Google, Apple, Tech Giants Can Find Major Growth In One Place: Cars – Forbes
Google parent Alphabet, in its earnings release yesterday, showed that its non-advertising revenue was growing at a pace, 62%, more than three times as fast as its traditional source of sales. But advertising still comprises 87% of the company’s revenue.
The company got dinged by some analysts for missing the consensus number for earnings per share, but many observers were buoyed by the growth of non-advertising revenue sources.
Apple, of course, while more diversified than Google, is fighting some of the same pressures: the company has become primarily a phone maker and its sales are tethered to the fortunes of its iPhone franchise. Both companies, as well as other tech giants, have long been watching what most consider the next big platform in tech: cars.
It’s an evolution that makes sense, as the rising generation of great hardware companies have proven themselves to be, first and foremost, great software companies first.
It seems as if Alphabet has abandoned any plans of actually making cars, but Alphabet’s Waymo division seeks to take all of the learnings from the Google Car project and turn them into the guts of the next generation of cars. In this strategy, Alphabet seeks to be Delphi rather than GM.
But that doesn’t mean that other tech giants, notably Apple, and perhaps Uber, aren’t eyeing the possibility of stamping their logos into a car grille.
There isn’t anything that compares to the potential and size of a future car market that’s infused with automation and software that, by and large, replaces human drivers and enables the car experience to be so much more than what it is currently.
Five of the top six companies by market cap are tech companies—Apple, Alphabet, Microsoft, Amazone and Facebook—and three of them have had IPOs during the last 20 years. It’s not easy to grow at big clips for companies already worth half a trillion dollars. The car market is one of the few places that’s big enough to make a difference, however, so it will continue to be scrutinized and sized up by these keystone tech companies.
I did a deep dive on this topic with FundersClub, for which we gathered insight from all over the car and tech industries. Many experts’ conclusions were intriguing.
There are other ways for these companies to grow outside of vehicles, of course, but none of them hold the same potential. Google, like many in Silicon Valley, has been focused on growth through the cloud. It’s happening, but it’s still behind others. Google doesn’t break out its cloud revenue, but it looks to be squarely lagging both Amazon and Microsoft, whose cloud businesses are both on annual revenue run rates north of $14 billion.