Google continues to surpass expectations of financial analysts, completing 2013 with $59.82 billion in revenue, almost $10 billion more than a year before. Ad sales remain the company’s main revenue stream, making up 96% of its profits. But there are other technologies Google has been investing in and acquisitions it’s been making. So how does Google make money? Here’s a brief outline of some of the company’s revenue sources.
AdWords continue to be the search giant’s main profit source, comprising as much as 70% of all of its advertising revenue. AdWords is Google’s auction-based advertising system, where businesses can bid for keywords and place targeted ads on Google sites and across the Google network, consisting of content publishers and site owners. Advertisers can choose to pay either for clicks or for impressions. The former means that the business is under no obligation to pay unless the user clicks on the ad. The latter indicates the payment method based on the amount of times the ad appears in the Google Network, and is usually counted in thousands of impressions.
The AdSense program is responsible for the remaining 30% of Google’s ad revenue. The program lets webmasters sign up and place relevant ads on their sites, paid for by the AdWords advertisers. Google shares the revenue from such ads with the network’s members.
While Gmail, Google Drive and Google+ Photos are free at their core, Google does charge users for extra storage, which can then be shared between these services. The plans start at $4.99 for 100 GB and go all the way up to $799.99 for 16 TB, with plenty of options in between.
Google Apps for Business
While Google initially provided a lot of its Apps services for free to users, it stopped doing so a couple of years ago and switched to paid subscriptions only. Google Apps for Business include such tools as custom email addresses, additional Google Drive storage, 24/7 customer service, calendar, video chat and document editing, among others. Google Apps for Business cost $5 per user per month or $50 per user per year. Google Apps for Business with Vault includes some extra features, such as reduced litigation costs, email archives and ability to restore deleted messages, among others. It costs $10 per user per month. Google acquired an email and Web security company, Postini, and integrated its security technologies into the Apps.
Google Search Appliance
Google Search Appliance allows businesses to apply Google’s highly successful search technology to their own databases, indexing up to 100 million documents. The technology is secure, universal and scalable for a data repository of any size. The company charges Google Search Appliance users on a per-document basis.
In 2010 the company launched its Google Fiber project, announcing plans to create an ultra-high-speed broadband network in several American cities. The first such community was Kansas City, Kansas, followed by Austin, Texas, and Provo, Utah. Several packages are available to residents of these areas, including free broadband Internet, $70/month high-speed Internet at 1Gbit/s, and a $120/month TV and Internet package.
Google Wallet is a mobile app that acts as one’s digital wallet. Users can send and receive money with it, using it in stores where Google Wallet is accepted and online. It’s free to make payments via the app or send money from your bank account. Google applies a per-transaction fee for using credit or debit cards to make payments, though. More than 200,000 U.S. merchants currently accept Google Wallet.
Android is a Linux-based operating system designed for touchscreen mobile devices. It was developed by Android, Inc. and bought by Google in 2005. The operating system’s source code is released under the Apache License, making it possible for anyone to distribute and modify the software. In order “to supercharge the Android ecosystem,” Google bought Motorola Mobility in 2011.
Google Play Store is the Android app marketplace. Developers pay $25 registration fee to be able to distribute their apps via the store, after which 70% of each sale goes to the developer, and 30% pays the distribution partner and covers the operating fees.
Based on the Android operating system and running on Google Chrome, Google TV allows users to watch television and browse the Internet on a single screen, with the search function allowing them to find content to watch.
Google Glass is a portable computer with a head-mounted optical display. The developer version, Glass Explorer, became available in February 2013 and cost $1,500. Explorer connects to the Internet via Wi-Fi or Bluetooth tethering. Users can give voice commands to the device by saying “OK Glass” before the command, or by scrolling through options on the side of the device using their fingers. Besides browsing the Internet, the device can also take photos, record videos, and play music and videos. Similarly to smartphones, it uses third-party apps to add a variety of features. The product is supposed to be made available to the public later this year, and to cost a lot cheaper than the developer edition, although the final price hasn’t yet been announced.
Google Nexus is the line of Google’s mobile devices that run on Android. The devices don’t have any wireless carrier modifications, allowing for further development and modification by end users. Second generation 7″ Nexus 7 tablet, high-resolution 10″ Nexus 10 tablet and Nexus 5 phone are the latest devices from the series. Nexus Q was Google’s media-streaming device, which was taken off the market following user complaints about the lack of features.
Google Books allows users to search Google’s large collection of scanned books, similarly to the way they do a regular Web search. Some books in the collection are available to read for free, while others can be purchased from the Google Play Store. Prices range from $0.99 to $10 on average.
Google Shopping Express
Google Shopping Express is the company’s same-day delivery service, launched early last year in Silicon Valley and San Francisco and available to retailers in the area on a free trial basis. Customers are charged $5 for each shopping stop that Google’s Prius sedans make for them. They get their products delivered in three to five hours. Google Wallet must be used for all purchases.
Driverless car is an autonomous vehicle using sensors and technologies like GPS to navigate without human control. Google’s experimental self-driving car uses 3D maps of the environment combined with high-resolution world maps to generate a data model allowing the vehicle to drive itself.
Sources for this article include: