With Google you see research (which is of course commendable), but so far they haven’t been able to produce profit from anything else than ads, so I would call that research awesome, useful, beautiful, but not (yet) future proof for the company.
This is actually why I've been saying that Google is acting more like a government than like a business. They have a buoy of revenue to coast on and are spending it on (what appears to be) unrelated R&D. It smells more like IBM or Microsoft than Ford or Chevrolet.
To me, it's not just not the same race. It's not even the same game. Facebook's playing Tetris; Google's playing Civilization.
You hear this a lot (Google is an advertising company, they make 95% of their money from ads). But by that metric many companies are ad companies. Pretty much every web site on the web is just an ad company, because that is how they actually make money, most of the television and radio industries are just ad companies, because that is how they make money.
From http://investor.google.com/financial/tables.html if I'm reading it right, 69% of their revenue comes from ads on their own sites. For mine that deserves to be counted as "technology company revenue" not "advertising company revenue". If they didn't have their own ad arm they still would have made a big chunk of that 69% by using some other company to show ads on gmail, youtube and their search page, but if they were only an advertising company they would have just made the 27% that was pure "advertising on other sites" revenue. Just because youtube makes money by showing ads, doesn't make youtube not profitable.
Making money from ads is just a business model. Don't confuse it for a one-hit product. Google could make a lot of different products and services that are based on ads. What you're saying is like saying 30 years ago that TV networks only survive on ads.
I think in the next 5-10 years we'll also see a much more hardware-oriented Google, too. I think Google is serious about hardware (Glass,Motorola devices...maybe even a self-driving, self-sustaining electric car in the future? Who knows).
Google don't have to produce profit now. Remember that they didn't profit from search or ads for a long time.
What they have to do is ensure no one else profits from some research, and to have a way of profiting in the long term. That is a lot easier to work out once something is successful, you know how people use it and it has become somewhat indispensable to users.
Isn’t that repeating the same thing I said? They are creating new cool tech, but they have to figure out how to make money from it, thus it’s not future proof.
Android is successful, but apparently it’s not generating much profit for Google.
Not even close. They do not have to figure out how to make money from things now or even for several years. Or in some cases ever. The ad revenues can subsidise things forever.
For example their maps product (excluding premium) being free means no one else can realistically charge for an equivalent service. But all the people using it provide Google with a large amount of information such as places people actually want to go and where they don't. Those signals can be further used to improve their search relevance which keeps users away from competing search products.
asymco.com has various revenue numbers. At best Google is making around $4 per Android user per year in revenue (not profit). However if Google did not provide Android then they would be completely at the mercy of the likes of Apple and Microsoft who could make using and finding Google products on their devices hard.
Chrome is another example. Even if not a single person used Chrome, its effect was a massive reinvigoration of browsers (sandboxing, Javascript performance etc). Google depend on browsers to deliver their products so this helped ensure continued good delivery. (If users started abandoning browsers for native platform apps then again Google would be in danger of being shut out.)
