ASYMCO: On the future of Google. Part 2

InsightaaS: Across the Net often highlights posts from Horace Dediu’s ASYMCO blog, an important source of information on issues pertaining to Apple and to the smartphone and related markets generally. This post finds Dediu shifting his attention - with his characteristic insight - to Google. Part 1 of the sequence correlated Google revenues with non-China internet users. In this post, Dediu adds analysis of the trends. After examining the parallel growth arcs, he concludes that "correlation is not causation," finding that "the toughest nut for Google to crack is not penetration but emerging market monetization" and speculating as to whether Google's R&D investments are well-aligned with its fundamental market requirements. 

In Part 1 of a look at Google’s future I showed that Google’s revenues have been highly correlated with the population of Internet users in the markets it serves. If there were a causal relationship between population of users and revenue growth then the company would face a growth inflection point when that population becomes half penetrated.

In Significant Digits Episode 1 (Part 1) I showed data which suggests that the inflection point will come in 2016. Essentially the argument is that Google’s growth is ultimately limited by the population of users and that itself is a predictable number. I also used the example of the PC and smartphone penetration curves to show how the perception of the fortunes of companies whose revenues are based on those technologies were affected by inflections in their respective adoptions.

However, correlation is not causation. These users we count are not the customers who pay for Google’s services...

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