Google Q4 Earnings: Meet me at the Intersection of Hardware, Software and Services

January 31, 2017

Digital Marketing Link Walls By Link Walls

One of the great parts about ChannelAdvisor is that we sit in the middle of so much innovation going on in the consumer web. Over the last decade perhaps the only constant in e-commerce is the relentless continued pursuit of an improved consumer experience. From Amazon to Yahoo and everyone in between, billions are invested every year to this end.

The latest trend is companies seeking to own the entire ecosystem — from hardware to software to services. Google released their fourth quarter and full-year earnings late last week and this theme of the intersection was a key one.  

“It’s important for us to work at the intersection of hardware, software and services,” said Sundar Pichai, Google’s CEO. Pichai was commenting on the intersection of core Google Search and new products such as the Pixel phone and Google Home.

The theory being that by controlling the hardware, Google can improve the overall search experience for users, thus encouraging more usage (see our post last quarter for more historical context on this). Amazon has their own set of metrics but this same fundamental idea is behind investments in voice recognition and the Echo.

Google/Alphabet posted very consistent results for the 4th quarter. Some of the highlights were:

  • Revenue grew to $26.1 billion for the quarter, which represented growth of 24% in constant currency
  • Net income grew 8.3% to $5.3 billion
  • Clicks increased 36%
  • CPC decreased 15%

The consistency of Google’s growth is pretty staggering — this represented the twentieth consecutive quarter they have posted 20% or higher revenue growth.

For the full year, Google generated $90.3 billion which certainly sets them up to crest the $100 billion mark in 2017 based on historical growth rates. The key drivers in Q4 were the same as the rest of 2016 — strong growth in mobile search and YouTube.

The takeaways for brands and retailers remain to focus on making YouTube and mobile work as a core part of a digital advertising strategy today while looking ahead to a not-so-distant future where advertising via Home is another option.  

And if you think those self-driving cars won’t have Google Assistant tightly integrated into them, then you haven’t been paying attention.  

Ok, Google — that’s all for now.