Google CEO explains why Glass is important, even though it’s still a financial loss

Today, Google put a bow on the first quarter of 2013 with $14.0 billion in revenue, a 31 percent year-over-year increase. But that revenue, largely from ads, seems totally unrelated to the company’s most innovative products.

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“Over the last two years, we’ve worked hard to increase our velocity … and make big bets,” said CEO Larry Page in a call with investors.

Talking about some of the mid-range bets — products like Google Now, voice search, Chrome’s speech API, and Google Play — Page highlighted the company’s innovations and releases for the quarter, saying, “In the same way, we need to make advertising across all platforms easy for our customers. … I’ve been very pleased with the progress so far. We’re moving … a whole ecosystem on a dime.”

But what about expensive projects that stir the imagination but leave the Scrooge McDuck-like bank vault empty?

“It’s super important to stay focused on the future. Companies tend to get comfortable doing what they’ve always done … but incremental improvement is guaranteed to be obsolete over time, especially in technology,” Page said. “So a big part of my job is to get people to focus on things that are not just incremental.”

That involves explaining to investors why Google is spending so much time and effort on “speculative projects such as self-driving cars,” Glass, and Google Fiber.

While these products are money-losers for now, Page said, “The best people want to work on the biggest bets … Someday, we’ll all be amazed that computing involved fishing around in pockets and purses.”

He continued, “There are so many opportunities to create technology that makes people’s lives better. … We’re still just getting started.”

Q1 was a quarter filled with rumors and excitement about Google’s future — self-driving cars, a smartwatch prototype, and the wildly popular-in-the-public-imagination Google Glass. In fact, Google chose to open its investors’ call webcast with a Google Glass commercial featuring the Google campus, its iconic multi-colored bikes, and exec Vic Gundotra.

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But though those products (or potential products) drove the company’s press coverage in the first months of 2013, they weren’t what was driving its revenue.

For Google’s bottom line, we have to look to boring staples: Online ads. Search ads. Display ads. The company’s revenue from ads totalled nearly $13 billion.

As marketing intelligence firm eMarketer pointed out via email, Google controls more share than any other company in pretty much every facet of online ads, including U.S. online search, display, and mobile advertising. In the U.S., Google will take home around 41 percent of all digital ad spend.

One newer money-maker for the company was mobile. The total mobile ad spend for U.S. companies is still only around $7.3 billion, but Google claims 54.7 percent of that pie, eMarketer analysts say.

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The only place where Google lags in mobile is mobile display ads, where newcomer Facebook has taken a surprisingly strong lead.

Motorola Mobile revenues were $1.02 billion, or around seven percent of the total. Restructuring charges arising from the Motorola deal were $66 million, and the related tax benefits were $23 million. The Motorola side of Google’s business is still recording GAAP and non-GAAP losses for the quarter, 27 percent and 18 percent, respectively.

As the second quarter begins, Google’s cash, cash equivalents, and marketable securities sit at $50.1 billion. Non-U.S. revenues were at $7.1 billion.

Google celebrated its first-ever $50 billion year in 2012, a feat Page called “not a bad achievement in just a decade and a half.”

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Google’s long-planned stock split is still in the works, with 3 million unpriced shares earmarked and unsold.

Here’s a snapshot of the company’s financials over the past five years:

Meanwhile, Google’s stock price is solidly in the middle of its class, gaining around eight percent over the past quarter. As of this writing stock ticker GOOG is trading at $767.68, up from $732.87 at the time of the company’s last earnings call:

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Photo credit: Project Glass/Google+