Google Is Not The Mobile Giant It Pretends To Be

Image via l i g h t p o e t/Shutterstock

Google Inc (NASDAQ:GOOGL) is set to release its earnings report for the first quarter of 2014 this afternoon after the close of the market in New York. the search giant is expected to show strong revenue growth and gains in mobile in the release, and after the positive results from Intel Corporation (NASDAQ:INTC) and Yahoo! Inc (NASDAQ:YHOO) on Tuesday afternoon, the market seems optimistic about the company’s prospects.

In the midst of a transformation, Google is actually at a more delicate juncture than most investors seem to think. The company is the king of advertising, but the impressiveness of the firm’s desktop numbers is less every year, and the company is simply not the big mobile player that it pretends to be.

Google Has Mobile Swagger, Not Mobile Substance

Nobody is really sure how to monetize services on mobile just yet. About 50 percent of web traffic comes from mobile devices, but Google Inc (NASDAQ:GOOGL) is only expected to garner 14% of its revenue from mobile in 2014. Google is, apart from the device makers, probably the best performing of the mobile service providers. Nobody has figured out how to monetize mobile properly, and it may take a long time to solve that problem.

Google has claimed victory in the battle for mobile. Android activations are well ahead of any competing platform; the company’s operating system is the de facto face of the mobile world. That means little in a world where nobody makes all that much money. Google may be ahead in mobile, but it still hasn’t really figured the business out, and that should be worrying to investors.

Google Sticks To The Slow Lane

There have been a couple of major omissions from Google Inc (NASDAQ:GOOGL) product lines in recent years, and the company has shown that it is not talented at jumping in on emerging trends. Social networking and messaging have both passed Google by with little impact from the company’s own offerings.

Google is ahead in mobile, but the company is not great at making money from the platform. Being ahead doesn’t guarantee success, and the solution to mobile advertising my not come from Google, it could be on the way from Facebook Inc (NASDAQ:FB), Yahoo! Inc. (NASDAQ:YHOO), or any number of competitors. Shareholders are not calling the Google bluff, and that might be the biggest weakness for the company going forward.

Google Inc (NASDAQ:GOOGL) stock started trading at close to 2 percent above Tuesday’s finish, continuing the volatility of recent trading. Shareholders do not seem worried about Google business, but they are worried about the valuation of the stock market in general, and the company’s shares have been suffering from that mood. Shares in the Mountain View firm have fallen by close to 1 percent since the beginning of the year.

Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted.