Editor's comment: Google's evolution is key

Ever since 1982, when KITT carried out its first wheel-spin on our TV screens as David Hasselhoff's sidekick in Knight Rider, the arrival of driverless cars has been eagerly awaited.

Last week, Google's Larry Page and Sergey Brin delivered on Hollywood's promise, unveiling a fleet of self-driving cars capable of using Google Maps data and whisking passengers from A to B.

Needless to say, the announcement marked a significant departure from Google's core search advertising business, and overshadowed the release of the company's third-quarter results.

However, while the world was contemplating a chauffeur-driven future, analysis of the company's financial performance revealed that in revenue terms, at least, Google is far less dynamic.

That's not to say that the search behemoth isn't doing well: it is. Figures for the three months to September show it outperforming expectations, with a 9.8% rise in UK revenues alone. It also opened up for the first time about its display and mobile advertising operations, which now contribute $3.5bn (10%) of gross global revenue.

However, beneath the headlines lies the fact that Google's profit is still almost wholly reliant on search ads. Of course, its search business happens to be the best in the world so there's no need for Larry and Sergey to panic just yet. But with Microsoft and Facebook hell-bent on stealing Google's crown and new challengers arriving, the need to diversify has never been greater.

Google knows this, of course, and is investing in growing YouTube's commercial offering, while its mobile ad business may well hold the key to its long-term financial future. Despite this, Google needs to do more to reduce its reliance on search, so, if it continues to follow Hollywood's lead, perhaps we can all look forward to the imminent arrival of hoverboards and self-drying clothes.


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