Before all of the Google (Nasdaq: GOOG) lovers argue innovation never left Google, let me explain my understanding of the difference between innovation and invention. In my days as a researcher at 3M (NYSE: MMM), I learned invention is taking money and turning it into ideas while innovation is taking ideas and turning them into money. Having the coolest ideas at the end of the day doesn't make you an innovative company. It makes you inventive.

Under that lens, I have wondered for years how Google could spend so much time inventing great ideas without turning those inventions into profitable innovations. Google has all kinds of great gadgets such as Google Earth, Picasa, Translate, and even YouTube, but nothing beyond search has driven results to the bottom line yet. Advertising is still 97% of revenue, and search accounts for the vast majority of that revenue.

Search and beyond
In the past few months, some of these inventions have come together, and a clear innovation path has taken shape at Google. The Android platform is growing rapidly and will likely pass the iPhone as the second most popular smartphone platform within months. Android is important for Google as a way to keep on top in mobile search but also as a way of reaching app developers. Much like its wildly successful AdSense for Web developers, AdMob is providing a way for developers to monetize their apps.

But Google may really hit a home run with Google TV. I have totally bought into the potential Google TV offers for users, advertisers, media companies, and Google. Until now, we've been captive to the pricing and lineup of satellite and cable providers like my arch nemesis Comcast (Nasdaq: CMCSA). But Google may be able to cut that cord.

Step into the future
Google TV will offer the Web, searchable media, and applications, much like Android or the iPhone, but the apps available for Google TV are what I am most excited about. I routinely stream movies and TV shows through Netflix (Nasdaq: NFLX) on my Wii, and now media will be able to use similar technology to offer content on its own terms. Hulu Plus gives us a peak into the business model of a paid app directly from the media source. Hulu Plus charges a monthly fee of $9.99 for access to videos including the latest series like Glee and 30 Rock. Hulu owners Disney (NYSE: DIS) and GE's (NYSE: GE) NBC will be able to test the subscription model and tweak it to capture the most value for their content.

This type of app gives media companies the ability to create their own pricing, a major hang-up for Apple (Nasdaq: AAPL) TV right now. Google TV will offer options once only dreamed of and can bring Google into an even more central part of our daily lives. As more apps and content come online, the advertising possibilities are endless for Google TV.

Building an innovation machine
The Android platform and Google TV are just the start of my reasons to be excited about Google today. But I'm more excited about what we haven't seen yet. As the table below shows, Google spends more of its revenue on R&D than 3M and Apple, companies famous for innovation, and doesn't appear to be slowing down any time soon. As long as Google keeps operating under the "throw stuff at the wall and see what sticks" mantra, we should see new products coming out regularly. Every once in a while, it might even make money.

  2009 Sales 2009 R&D Expense Percent of Sales
Google $23.65 Billion $2.84 Billion 12%
3M Co. $23.12 Billion $1.29 Billion 5.6%
Apple $36.54 Billion $1.33 Billion 3.6%

Source: Securities and Exchange Commission filings

Google still revolves around search and will for a long time to come, but innovative products will be the foundation of growth in the future. As long as researchers are left to explore the reaches of their imagination, investors should benefit from Google's free-wheeling culture.

With more than $30 billion of cash and short-term investments on the balance sheet, Google's price/earnings ratio is only 22.7 and revenue growth of 18.6% over the last three years looks pretty attractive. As Google figures out ways to monetize the Android and Google TV platforms through ads or some other means, there is no reason to think revenue won't continue to grow at double digits. I'm excited to see what comes out next.

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