Aardvark Daily

Please visit the sponsor!

Google, just one step to go

Right now, the most valuable company in the world is Apple -- but Google is closing fast, very fast!

Based on market capitalisation figures, Apple is worth an impressive $475bn (that's half a *trillion* dollars) and Google has a value of $390bn, having just pipped Exxon Mobil's $389bn to take second-place.

An even more impressive performance on the part of Google comes in terms of its price-earnings (PE) ratio.

While Apple and Exxon Mobil have a PE of 11 to 12, Google has a gobsmackingly huge PE of 27. This is why many experts are picking to steal Apple's "World's most valuable company" title in the near future.

It is interesting to compare Apple and Google and how their businesses differ.

Apple has, in the past, been very much focused on hardware.

Starting with the old Apple 8-bit micros and continuing right through to today's iPads, iPhones and the like, the company has always had a focus on stylish nuts and bolts.

By comparison, Google has focused almost entirely on delivering services such as its search engine and advertising network.

Of course there is growing degree of cross-over occurring -- as Apple moves more towards service-based revenues by way of its iTunes store and Google gets into the hardware market by way of its tablets, Chromecast and other gadgets.

When you consider that Apple has been in business for two decades longer than Google, it becomes apparent that the growth of Net-based service industries can have significantly higher than those which are reliant on the design, manufacture and marketing of "iron". What's more, unlike Apple, Google's profits are boosted by much lower input-costs -- since they don't have to manufacture or ship stuff and aren't reliant on bricks and mortar retail stores to flog their wares.

As the speed and capacity of the Net continues to grow and as devices that hook up to it become even more ubiquitous, online service industries will (IMHO) become an even more profitable and prosperous business sector.

Watch for Google to eclipse Apple's value in the very near future, especially now that the charismatic force that was Steve Jobs is now gone.

Perhaps another massive contributor to Google's extraordinarily high PE number is the way it structures its tax. When you pay tax at a rate which is effectively far less than most other companies or individuals, naturally your numbers will look great and your value will grow at an astronomical rate.

Bottom line: Gadgets are great -- but, it would appear, Google is greater!

As a footnote, I spotted something very interesting this morning while researching this column...

The trademark "Google" is clearly a very, very valuable asset right now. One of the most important aspects of protecting a trademark is not allowing it to become a generic term -- in the way we now use "Aspirin" to describe any form of acetylsalicylic acid. To that end, most trademark owners are quite vigilant at policing the correct use of their property and work hard to avoid losing protection by virtue of it becoming a generic term.

How odd the results of this search on Google are then.

Please visit the sponsor!

(Sorry, forums are stuffed at present)

PERMALINK to this column

Rank This Aardvark Page

Change Font