ever changing tech world, they are incurring huge costs that will more than likely affect their bottom lines. They are pouring millions into not only buying other companies to advance their positions, but they are also investing heavily in tech geniuses to develop cutting edge products. Wars over patents continue, and the financial toll of those must also be factored in. However, in the long-run, these lawsuits may be worth it considering the billions of dollars that are at stake.
Considering that Google has the most pans in the fire, I can’t help but to think it has the most to lose. Its profit margins have held up pretty well, even after the mega buy of Motorola.
It will indeed be interesting to see how the company manages all of its competitors. It will be equally interesting to see how the competitors respond.
TwillyD has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple 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.If you have questions about this post or the Fool’s blog network, click here for information.