Google has been manifesting itself in more and more niches of the technology sector. Cryptocurrencies however, remained untouched by the internet giant for now. What if…
Since the fall of 2012 our advice has been to sell Apple stock. The reasoning behind it was fairly simple. Without the leadership of top exec Steve Jobs, the large corporation would become very hard to manage and steer into the right direction. About a year and a half later, this is exactly the technology company’s problem. Apple does not surprise, innovate, or lead the pack anymore. Apple is lagging and that is deadly in a sector that is extremely competitive like technology. We have been waiting on iTV for years now, but it does not look like it is going to happen. The iWatch has been on our watch list for months, while the competition has been launching one smartwatch after the other. Too late, Apple. The company that once was a technological super power, now is a has-been.
On the other hand, regular readers of Sprout Money know that we love Google. The basic idea behind it is that Apple operates inside a closed environment, while Google has an open ecosystem. Google can power the entire internet to generate revenue, while Apple can only generate revenue from its own users. Meanwhile, Apple is hitting the limits of its business model, while Google’s growth is practically unlimited, only limited by the ever-expanding reach of the internet. The internet is taking a brand new direction too. We are evolving over the next few years into the concept of the ‘Internet of Things’, connecting the worldwide web to everyday objects and services. An example of that would be a ‘smart fridge’, which can deduce from your agenda what’s on tomorrow’s menu, alert you of missing ingredients if there are any, and even order online.
Google is biting down hard to not miss this trend, and potentially even shape it. Not only did the company come out with Google Glass last year, which are high-tech glasses projecting an additional dimension with all the knowledge of Google on the inside of the glasses, but the company also purchased Nest Labs recently, the producer of the smart thermostat. With that, Google can probably collect more data on its users in order to position even more and better ads, which is still the core business of the internet company. But Google also made some purchases in other niches of the technology sector. Recently, the company acquired robotics specialist, Boston Dynamics, and artificial intelligence authority, DeepMind. However, Google’s acquisition fever did not just start a few months ago. Since the beginning of 2013, Google has been extremely active on the acquisition trail as evidenced by the list below (source: Wikipedia).
The acquisitions are in different sectors of the technology space, but Google also spread out geographically with its purchases (not only in the US). This will prove to become a true value differentiator for shareholders, because only through innovation can a company remain competitive or, even more, become a market leader. One area in which we have not heard from Google yet is cryptocurrencies. You know, bitcoin et al. It is an interesting evolution in the online payment market.
It is highly likely that Google is in wait-and-see mode for now with regards to cryptocurrencies, but we are sure that this segment has their full attention. We recently read that Google would possibly accept bitcoins in its payment ecosystem Google Wallet, but we suspect that it might be a bit too early for that. Furthermore, Google might be a candidate for launching its own cryptocurrency in our opinion. The Googlecoin or Gcoin. Google has the largest P2P network in the world, which is what powers a cryptocurrency. Sounds crazy? We don’t think so. Don’t forget that Google owns banking licenses for the most important countries in the world. One day, Google could start putting those licenses to work, and what better way to serve the financial side than with its own cryptocurrency. It would be relatively cheap to do so, and the insight and data arising from its usage would be a huge advantage to the company.
While the competition is struggling, Google is innovating non-stop. Organically and through acquisitions, the company is creating additional shareholder value in the technology sector with seemingly relative ease. Not by sitting on its cash, which seems to be Apple’s approach. As a consequence, GOOG remains a favourite technology stock of Sprout Money. It's not only an advertising search gigant, but a robotics, 'internet of things', AI, ... , and maybe also a future cryptocurrency play.
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