Google Moving From Mobile-First World To AI-First
Key Message from Google’s Earnings Call: AI-First. On tonight’s Q4 earnings call, Google CEO Sundar Pichai reiterated that we are quickly moving from a mobile-first world to an AI-first one.
“Looking to the future, the next big step will be for the very concept of the ‘device’ to fade away. Over time, the computer itself — whatever its form factor — will be an intelligent assistant helping you through your day. We will move from mobile-first to an AI-first world” – Sundar Pichai
We couldn’t agree more. As we detailed in our recent piece, The 5 Focuses, Google, Amazon, and Apple have all made artificial intelligence a core focus. AI touches most of the Internet products we use from the tech giants. From a user standpoint, AI makes products better and more effective. It makes them more of a joy to use, meaning we spend more time with them. From a financial standpoint, AI-enhanced products mean consumers spend more money. For Google, more time spent is more opportunities to show relevant ads. For Amazon, more time spent means more opportunities to unearth products the consumer didn’t know about, but might want to buy. For Apple, more time spent means more opportunity for them to provide you with their emerging Services or time to prove the value of your device and retain you as a loyal upgrader.
AI Transition Risk. A problem for Google will be figuring out how to monetize the artificially-intelligent evolution of search. The shift to an AI-first world means that the 10 blue search results links may go away, which will have negative near-term consequences for Google search monetization, just like the shift from desktop to mobile. Eventually, AI will be a positive for the Google story. Thinking about search over the past two decades, we’ve gone from PC to mobile to voice interfaces. On PCs, our large screens meant we saw all of the sponsored links and shopping results and most of the 10 organic links, if not all of them. On mobile, our small screens mean we see at least a couple of sponsored links and maybe a few organic links. Google was successful in maintaining monetization of its core product even as it moved from large PC screens to small mobile screens, although it had to work out some issues with click prices during the early transition. It’s hard to say what the future might look like for voice interface, but Google has a track record of adapting to new interfaces, and our bet is that AI search will be a better user experience and monetization opportunity.