Free 7-day Trial
All Articles and Columns »

Bullish Cloud Hovering over Google Camp

Muhammad Bazil

Muhammad Bazil

3 followers
The technological space, particularly the Internet industry, has been a melting pot of activity over the past two or so weeks. This was of course after the eve and, sorry to mention, disappointing wake of the Facebook (FB) IPO. Facebook (FB was expected to take the reins from Google). In my opinion, this was more than far-fetched. Facebook cannot be the next Google (GOOG). It simply doesn’t have it. Google comes out as a more versatile player — a very important lineament in the Internet industry.

I would confidently advocate for Google. Although share price remains fixed at figures of around $600, progression is not absent. A bullish cloud hovers over the tech titan. Similarly, current market dynamics give it an edge. Although Lyons at Motley Fool pushes for the idea that the Google throne may land in the hands of another, this is likely possible. Why?

Smartphone craze

The use of smartphones has swelled over the past few years. In some places, it has actually been dubbed a fad. All along, the winners in the continued increase in smartphone popularity have been Google and Apple (AAPL).

Rick Aristotle puts it very clearly: "Apple and Google are running away with it." According to him, these two competitors have more or less dominated the smartphone industry. I tend to agree. After all, numbers don’t lie. The IDC recently revealed that Apple’s iPhone and Google’s Android accounted for a staggering 82% of smartphones shipped to retailers in the first quarter of 2012. This means that players like Nokia (NOK) have been left out of the equation. A lagging Research-In-Motion (RIMM), synonymous with Blackberry, scraps in the minority numbers.

I am confident that Google’s Android stands a better chance than iPhone’s IOS. First, Android has an open platform that can be anchored on the designs of various phone manufacturers. On the flip side, IOS exclusively leans towards the iPhone. This means that if the iPhone fails for any particular reason, the IOS will not sell. In simple terms, the iPhone cannot afford to lose out to another smartphone. Therefore the long haul looks brighter for Google as opposed to Apple. There is a possibility that Google may fully dominate this sector in the future, which would lead to higher sales and a healthier outlook for Google stock.

Apple’s heavy reliance on the iPhone perhaps explains why they are battling court cases aggressively against bitter rival Samsung.

Of Samsung and Apple

These two tech heavyweights have been on each others' cases for quite some time now. Many people don’t really see the court case drama for what it really is. Apple is intimidated by Samsung’s growing popularity in the smartphone niche, particularly the rapid proliferation of its Galaxy series.

For Apple, the stakes couldn’t be higher. The company intends not only to put a leash on Samsung, but it also purports to bring Google to its knees. "Killing two birds with one stone" would be the appropriate expression to use here.

If Apple manages to take Samsung down, Google will tag along with Samsung. Fresh numbers from the IDC show that Samsung accounts for 45.4% of all Android-based smartphones. This means that if Samsung takes a knockout blow, Google will certainly feel the effects. Its Android sector would be sliced practically in half.

Apple is actually trying to transform dominance into monopoly, so to speak. It is aware that together with Google, it accounts for 82% of smartphones. By working against Samsung and digging a hole in Google, it will have the opportunity to gain a larger market share and in the process move closer towards creating a monopoly.

I believe the reality is that Google does not have firm grounds to tackle Samsung effectively. Therefore, Google will continue to enjoy high revenue through Samsung smartphones.

A dying man will clutch at a straw

Everyone knows that Yahoo! (YHOO) is in a downward spiral. Yahoo intends to enter the browsing space through its new Axis browser that supposedly offers a visual preview of search results prior to clicking on them.

This is quite a breakthrough. However, the timing couldn’t be worse. Google, which as stronger financial muscle, is more likely to improve on the idea. Therefore, this doesn’t pass as a threat to Google. It in fact is a golden opportunity.

Conclusion

Things are moving fast in the Internet industry. As an investor, I am more secure in a stock that exhibits the potential to maintain a firm standing amid overwhelming movements. That is why I am inclined towards Google.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

Rating: 2.5/5 (11 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide