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App Streaming Could Be the Key for Improving Google Search

Parker Thomas

Will Google’s Search Innovations Affect 4Q15 Earnings?

(Continued from Prior Part)

Web user habits

The number of web search queries from mobile devices has surpassed the number of search queries from PCs. According to a report from eMarketer, the US mobile search market could grow from $9 billion in 2014 to $28 billion in 2019 at a compound annual growth rate of 27%. Google’s Android dominates the global smartphone operating system market with a share of 81.1% compared to Apple’s (AAPL) iOS share of 15.2%, according to IDC.

Despite having the majority share in the smartphone OS market, Google (GOOG) has failed to keep users engaged with mobile searches. From the chart below, we can see that users spent 90% of their time in apps compared to 10% in browsers, where users’ engagement with Chrome remains the lowest, at 4%. Moreover, the social media site Facebook (FB) takes up the most user engagement at 19%, followed by entertainment at 17%.

New avenue to generate ad dollars

To deal with the situation, Google will roll out a new feature for “app-only content” that will integrate with its mobile search engine. This new feature will allow users to run Android apps without having to install them.

In 2015, Google acquired Agawi, which specializes in streaming mobile apps over the web. It lets users preview an app before downloading it. For instance, if a user searches “Hotel in Chicago,” it will list every hotel nearby along with a streaming app to get real-time room availability. The new feature will enable users to do away with searching and installing a specific app using Play Store.

Google will make users depend on mobile searches and spend more time interacting with the web, which has lost relevance. By rolling out this new feature, the company can monitor users’ activities within apps, which in turn raises new opportunities for ad dollars by targeting user-specific ads. Google can monetize the service by simply promoting apps to stream inside the Google Search app.

The PowerShares NASDAQ Internet Portfolio (PNQI) could be affected by these changes. Its top four stocks are Amazon (AMZN), Alphabet (GOOG), and Facebook (FB), which constitute 9.1%, 8.7%, and 8.3%, of the fund, respectively.

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