Google learns a $15B lesson on mobile

Google hit the news last night for all the wrong reasons. Firstly when their printer inadvertently issued their Q3 results hours too early (when NASDAQ was still in session!). Secondly by issuing results that were well below expectations.

But if you look behind the announcements you can see a more interesting trend.

Mobile explosion

Indeed, all the current analysis seems to show that the move to mobile is happening even faster than expected, certainly faster than many top companies predicted. Google reported that annualized revenues from mobile are now $8B compared with $2.5B a year back. That’s a pretty stunning change and could be considered good news if mobile was core to Google’s business. It hasn’t been.

Others see the change. Gartner’s key theme for their upcoming Symposion ITxpo conference is the “Nexus of Forces”, the coming together of the key themes that define the current technological age. One of those key forces is mobile. Their prediction of “5B mobile devices and $52B in app revenues by 2015” seems to already be coming true.

Pre-Halloween scare

What spooked the market was Google’s 15% year-over-year and 3% quarter-over-quarter decline in advertising ‘cost per click’. It shows that Google is suffering the same malady as Facebook, whose shares were dragged down nearly 5% on the Google news. This isn’t surprising as they are both experiencing lower revenues as users move to mobile.

Neither company has demonstrated to the marketplace that they have a solid plan to accelerate alongside surging mobile usage. Fewer eyes on monitor-sized browsers is an enormous challenge to overcome when they’ve both ‘grown up’ with the browser as the primary interface to the Internet.

So mobile is clearly becoming critically important, but the companies most effective at extracting revenue even a short time ago are struggling to make it work as things change.

The preceding was first published on Ian Gotts’ site and have been lightly edited.