Believe it or not, Google's parent company Alphabet is on pace to overtake Apple in sheer market value.
For years, Apple has enjoyed its status as the most valuable tech company -- by a long shot. But with worries about the iPhone and chronic concerns that Apple can't innovate like it used too, Alphabet is coming up fast in the rearview mirror. Ahead of an earnings report from Google's parent company, Alphabet, the firm had a market capitalization of about $514 billion as compared to Apple's roughly $543 billion.
It's tempting to look at this as the fall of the importance of hardware, and the rise of software and services -- especially after Apple reported its slowest-ever sales growth for the iPhone. But analysts say it's a little more complicated than that.
Colin Gillis, senior technology analyst for BGC Partners, does see value shifting in the tech industry, noting to investors ahead of the earnings that he believes Alphabet -- not Apple -- will become the first trillion-dollar company. That won't happen overnight, he said, but the trend lines are good.
Why? Sheer numbers, for one, Gillis told The Post in an interview.
"Think about the number of services they have with a billion users: Google Search, YouTube, Maps. Some of those are used multiple times every single day," he said.
Numbers may be one thing, but Gillis also noted that we seem to be at the start of true mobile monetisation - meaning that those users will translate more solidly to revenue in the coming years. "Google's had a tremendous transition period," he said. "Facebook has figured out mobile [advertising] first but just think what would happen to Google if they started monetizing mobile better."
Google is uniquely positioned because what they're doing now is the best of both worlds - making sure investors feel comfortable that the big bets are being looked after correctly.
He also pointed to the fact that Google even before the reorganization has been more public about its so-called "Other Bets" outside of its core advertising business. That puts pressure on the employees running those experiments to turn in results. He pointed to recent reports that Alphabet is working on solar-powered Internet-connected drones, which he said demonstrates that the company knows exactly how to show investors about its future promise.
He also credited Alphabet's chief financial officer Ruth Porat with instilling some discipline.
It's hard to compare the two firms. Apple is a product company and Google's an advertising company - though they do everything they can think of to tell you otherwise.
"There's a little more pressure to push forward; you don't just want [research and development] to hide," he said. That stands in stark contrast to Apple, he said, which is notoriously secretive about its future businesses and experiments. "Google is uniquely positioned because what they're doing now is the best of both worlds - making sure investors feel comfortable that the big bets are being looked after correctly."
Rob Enderle, principal analyst at the Enderle Group, agreed that Google's recent success simply shows it has won the Web with its core business, rather than fitting neatly into any narratives about the falling importance of hardware.
"They're the dominant provider and conveyor of Web advertising," he said of Google. "It's hard to compare the two firms. Apple is a product company and Google's an advertising company - though they do everything they can think of to tell you otherwise."
The upshot of Google's recent success, he said, is that they have finally realized the potential of all those years of trying to dominate the Web. "In the great Internet land grab, they won," he said.