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On Google’s Future. Part 1

From 2005 through 2012 Google site revenues[1] have risen at a rate consistent  with the growth in global Internet population excluding China[2]. The Internet population and Google.com revenues for the period 2005-2012 are shown in the following graph.

Screen Shot 2014-03-13 at 3-13-3.17.02 PM

The correlation is shown in the following graph:

Screen Shot 2014-03-13 at 3-13-3.17.21 PM

Taking into account costs and expenses, on a per-user basis profitability per user (assuming all non-Chinese internet users are Google users) is shown below:

Screen Shot 2014-03-13 at 3-13-3.17.14 PM

The simple conclusion is that Google earns approximately $1.2 per user per quarter (net income is the blue area above). This figure is relatively constant with a slight increase (~20%) over 3 years.

If the company does not alter its business model then the future potential of the business could be measured as a function of Internet (ex. China) population growth.

How hard can that be?

The next post will answer this question.

Notes:
  1. Google revenues are reported as “Google.com”, “Network”, “Motorola” and “Other”. For this analysis I am including only the Google.com revenues []
  2. Internet population is calculated as a combination of penetration as reported by the ITU and population data from the World Bank []