Wednesday, October 27, 2010

Google CEO Eric Schmidt: "Android is hugely profitable" (Review) Android Success: "well past anything I had ever hoped for" GOOG

GOOG


Google CEO Eric Schmidt: Android "well on its way to being a huge, huge success"


Q3 Earnings Call

Google reported excellent financial results for calendar Q3 2010. CFO Patrick Pichette said Google was experiencing "explosive growth in the digital economy". A review of the Google earnings conference call has been posted on the Google Earnings Conference Call page. The actual financial results, charts, and commentary have been posted on the Google Financial Performance page. The audio of the conference call is also available on the Google Earnings Conference Call page.

Senior Vice President and Chief Financial Officer Patrick Pichette and Senior Vice President of Product Management Jonathan Rosenberg gave presentations at the Q3 earnings call. Chairman of the Board and Chief Executive Officer Eric Schmidt then joined the conference call, along with President, Global Sales Operations and Business Development, Nikesh Arora, for the question and answer session.


Q3 Earnings Call: Question and Answer Session Highlights

"Phenomenal success of Android, well past anything I had ever hoped for" (Schmidt)
Android "well on its way to being a huge, huge success, in terms of number of partners, devices, open model for access, innovation, dynamics" (Schmidt)
90,000+ applications on Android and growing very, very fast (Schmidt)
"Android applications have Google search services inside of them" (Schmidt)
Mobile is larger than the PC market. Tablets are a small, but important, component of mobile. (Schmidt)
We hope Android to become leading platform in mobile, doing it with an open source approach (Schmidt)
Android is hugely profitable, but primary purpose right now is building this open platform (Schmidt)
We have mobile revenue model we are very excited about (Arora)
(Google) Revenues are roughly split between search, display, and applications efforts (Arora)
We can play across search, display, and applications to monetize mobile (Arora)
We don't see cannibalization between mobile and PCs, are complementary (Rosenberg)
Search monetization on handsets will become equal to then exceed PCs (Schmidt)
Clear separation between general economic growth and digital economy growth (Arora)
Web continues to grow at a blazing pace (Rosenberg)
Last reported 200,000 Android sets activated per day, no current information will be provided (Pichette)


Q3 Earnings Call: Question and Answer Session

Highest correlation of growth between ad clicks and anything else is query growth. New ad formats are also increasing ad clicks and click through rates. (Rosenberg)
Google will not comment on YouTube profitability (Pichette)
YouTube: 24 hours of video uploaded every minute, 2 billion views per day (Rosenberg)
Complex signals used for social networking, even if not directly accessible by Google (Schmidt)
We want users to be "more logged in" to Google to provide better social networking information to them (Schmidt)
We already have "significant feeds" from real-time information providers and sources of information, e.g. Twitter (Schmidt)
Real-time information feeds create the real-time index (Schmidt)
"Phenomenal success of Android, well past anything I had ever hoped for" (Schmidt)
Android "well on its way to being a huge, huge success, in terms of number of partners, devices, open model for access, innovation, dynamics" (Schmidt)
90,000+ applications on Android and growing very, very fast (Schmidt)
"Android applications have Google search services inside of them" (Schmidt)
"Android is probably the largest single platform play in the market today" (Schmidt)
Mobile is larger than the PC market. Tablets are a small, but important, component of mobile. (Schmidt)
We hope Android to become leading platform in mobile, doing it with an open source approach (Schmidt)
We give the software (Android) away with the open source approach (Schmidt)
The people who use with Android search twice as much as anything else and there is more revenue associated with those searches (Schmidt)
Mobile search revenues are shared only with operator, more lucrative: more searches, more ads, more lucrative (Schmidt)
Android is hugely profitable, but primary purpose right now is building this open platform (Schmidt)
Costs per employee went down sequentially in Q3 but no special effort was made to accomplish this (Pichette)
We have mobile revenue model we are very excited about (Arora)
Revenues are roughly split between search, display, and applications efforts (Arora)
We can play across search, display, and applications to monetize mobile (Arora)
Display (advertising) will become a very large component of mobile revenues (Schmidt and Arora)
Android Store: goal is to make money for app developers, not a revenue goal for Google (Schmidt)
CPCs on mobile lower than on PCs (Rosenberg)
As mobile payment platforms get built into mobile devices, CPCs will go up substantially (Rosenberg)
We don't see cannibalization between mobile and PCs, are complementary (Rosenberg)
Search patterns: People use mobile more at lunch, after work, weekends, holidays (Rosenberg)
Both mobile and web/PC search are growing (Rosenberg)
Revenue growth good in USA and worldwide, UK has been a bit weaker (Arora)
Southern Europe growing faster than Northern, some Asian markets growing robustly (Arora)
Operator and handset manufacturer will make a lot of the monetization of handsets, Android OS is free.
Google will make on advertising and value-added services (Schmidt)
Search monetization on handsets will become equal to then exceed PCs (Schmidt)
Mobile should become a very strong revenue stream compared to PCs (Schmidt)
Interest continues to grow in mobile advertising in local, hyper-local, and click to call categories (Arora)
As payment platforms get built into mobile platforms, will be more interest from larger advertisers (Arora)
Clear separation between general economic growth and digital economy growth (Arora)
Traffic acquisition costs lower in Q3 because additional prior MySpace costs stopped and mix of ad network partners changed (Pichette)
Continuing to make algorithmic improvements to our ad targeting, which improves revenue performance on a per query basis (Schmidt)
Web continues to grow at a blazing pace (Rosenberg)
Google Instant will be available on mobile devices soon, this year (Rosenberg)
Last reported 200,000 Android sets activated per day, no current information will be provided (Pichette)
Smart pricing (ads) is done by algorithm, doesn't differentiate between mobile & PC (Rosenberg)
Leveraging user data: we are not going to do very much of it, end user data privacy important (Schmidt)
A lot more rich media, video, in the display network in the future (Arora)
Entire partner network, entire Google network is part of display network (Arora0



Visit Osprey Port News Network!
Apple, Google, Baidu, China, technology, financial system, stocks, markets, economy, science, environment, future


Follow Google Investor (@GoogleInvestor) On Twitter!
Google & technology news plus GOOG stock analysis. Select USA & global economic news.


GOOG

Seeking Alpha