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.
Some of his prize money will go to families of the missing Malaysian airline.
FORTUNE -- Everybody's Web software got "pwned" at the Pwn2Own hackers conference this week: Apple's (AAPL) Safari, Google's (GOOG) Chrome, Microsoft's (MSFT) Internet Explorer, Mozilla's Firefox and Adobe's (ADBE) Reader and Flash.
Chrome was hacked by a French team from Vupen Security with a use-after-free vulnerability that affects both the WebKit and Blink rendering engines.
Safari was defeated by Liang Chen, one of a MOREPhilip Elmer-DeWitt - Mar 14, 2014 12:07 PM ET
It's just gone mobile.
FORTUNE – There was a time when web browsers duked it out for dominance on the desktop. But with users consuming information more and more on smartphones, tablets, and newer form factors like "phablets," the battleground has shifted to mobile. Who's winning?
As recently as June 2012, the competition was in a dead heat: Android led with nearly 22%, followed by Opera at 22%, then Safari on iOS MOREJP Mangalindan, Writer - May 20, 2013 11:23 AM ET
How fast is fast?
Chrome's "canary" build -- the least stable and most advanced version of the browser -- was 40.5% faster than the "dev" edition and 43.5% faster than the current "stable" version.
It also MORESeth Weintraub - Dec 8, 2010 6:03 PM ET
ChromeOS is weaponized for business with Citrix, and encrypted storage.
Last week, Google (GOOG) Engineer Linus Upson made a stir when he said that ChromeOS computers could replace 60% of corporate Windows desktops out there at launch. The assertion at the time may have sounded pretty outlandish. But Google has a few secret weapons at its disposal.
Today, Citrix (CTSX) got on board with Google's ChromeOS. When Notebooks running ChomeOS launch in MORESeth Weintraub - Dec 7, 2010 11:08 PM ET
Microsoft's Internet Explorer dips below 50% of the browser market for the first time since the late 90s.
Google's (GOOG) Chrome browser continues to increase its market share at an impressive rate, more than tripling from 3.69% September 2009 to 11.54% September 2010, according to browser analytics firm Statcounter.
A year ago it was a three-horse race between Apple's (AAPL) Safari, Opera and Google's Chrome for third place behind Firefox and IE. MORESeth Weintraub - Oct 5, 2010 11:21 AM ET
Google's monetary exchange service, temporary sidelined, is poised to make a comeback as the exchange for the Chrome Web Store.
Google's Chrome project(s) are about getting people to do things on the web in a browser (as opposed to say an app). One of the bigger aspects of this strategy is Google's intent to create a kind of App Store for Web developers, which allows them to both make some money MORESeth Weintraub - Sep 24, 2010 12:29 AM ET
A round-up of the companies, deals, and trends that made headlines.
Every day, the Fortune staff spends hours poring over tech stories, posts, and reviews from all over the Web to keep tabs on the companies that matter. We've assembled the morning's most newsworthy bits below.Microsoft (MSFT) and Facebook are in talks to expand their search partnership, which could give Bing access to anonymized data from consumer usage of the social network's MORE JP Mangalindan, Writer - Sep 16, 2010 8:18 AM ET
Google is phasing out its use of Microsoft's Windows on desktops, citing security concerns stemming from the recent Chinese hacking incident
It must be nice to be a Google employee. You get to work with the smartest engineers out there. You get gourmet cafeteria food and all kinds of amenities. But best of all, you aren't given some generic, locked-down PC that you aren't familiar with. You get to pick what platform you MORESeth Weintraub - May 31, 2010 10:30 PM ET
Palm demonstrated some software based on HTML5 today, not that Chrome was coming to webOS, as previously speculated.
Breakfast is being served and the show is about to begin. Here's a quick clip of the show floor with an unlikely guest.
Palm. With a little Chrome Browser icon below their display.
Though it was easy to assume that they'd be utilizing the Chrome Browser, it turns out they have a software wing and MORESeth Weintraub - May 19, 2010 11:20 AM ET
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