When it comes to modern global technology, a couple of giant companies are “running all the show,” and they earn massive profits because their products are being used all over the globe. For example, if you are involved in the real estate business, you will need useful apps to get your through all the obligations and tasks that you may have, and the same goes for all other areas of human activity. Just like Realtors need apps to boost their productivity, most other professions require similar software to produce better results and be more efficient.
Google is one of those powerhouses that are creating products for millions of users, but its parent company, called Alphabet, has reported lower earnings than expected and this drop in revenue is buzzing in the technology world. Of course, it is not the end of the world if a company is not making a couple of billions more, but this change could also indicate deeper problems in the methodology and the areas in which these companies are involved in.
The Reasons For Lower Revenue
Alphabet is a multinational corporation that was officially established in 2015 when Larry Page stepped down from the position of CEO at Google and moved to this new holding company. At the same time, Sundar Pichai took his former position, and he is now the current chief executive officer of Google. Because of this new structure, the companies were able to diversify their activities, and Alphabet has a much wider scope of interests when it comes to advancements in the overall technological world.
Many experts are saying that this widespread nature of the corporation and constant expansion into new areas is the primary reason for lower income, but high acquisition costs and investments in services such as YouTube also played a part.
The Situation In The Market
Google is investing heavily in the development of their Cloud technology, and this requires a lot of new data centers and storage facilities. In the same time, their advertisement income is going down, and their costs-per-click are bringing less and less money. As a matter of fact, the profits from this service have dropped down 16% in 2016, but the overall situation in the market is dictating the flow of prices. Companies are exploring and investing in new ways of doing things, and sophisticated technological solutions are appearing almost on a daily basis.