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Google has explained why it pulled the plug (for now) on Google Glass

The company held its earnings call last night, where it failed to meet analysts’ expectations for the fifth quarter in a row.
Jan 30th 2015, 3:40 PM 15,071 11

WHEN GOOGLE DECIDED to stop taking orders for Google Glass, its experimental headset device, it said that it would be focusing more on building new versions for the future.

Yet some new information from one of the company’s executives revealed that it wasn’t exactly meeting the expectations it originally set.

At Google’s Q4 earning call last night, its Chief Financial Officer Patrick Pichette explained that it’s not afraid to go back to the drawing board when projects like Glass “don’t have the impact we had hoped for.”

In other cases, when the teams aren’t able to hit hurdles, but we think there are still a lot of promise, we might ask them to take a pause and take the time to reset their strategies, as we recently did in the case of Glass. And in those situations our project don’t have the impact we had hoped for, we do take the tough calls. We make the decision to cancel them and you’ve seen us do this time and time again.

When Google pulled the project, it said that it was “graduating” from Google X labs to its own team. Pichette explained that each Google project starts with “small dedicated teams that are given clear milestones to hit” before it increases investment in it. He cited Fiber, its US broadband service, as an example of this process and how it’s expanded to different US cities over time.

“Although the vast majority of our resources in time continue to be invested in our core products, we also have the enthusiasm to invest in new promising ideas like self-driving cars or [Project] Loon. We use the same disciplined approach to these new areas that we used for investing in our earlier bets like Android or Chrome or Display.”

During the earnings call, it was also revealed that YouTube now has more than one billion users, with watch time up 50% year-over-year and mobile revenue up more than 100% over the same period, according to its Chief Business Officer Omid Kordestani.

Failing to meet expectations

Google has gotten into the habit of missing analysts’ earnings targets, frustrating investors who believe the online search leader would be more profitable it wasn’t pouring so much money into far-flung projects such as driverless cars.

The earnings were well below analysts’ predictions, marking the fifth consecutive quarter that Google hasn’t cleared a key hurdle for publicly held companies.

But investors’ disappointment with the performance seemed to dissipate during a pep talk by Pichette. He assured investors that Google intends to spend in a “prudent manner” and left open the possibility that the company might funnel some of its $64 billion (€56 billion) in cash back to shareholders, especially if a law is passed to allow money stashed in overseas accounts to be brought to the US at lower tax rates.

Those remarks, made during conference call to discuss the results, reversed an initial sell-off in Google’s stock.

(Additional reporting from AP)

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Quinton O'Reilly


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