Rise of use of mobile devices Google reported that, in the nine months ended September 30 2012, cost-per-click rates

declined compared to the same period in the previous year. Notably, the explanation for this given by Google in its Q3 2012 financial report included the rise of the use of mobile devices to access the internet, on which average cost-per-click is usually lower than on desktop computers and tablets. Interestingly, this is also an area that other Internet-based companies, such as Facebook, have also struggled to monetize. The return to decline of cost-per-click in 2012 once again exposes Google to potential future limitations. This limitation was also seen by many investors following the premature announcement of its Q3 2012 results in October 2012 when a drop in share price reduced Googles market capitalization by around $20bn due to unpromising revenue growth and declining profits. Internet-enabled mobile devices Key growth driver

There has been a dramatic rise in the usage of mobile Internet services, which is a key area that Google will want to exploit in order to maintain revenue growth in terms of its core advertising business. Additionally, Internet-enabled portable hardware such as tablets and smartphones has served to bolster revenues and profits of other technology companies in recent years.

California-based technology company Apple Inc. is a company that has seen tremendous growth in terms of portable hardware products. In recent years, Apple has seen its revenues soar, lending it the title of worlds most valuable company in 2012. What is most striking is the source of this revenue growth, which can be seen in Figure 1. Since the introduction of its Internet-enabled iPhone and iPad products in 2007 and 2010, respectively, Apples traditional computer hardware Mac-related revenues have been eclipsed by earnings from internet enabled devices. In order to gauge the significance of this in relation to the IT industry, it is important to recognize the technological nature of such products. Take, for instance, the iPhone, a product that can not only conduct phone calls, but also allows portable access to the Internet, email, and

other applications. In a sense, the iPhone, as well as other smartphones, can be seen as a potential replacement for computers.

In addition to this, the extra functionality that Apples iPad, a tablet computer, has over a smartphone further cements its viability as a substitute for the traditional computer. Although Apple has been instrumental in the uptake of such technology among consumers, this trend is not confined to Apples success. Advancements in technology, coupled with changing consumer attitudes, mean that the smartphone and tablet computer markets tend to be more attractive to technology companies, and offer tremendous revenue growth prospects.

Rise in internet usage on mobile devices

According to MarketLine research, the global mobile broadband industry has seen subscriber numbers grow with a CAGR of 39.3% between 2007 and 2011 to over 1 billion. This shows that subsequent to the increased uptake of mobile computer hardware amongst consumers, the utilization of mobile data services has risen dramatically across the globe in recent years.Furthermore, this number is expected to

grow to 2.5 billion by the end of 2016, just over a third of the total estimated global population, as more consumers access the Internet via smartphones and tablets as opposed to traditional desktops and notebooks. The increased prevalence of Internet access via mobile devices represents both an area of potential growth and challenges for Google.

Mobile devices have the potential to expand Internet usage at a time when uptake of traditional services is beginning to show signs of slowing down although, as previously outlined, mobile devices are difficult to monetize in terms of advertising revenues. However, a successful entry to the hardware market would allow Google to capitalize on the burgeoning market for internet-enabled mobile devices. Additionally, by way of extension, Google would also enjoy a greater influence over the way in which the Internet is accessed using such devices, benefitting its core business activity of generating revenues from online advertising operations.