FORTUNE -- Simmer down, folks. Google is doing just fine.
Judging from media coverage this Wednesday following Google's (GOOG) first-quarter results, you'd be forgiven for thinking the world's largest Internet search provider is in hot water. Google reported first-quarter revenues of $15.4 billion, up from $12.95 billion the same period last year, while earnings came in at $3.45 billion, also up slightly from last year.
But those numbers fell short of Wall Street's targets, based in part on the ongoing decline of Google's revenue from online ads, which account for the lion's share of company earnings. (The average "cost per click," or CPC, for instance, declined 9% this quarter.) That, in turn, caused Google's share price to fluctuate and set the media buzzing with talk of "disappointing" financial results, and more proof that Google is experiencing "growing pains," or is experiencing a "slump."
The culprit behind lower ad prices? The rapid, tumultuous shift from desktop to mobile. According to New York-based digital marketing research firm eMarketer, the number of smartphone users worldwide will grow 22% to 1.75 billion this year, rising to 2.03 billion in 2015 and 2.28 billion the year after.
Businesses like Google that rely heavily on ad revenue already have desktop ads down to a science, but mobile advertising, which has cropped up in recent years, has remained tricky. They certainly see the potential in the rapidly growing mobile market, but haven't yet figured out the best way to use mobile to their advantage -- a reality Nikesh Arora, Google's chief business officer, acknowledged during Wednesday's earnings call.
Arora is bullish, arguing that mobile ad pricing will eventually surpass that of the desktop: "In the medium- to long-term, mobile pricing has to be better than desktop pricing," Arora said during the call, referring to mobile-unique tools, such as more accurate targeting of ads based on a user's location, thanks to GPS technology.
The reality for Google is that, despite a rocky transition, it more than any other company -- with the possible exception of Facebook (FB) -- stands to benefit from mobile advertising once everyone figures out the best way to engage with users on smaller screens. Besides, while Google's CPC pricing is suffering, so is everyone else's, and some are faring much worse. According to digital marketing company Ignition One, the average CPC for search advertising on mobile plunged 35% during the first quarter of this year, compared with Google's more modest 9% decline.
As for Wednesday's wavering share price? Chalk it up to antsy investors. Between the stock's rise and fall during regular trading hours and after the market closed Wednesday, Google shares actually ended up almost 1% for the day and not down, as some outlets had suggested.
The transition to mobile might give Google reason to further develop other revenue streams. For instance, the company's "other" revenue source -- a business segment that includes YouTube, Android, and Chrome -- may account for just over 10% of current revenues, but it also climbed 48% year over year to $1.55 billion. The shift could also spur the company to duck out of investments that aren't panning out, as Google did when it agreed this January to sell the Motorola smartphone unit to Lenovo for $2.91 million after purchasing it for over $12 billion less than two years prior.
But for the foreseeable future, Google's massive revenue driver will remain advertising.
Given Google's already dominant position in the space, "I think they have to stay the course when it comes to the mobile advertising," explained Andrew Frank, vice president at Gartner Research. And like Arora, Frank predicts today's lower mobile ad prices are a temporary deal: "They can only go up," he added.
Android or iOS? That may depend -- more than you know -- on where you live.
FORTUNE -- Do the rich tweet from iPhones and the poor from Androids?
That was Business Insider's takeaway from a graphic of Twitter usage that painted Manhattan island Apple (AAPL) red and Newark, N.J., Google (GOOG) Android green.
Patently Apple's Jack Purcher didn't buy it. And with series of maps like the one above, he made the case Friday that when MOREPhilip Elmer-DeWitt - Apr 5, 2014 2:55 AM ET
Apps crash more frequently on iPads and iPhones than on Samsung's Android devices.
FORTUNE -- Quentin Hardy may be forgiven for looking at the attached charts and seeing what he expected to see.
Summarizing a new report on the failure rate of mobile apps, he wrote in Friday's New York Times that apps running on Google's (GOOG) Android operating system crash more frequently than apps running on Apple's (AAPL) iOS.
