Google’s core digital advertising business is so dominant that analysts are questioning just how much it can continue to grow. The company has been trying to respond to this by unleashing its vast cash hoard on robotics, artificial intelligence, smart thermostats and, just this week, high-altitude drone satellites. The only thing all these acquisitions have in common is a focus on the future — often, the distant future. The risk in thinking about what will be big in 2050, however, is that you can lose sight of 2014.
Google’s first-quarter earnings report, released after the market closed on Wednesday, surprised Wall Street. The company had originally gushed profits without breaking a sweat. Now it takes more effort.
One big reason was a problem of several years’ standing: Internet users are migrating to mobile devices, but ads on phones and tablets still do not have the familiarity and appeal they do on bigger computers. And they are not as profitable for Google. Google’s ad volume jumped 26 percent in the quarter, while the amount advertisers pay dropped 9 percent.