Alphabet Inc (GOOG)

[SeriousMoney]

GOOG's Virtuous Cycle

[Safa Rashtchy] still believes the company's revenue will continue growing, thanks to expansion efforts such as Gmail, the company's free Web-based e-mail, and the map service Google Maps. He says those products will draw more users to Google and make its brand more meaningful beyond its core business as an Internet search engine. Piper Jaffray (PJC)... recently surveyed 337 Internet users, in which it found that 49% of respondents use at least one Google product aside from search. A quarter used at least two.

"While Google's partnership strategy and monetization improvement trajectory are well understood by investors, we do not believe investors fully understand the impact of Google's non-search related product extension strategy," Rashtchy wrote Jan. 3 in a note to clients. As a result, "consumer adoption of non-search-related products creates a virtuous cycle of brand affinity that drives incremental search volume." In other words, the more you use Gmail, share photos with Picasa, or get directions to a new club with Google Maps, the more likely you are to feel good about Google's free services -- and, by using them, eventually drive more cash to the company.

Another trend Piper Jaffray sees: search becoming a more important component of Web surfing. Whereas people once used a search engine for research or to locate a business, such sites are now becoming "the dominant navigation method" -- that is, essentially used as a browser -- by many, according to the brokerage's survey.

http://www.msnbc.msn.com/id/16469215/