Google Updates Music to Maps as Stock Rises Above $900 for First Time

Wednesday, 15 May 2013 05:18 PM

 

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Google Inc. introduced subscription music streaming and overhauled its online maps, part of an array of product updates aimed at attracting more users and advertisers.

The world's most popular search engine also showed off upgrades to the Android mobile operating system, Glass computing spectacles, Chrome browser and other initiatives at the I/O conference in San Francisco Wednesday. By getting developers to write software for its products, Google is seeking to broaden the appeal of its services.

Keeping a fresh lineup is critical as the Mountain View, California-based company vies with Amazon.com Inc., Apple Inc. and Microsoft Corp. for Web consumers of information and entertainment. Google shares rose past $900 for the first time, a sign of shareholders’ optimism that Chief Executive Officer Larry Page will outpace software and services competitors.

"Investors are responding to the overwhelming evidence presented today that Google is keeping up with – and in some cases staying ahead of – its major platform rivals," said James McQuivey, an analyst at Forrester Research in Cambridge, Massachusetts. "To see such a large company attack so many fronts with such agility is rare and, evidently for the market, inspires confidence."

Google shares rose to a record, partly boosted by an increased price target to $996 from $932 by Morgan Stanley analysts. The stock climbed $28.79, or 3.2 percent, to $915.89 at the close in New York, the highest since the initial public offering in August 2004. Google has advanced 29 percent this year, compared with a 16 percent gain in the Standard & Poor's 500 Index.

Music Boost

By offering music, Google is seeking to give consumers more reasons to use the Android operating system, already the most widely used software in smartphones, with more than 900 million activations.

Google’s All Access music service will cost $9.99 a month, making millions of songs available on Web browsers as well as mobile devices, the company said at Wednesday's conference. Universal Music Group Inc., Sony Music Entertainment and Warner Music Group Corp. have reached agreements to license songs, according to people with knowledge of the matter, who asked not to be identified because the details weren't public.

The company is also challenging online-music providers like Spotify Ltd., which lists more than 6 million paying subscribers and more than 24 million active users in 28 countries.

Maps Revamp

A central feature for smartphones, mapping applications have become a key tool for software and hardware makers to lure more users. Apple introduced its own maps app in September to replace one that relied on Google’s data. Following poor reviews of Apple's product, Google rolled out its own version that's become popular with iPhone users.

The upgrade to Google Maps provides more context and recommendations, whether that's a particular restaurant or museum, according to Jonah Jones, lead designer at Google Maps.

While Google's preview of Maps is tailored for the desktop and not yet mobile devices, a new version will eventually be available across all platforms, Jones said. Google Maps also competes with a Microsoft desktop version, and the revamp will let users quickly zoom into a location without running into fuzzy images, thanks to technology that renders the map repeatedly, depending on the speed of the browser.

YouTube Opportunity

Google is also devoting part of the conference this week to YouTube. The online-video service could grow into a business with $20 billion in sales by 2020 from $4 billion this year, according to Scott Devitt, an analyst at Morgan Stanley. In video, YouTube reaches about 80 percent of viewers of online video, and Google's measuring tools can help advertisers target precise audiences, Devitt wrote in a research note.

"We believe that Google has been aggressively courting video-advertising dollars," wrote Devitt, who has an overweight, or the equivalent of a buy, on Google stock.

"We’re only at 1 percent of what's possible and even only less than that," Page told software engineers at the event. "Despite the faster pace of innovation in the industry, we're still moving slow relative to the opportunities that we have."

Search, Google's core business that generates 85 percent of revenue, also got an upgrade, with the introduction of voice-based queries for the desktop version, a feature already available on smartphones.

Google shares rose 2.7 percent during three days at the 2012 I/O conference, and the impact this year "should be positive," according to Brian Pitz, analyst at Jefferies & Co.

"As in prior years, we expect news coming out of Google I/O should move the stock, but this year's impact may be more muted," Pitz, who has a buy rating and a $1,000 target price for the stock, wrote in a research report.

© Copyright 2014 Bloomberg News. All rights reserved.

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