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Google reports big profits as it continues to invest in mobile

Engadget Engadget 28/07/2016 Nicole Lee
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It's been nearly a year since Google underwent a major organization do-over, with a renaming of the overall parent company to Alphabet, while Google itself was now just a sub-firm within. But, as its latest earnings results suggest, a majority of Alphabet's profits still come from regular ol' Google. Of the $21.5 billion it made in revenue, $21.3 billion was from Google-related ventures like search and advertising. Also, that $21.5 billion number? That's a whopping 21 percent increase from this time last year.

Its "Other Bets" segments -- which include Nest, Google Fiber and Google X -- made money too, but it lost more than it gained. Specifically, it made $185 million in total but lost $859 million in expenditure. Which isn't too surprising considering the experimental nature of most of these businesses, plus the loss is a drop in the bucket when compared to the company's overall revenue and profit.

One of the reasons for such growth is Google's big push in mobile. As CEO Sundar Pichai said during the investor call, mobile is the "engine" that drives much of the business. That includes advertising, YouTube, its platforms such as Chrome and Android, the cloud and of course mobile search. Indeed, CFO Ruth Porat says that ad revenue from mobile search was a big reason for the increase in profits this past quarter.

Going forward, expect to see a lot more investment in AI. Already, the company has put quite a bit of money in the area, using AI to improve everything from search to core Google products. "It's a pivotal and transformational moment" in machine learning, Pichai said on the call. Search is smarter and more useful, he said, while GBoard (its IOS keyboard) and Google Photos are just a couple of Google products that are enhanced with machine learning and natural language processing. "Advances like these make searches even more relevant," he said.

Pichai also called out AMP, its internal effort to make the mobile web experience faster and its work with YouTube. He says YouTube is a "thriving home for creators" and that the big part of its focus in recent years has been on live video. Though YouTube is a little late to the game as far as mobile live video streaming, Pichai says that the company is definitely committed to pushing it forward. A recent livestream of the Champion's League in the UK, for example, was the country's biggest ever livestream event.

As to what to expect the rest of the year, Pichai gave us few hints. He did, however, mention Daydream, Google's VR platform. He says Google has been working with partners to turn out several Daydream-ready phones, controllers and headsets that'll be ready by fall.

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