According to Gene Munster, senior research analyst at Piper Jaffray, traders aren't likely to see any fireworks when Google (GOOG) reports earnings after the bell on Thursday, but that shouldn't deter investors from buying the stock for the long haul.
Joining Breakout from Minneapolis, Munster says Google is managing to position itself to lever the company's competency of search in ways that seemed like sci-fi fantasy just a few years ago. In particular Munster says the search king's efforts in wearable technology and self-driving cars aren't just ahead of the game but are defining the space for the competition.
Munster says products like Google Glass, clunky and dorky though they may be for now, are going to one day replace smartphones. If that just meant the best hardware in a crowded space the opportunity would be too small to move Google's bottom line. Think Microsoft (MSFT) and the minimal bang for the buck its gotten with the wildly successful Xbox console.
Google Glass is a whole different game because of the information about you and your environment the company has been accumulating for the last decade. That information gives Google the edge even after competitors manage to catch up on the hardware side. As Apple (AAPL) has been proving since the release of the first iPod, the real money is in creating an ecosystem. Google knows who you are what you want and where you can get it. The form factor of the glasses can be improved but no one is going to be able to replicate Google's information about you.
The other innovation getting hyped by Google bulls is self-driving technology. Munster says it sounds crazy but self-driving cars could be only a decade away from mass production. If and when that happens Google is going to have a monopoly on licensing the technology to the auto makers. The auto industry will continue to make the hardware but Google will make the software that shapes the driving experience.
The misconception among investors is that Google isn't going to get paid on these developments until the freeways are dominated by driverless cars. In reality there will be an evolution of the technology likely starting with accident avoidance assistance and the obvious mapping.
None of this has much to do with Google's earnings report on Thursday. Google's stock has a history of making huge moves when the company reports but the direction is almost random. The way Munster sees it, another of Google's periodic post-earnings collapses would be a gift for those looking to enter a long-term position.