http://www.rethink-wireless.com/2011/04/17/googles-started-mobile-q1-disappoints.htm
Company’s rising costs worry investors, and antitrust probes are mounting, with the latest coming from Korea
By CAROLINE GABRIELPublished: 17 April, 2011
Google talked up its huge mobile potential even as it delivered first quarter results that disappointed because of the firm’s galloping costs. CFO Patrick Pichette said the company “tripped” into a $1bn mobile business without massive effort, leaving the audience to imagine what could be achieved once Google really started to try.
However, success in the mobile world is putting Google in the sights of new competitors and antitrust authorities, and the latest complaints come from Korea, where Android handsets are gaining ground rapidly. Korea’s web and wireless activities always have an influence disproportionate to the country’s size because of its advanced usage and major influence on the mobile industry. Adding to antitrust probes underway in the US and Europe, Korea’ s largest homegrown internet search providers, NHN and Daum Communications, have filed complaints against their US rival.
Their filings with the Korean Fair Trade Commission allege that Google has blocked local cellcos and manufacturers from embedding third party search applications in Android devices.
“Android is an open platform, and carriers and partners are free to decide which applications and services to include,” said Google spokesperson Lois Kim. “We’re looking forward to working with the FTC to address any questions they may have.” In some countries, non-Google search engines have appeared as the default homescreen option on Android devices – Baidu is the usual choice in China, but AT&T has some Android smartphones running Yahoo.
The issue is becoming serious, the complainants say, as 70% of the 10m-plus smartphones sold in South Korea as of March 31 were running Android, according to Hanwha Securities estimates. Yet on PCs, NHN and Daum control about 90% of web searches while Google has less than 2% share.
Of course, such statistics – regardless of the business practices at work – indicate why mobile expansion is so vital to Google, especially in markets where it has not achieved PC dominance, or where non-PC devices are the main tools of web use. Back at the results conference call, Jeff Huber – SVP of commercial and local services under Google’s recently announced new management structure – said mobile search had increased by more than 500% in the past two years, while 350,000 Android devices were being activated a day. More than three billion Android Market apps have been installed to date.
For the first quarter, Google saw earnings up 17% year-on-year to $2.3bn but its shares dropped by 5%, because costs grew more quickly than revenues. The latter were up 27% to $8.6bn, with paid-for clicks on adverts a key driver. Operating expenses were a third of revenue, the highest proportion since 2007, and some investors are concerned at the trend, since Google plans to add a further 6,200 staff to its 23,300-strong workforce this year, the highest number in its history.
No comments:
Post a Comment