By doing this GOOGL will now be able to develop a complete profile of its users. Literally everything about you and not just very good educated guesses. Think about how Facebook Inc (NASDAQ: FB) uses all those “likes” and comments to help advertisers screen for just the right person to buy their products or services.
Now imagine what GOOGL can do if it knew you drove to your local 7-11, bought a particular soda and candy bar with your phone, and then played around at your hometown bowling alley. As consumers engage and share information with their Pixel phones, Google Assistants and Chromecasts, that’s just what GOOGL is going to know about you. Not just that you like the Game of Thrones, but also that you eat pizza every time it’s on and that you watch after playing golf on Tuesdays.
That sort of information may seem trivial, but it is gold to advertisers. And they’ll pay a pretty penny to get their hands on that kind of information. Direct targeting is still the best form of advertising out there. Google knows this, and that’s why they are spending so much time on device growth. It’s about building an entire ecosystem of data collection to mine for trends.
GOOGL Stock Is the Tech Stock to Own
In the end, Alphabet is setting itself up to be the absolute king of data collection. Moving beyond the desktop and mobile phone and into our daily lives is the next step in how it will better compete and drive advertising sales. This shift is the next evolution in its business model.
Over the longer haul, data collected from these devices is what’s going to drive revenues and profits at GOOGL stock. It doesn’t matter if takes a loss on a Chromecast today; the info pulled from that device is going to be worth a lot of money down the road.
While it may seem like a waste or hobby, Alphabet’s decision to go device heavy is ultimately going to be its biggest win. Investors just need to hang on until that ride starts to pay off.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.