"iOS 7.1 has the fewest crashes," he adds, "most likely thanks MOREPhilip Elmer-DeWitt - Mar 28, 2014 8:40 AM ET
Why would Apple put its music on Google's platform?
FORTUNE -- Billboard reported Friday that Apple (AAPL) was "thinking about" about adding an iTunes App for Google (GOOG) Android phones. Some of the instant analysis on Twitter was pretty smart. A few one-liners that caught my eye:
@stroughtonsmith: iTunes won because it made owning easier than piracy. Subscription services will invariably win because they're easier than owning.
@reneritchie: I'd much rather have iTunes for MORE
A Web ad network's analysis of 2013 see shifts in momentum in the smartphone wars.
FORTUNE -- Apple (AAPL) and Samsung are both expected to launch new flagship smartphones in 2014. To get some baseline numbers in advance, the folks at the Chitika ad network have done a fresh analysis of iPhone and Galaxy usage in 2013.
Their report, issued Friday morning, is based on Apple and Samsung mobile ad impressions in MOREPhilip Elmer-DeWitt - Mar 21, 2014 9:40 AM ET
Adobe counted 574 million events streamed last quarter, up from 223 million a year earlier.
FORTUNE -- Apple (AAPL) dominates "TV everywhere" -- a buzzword coined by Time Warner Cable in 2009 to describe the "authenticated streaming" concept pioneered a few years earlier by ESPN.
The pitch to viewers is simple: Pay your monthly cable or satellite TV bill, and we'll let you watch our content on just about any device that MOREPhilip Elmer-DeWitt - Mar 17, 2014 12:14 PM ET
The dean of Apple bloggers offers a new metaphor from the trenches of the app wars.
FORTUNE -- Tech pundit John Gruber, best known for his Daring Fireball blog, launched a mobile app last summer, and it seems to have given him new perspective on the smartphone market. Or at least a new metaphor.
The terms most often used to describe the competition among Apple (AAPL), Google (GOOG), Microsoft (MSFT) and Samsung are drawn from MOREPhilip Elmer-DeWitt - Mar 17, 2014 4:31 AM ET
Another study found 42% of Chinese buyers want iPhones vs. 32% for Samsung.
FORTUNE -- "We may have underestimated Apple Inc.'s (AAPL) progress in China."
So begins a story in the International Business Times Friday reporting on the numbers in the first attached chart.
They come from an Upstream survey of 4,505 smartphone customers in five emerging markets in which respondents were asked what brand they hoped to buy next. Apple edged out Samsung MOREPhilip Elmer-DeWitt - Mar 7, 2014 7:10 AM ET
The app launches on Android today.
FORTUNE -- You've heard the cliché a million times: Gaming is a hits-driven business. Just ask our friends at Zynga (ZNGA), which rode Farmville, and then CityVille, to an IPO and subsequent collapse. Or OMGPop, whose hit app Draw Something lost millions of users just as fast as it acquired them (but not before selling to Zynga for $200 million). Or Rovio, which had MOREErin Griffith - Mar 6, 2014 1:00 PM ET
Daniel Eran Dilger rips into lazy journalism on the iOS v. Android beat.
FORTUNE -- If you like your pro-Apple agitprop straight -- right out of the bottle, no ice, no water -- Daniel Eran Dilger is your man.
Dilger, if you're not familiar with the byline, is Apple's (AAPL) fiercest defender at AppleInsider, one of the Internet's most prominent Apple news and rumor websites.
He was on a tear Saturday, ripping into the tech MOREPhilip Elmer-DeWitt - Feb 16, 2014 7:12 AM ET
|GM's recalled Cobalt was a failure from the start|
|Americans have fallen in love with real estate once again|
|Your Internet security relies on a few volunteers|
|Pope Francis challenges the free market - The Buzz|
|Detroit pension cuts hit civilian workers hardest|