Google (NASDAQ:GOOGL) made big news at the recent International CES in Las Vegas with the announcement of the Open Automotive Alliance. As its website says, the OAA "is a global alliance of technology and auto industry leaders committed to bringing the Android platform to cars starting in 2014."
So, Google has that going for it, which is nice. But the company also stands to win big as location-based technology becomes more and more ingrained not only in our mobile devices, but in our cars as well as automakers build 4G connectivity right into our vehicles.
Motley Fool analysts Austin Smith and Rex Moore were at CES, and discuss Google's automotive possibilities in this video.
A full transcript follows the video.
Rex Moore: We mentioned this is Google's thing. What about them? They're in everything. Still, obviously over 90% of their revenue is advertising based, but what do they get out of this?
Austin Smith: When you look at Google, one of the best products to come out of the Google brainchild in the last years has to be Google Maps; it's ubiquitous, it's integrated into cars now.
Just on one quick first blush, you start to see how a product like that is even further strengthened when you can have real-time data, not just second-guessed from mobile devices in cars, but actually from the cars themselves.
I see location-based services like Google Maps becoming significantly strengthened. You can start to actually integrate traffic patterns into fuel efficiency and better commute times; just all-around better data, further entrenching what is already a very entrenched product. Anything that involves location and tying it back with advertising is going to be a huge win for Google.
We had a really interesting conversation with someone earlier, where a lot of Google's value for companies, in many instances can be squishy. I search for a Coach (NYSE:TPR) bag, but if I don't buy it online, it's hard for me to know that that search actually was meaningful.
What becomes very interesting is, if you start having all this location-based technology, you can start to see that somebody searched for a Coach product, and within the next six hours got in their car and went to the Coach store. When you have this location-based technology, you can make that advertising connection a lot stronger.
You can start to see the value add from Google becoming much more direct. Not only do we know people searched for this, but they actually went out and bought it six months later. You can start to see some CPM numbers going up when you can make a very strong connection like that.
Anything that strengthens Google's presence and awareness and knowledge about your location, as well as the sort of ads you're being served -- and when they can star to tie those together -- you're talking about an advertising behemoth, even bigger than they are now. An incredible world is going to open up to them.
Austin Smith owns shares of Coach and Google. Rex Moore owns shares of Google. The Motley Fool recommends Coach and Google. The Motley Fool owns shares of Coach and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.