Google CEO says mobile ads to account for majority of revenue

google-buildingGoogle chief executive, Eric Schmidt, today made important comments about where he believes the majority of total revenue generated at his company would come from.

During the popular annual technology conference, TechCrunch Disrupt, in San Francisco today, Dr. Schmidt said that he believes “the majority of searches and the majority of revenue [would come from mobile devices],”

He cautioned that revenue generated from mobile advertising right now is not material (less than 5-percent of total revenue), despite exponential growth in mobile device use thanks to more advanced smartphones that offer a better browsing experience.

Online advertising generates about $24-billion in revenue for the company, which accounts for more than 90-percent of total revenue for Google.

 The personal computing trend seems to be shifting towards tablet computers and smartphones, as each become increasingly more powerful, less expensive, and more importantly, becoming increasingly functional for even the more-than-average tech savvy user.

In order for Google to solidify its dominant position in the online advertising market space, only about two years ago, the company launched its own open-source Android mobile operating system, which now gives manufacturers the option to use a highly advanced mobile OS completely free of licensing fees.

Given the growing popularity of Apple iOS products, having its own operating system puts Google in a better strategic market position.

Apple’s app store approval policy, arguably, until more recently, essentially blocked competing applications from working on its devices, which served as a significant threat to Google’s advertising business.

Google Android has seen exponential growth in the last couple of years, with the help of original device manufacturers, like High Tech Computer Corporation (HTC), Motorola, and Samsung, among others, who have adopted Google’s operating system, saturating the market with millions of Google powered phones.

In a recent primary research report published by Gartner Research, Google is expected to edge out both Apple and Research In Motion out of the second and third spots to become the world’s second largest phone maker as early as by the end of this year.

Apple, who currently has more of its iOS powered devices on the market compared to Google by units, recently launched its own advertising platform, dubbed iAd, to take on Google in the ever-so-lucrative mobile advertising space.

It is too early to reasonably forecast how much revenue would be generated from iAd for Apple as the company would likely cluster revenue together in financial statements for competitive purposes.

The Google stock (NASDAQ:GOOG) closed slightly below par today at $527 per share.

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Peggy holds a Bachelor Arts degree with honors in Economics from York University in Toronto, Canada. She is a Certified Management Accountant (CMA). She has also passed Level I of the Chartered Financial Analyst (CFA) Program. She is also a realtor. Write to [email protected]
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