However, with Alphabet carrying a market capitalization of $524 billion, GOOGL stock owners realize that the company must appeal to the upcoming generation if its growth is to continue.
For this reason, Google is targeting your children with Chromebooks as it prepares to tackle new markets.
The New King of Education
According to a new report from Futuresource Consulting cited by CNBC, Google’s Chromebook makes up 4.4 million of the 8.9 million devices sold to K-12 schools and school districts so far this year. When you add that to other devices using Android, it gives Google a 53% share of the market to end the third quarter.
What this proves is that Google is not only dominating the education technology market, but has also grown its market share in this fast-growing space at a mind-boggling rate. After all, Google sold just 2.9 million Chromebooks in all of 2013.
Therefore, it has sold 1.5 million more Chromebooks in just three quarters of 2015 than in all of 2013, with the busiest buying consumer electronics quarter yet to be reported. By the time it is all said and done, Google could very well ship 6.5 million to 7 million Chromebooks in 2015.
What Makes Chromebook a Winner
That said, Google is not going to create its next $50 billion in annual revenue by selling Chromebooks. Thus, Google Chromebook sales are not going to move GOOGL stock.
One of the big reasons for Chromebook’s success is its pricing, as the devices typically range from $200 to $250. This differs significantly from the more expensive MSFT and AAPL tablets.
Nevertheless, what Google’s doing is getting youngsters familiar with its software and services, which thereby sparks the next generation of advertising dollars. Beyond that, there is real money to be made in the e-learning market, and in other segments of education as learning becomes more digital and cloud-focused, two areas of great importance for GOOGL stock.
Every year the Federal & State expenditures on education top $750 billion, according to the Education Industry Association. Within the next year, the e-learning market will be worth $50 billion annually. This implies that spending has transitioned to the e-learning space, and with Chromebook’s market share, investors must assume that Google is going to control much of this market.
Furthermore, Google’s Classroom platform for Chromebook has been an absolute monster success. It gives Chromebook and Google users a platform to submit and access assignments and communicate with teachers, and for teachers to provide instant analysis, among other things.
Reportedly, more than 50 million students and educators are using Google’s Education applications.
What This Means for GOOGL Stock
This is service, software and hardware usage that might not be showing up big on Google’s quarterly income statement, but long-term, this market presence has the potential to add tens of billions to Google’s top-line as children grow to adults and become ad targets.
Keep in mind, Google is collecting usage data, which, like all data, is valuable to the right advertiser.
Ultimately, Google’s goal has always been to dominate the markets in which it operates, whether they be Internet search, mobile operating systems, applications or e-learning and hardware.
In respect to e-learning and education in general, Google looks well on its way to dominating this very large, fast-growing market, thereby giving it very bullish prospects for long-term ad revenue and explaining why Google is targeting children right now.
In other words, e-learning could very well be a long-term catalyst for GOOGL stock that investors don’t yet realize.
As of this writing, Brian Nichols did not hold a position in any of the aforementioned securities