Option Trade with Google Report

by Ian Harvey

June 14, 2012

Siri, the virtual personal assistant on the new Apple iPhone 4S, with new technology, could eventually put Google (GOOG) out of business or seriously threatens it’s $200 Billion core business ?

Amazingly, Google’s Executive Chairman of the Board, Eric Schmidt, may think so.....

In September of 2011, the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights conducted hearings to determine if Google was a monopoly in the online search industry.

Among those who testified was Eric Schmidt, who claimed Google was not monopolistic.

[H]istory shows that popular technology is often supplanted by entirely new models. Even in the few weeks since the hearing, Apple has launched an entirely new approach to search technology with Siri, its voice-activated search and task-completion service built into the iPhone 4S. As one respected technology site reported: “[E]veryone keeps insisting that Apple will eventually get into the search engine business. Well they have. But not in the way that everyone was thinking. Siri is their entry point.

Given the nature of the Internet, websites, and services can and do get supplanted by completely new models.

Google currently controls two-thirds of the market share for desktop search. Advertising accounts for 97% of Google’s revenue. Google AdWords is the company’s main advertising product (and primary source of revenue), bringing in $28 billion in 2010.

Knowing how Google makes its money, what if there was an alternative way to search for the answers you’re seeking that completely eliminates ads?

That is, what if you could bypass Google’s pages of search results, advertisements, and sponsored links and avoid having to manually mine through an endless list of possible links for the information you want? Would that disrupt Google’s core business?

For sure!

And that’s exactly what’s happening with mobile right now.

While desktop search (which Google dominates) can be highly monetized, mobile search is vastly different. And the bad news for Google is that search is becoming more and more mobile — a trend that will continue.

Mobile users demand nearly instant answers without the clutter of advertisements mostly due to time (users on the go need to act quickly) and screen size (small displays on smartphones) restraints. Because of this, user’s have come to expect the mobile experience to be optimized for quick answers with little to no room for ads to distract or slow the process. As a result, Google cannot monetize mobile search as much as desktop search — not even close. And with search moving away from the desktop and more towards mobile, this casts a gloomy outlook for Google’s core business.

Siri arguably poses the largest threat.

With mobile, search is not about results — it’s about actions.

In other words, consumers don’t want to research their options and read through screens of data. Instead, they want a fast solution, and they want that solution to be actionable.

Clearly, Siri provides the better user experience.

This is a game-changer.

Now, keep in mind that Apple didn’t develop the technology that powers Siri. Instead, they bought it from a company with the same name as its primary asset — Siri.

Apple wouldn’t have invested an estimated upwards of $250 million to acquire a technology if they didn’t believe it would enhance their products and give them a strong competitive edge.

In true Apple fashion, there has been speculation for years that Apple would eventually enter the search market (since their product family of mobile devices depends so heavily upon it).

But nobody predicted they would threaten to change the entire game with their first move.

Because Siri is unlike any voice-recognition software in the world.

Siri uses sophisticated voice-recognition technology — the result of approximately a decade of engineering and development — to understand what you are asking and present you with the correct answer, in real time.

That is exactly what Siri offers.

With mobile, search is not about results — it’s about actions.

In other words, consumers don’t want to research their options and read through screens of data. Instead, they want a fast solution, and they want that solution to be actionable.

If people start using Siri to bypass search, it could ruin Google.

Technology is an ever-important part of our lives, but the only way to make it truly accessible to the vast majority of people is to humanize it.

Google, Microsoft, and nearly all of Apple’s competitors all fail miserably at doing this. Yet Apple has proven time and time again that they are capable of revolutionizing industries where handfuls of others have tried and failed to get it right. Look at personal computing, music, mobile, and even retail.

Many believe the search industry is entering a period of disruption, where the search box is transforming into a conversational interface powered by voice recognition and even artificial intelligence. It’s this conversational interface that poses the threat to Google. No longer is the search box the front-end for searches on iPhones. Google is the back-end technology that is suddenly less visible. Or rather, just one of the back ends.

Because of the rise of specialized searches like Yelp and Wolfram|Alpha, Siri can easily bypass Google’s search algorithms for many queries. Siri even has the potential to tap into social networks like Facebook and Twitter to access personally relevant information based on your friends’ recommendations.

For these reasons, Siri is arguably the most significant competitor to Google — more so than Microsoft Bing and even Facebook.

Siri is the precursor to a revolution in search that provides far more intelligence in narrowing fields of haystacks down to the single needle and presenting it to the user in a simple way. The end goal is a single correct answer, and Siri is the most significant advance in this direction the tech industry has ever seen (at least in the last decade).

Nevertheless, Siri won’t stop people from searching with Google in the future. People will still search in five years from now, even on the desktop. So, in that sense, Siri won’t “kill” Google outright. And Google will no doubt strike back with its own artificial intelligence innovations to search to compete with Apple on its Android platform.

However, Siri offers a clear pathway forward for a revolutionary new way of retrieving information that bypasses traditional Google search and relegates Google to an unnoticed role under the hood. In that way, Siri is a clear Google competitor if not killer of its core business and cash cow — AdWords.

And the slide has already started!

• On Friday, January 20th, shares fell 8% after Google posted a rare quarterly earnings miss. Money paid to Google by marketers decreased for the first time in two years.

In fact, Google underperformed on both revenue and earnings. And this under-performance came during the holiday shopping period, which witnessed record online traffic and sales.


On this news, shares of Google dropped over $50.00 in a single day. It was the largest percentage fall for Google in the last nine months.

Google executives blamed the decline on Forex fluctuations and ad format changes. But the reality is that mobile search — led by Siri — is starting to eat into Google’s core business.

It happened again: For the second consecutive quarter, Google suffered a decline in their critical CPC rates. According to their April 14th earnings release, GOOG’s aggregate cost-per-click growth was down 12% (and also down 6% quarter-over-quarter). This latest decline, which comes on the heels of January’s decline, was once again attributed to the ongoing shift in traffic from desktop search to mobile search. Clearly, a trend is forming.

Most mobile Google searches don’t lead to users spending more money compared to desktop searches. In other words, Google doesn’t make as much money on mobile search as compared to desktop search, and mobile search is accounting for a growing percentage of overall searches. This is an indication of what’s coming for Google.

• Even Goldman Sachs admitted that the market needs to shift its expectations and lower estimates for Google going forward.


In my view, the top has now been set in Google. Going forward, the company is at severe risk to lose a major chunk of their market capitalization.

Back in 2009, GOOG traded for $300 per share. It was over $600. I predict that Google’s revenue slowdown due to the Siri threat outlined in this report could chop GOOG’s value in half, bringing it back down to the $300 level from 2009.

If you agree and would like to profit off this move, here’s what I recommend.....

*OPTION TRADING PLAY: Buy the Google Inc. (GOOG) Jan 2014 290.000 put (GOOG140118P00290000) at or under $9.00, good for the day. Place a protective stop limit at $4.00 and a pre-determined sell at $15.00.

The code to return to the Options Trades is ADGM061312MGDA

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.
Options traders win because they are successful.

Search Stock Options
Made Easy

Enjoy Relaxed or Fast-Paced Trading? Choose your Membership Style...

Whether you prefer to take a laid-back approach to your trading,

or to charge ahead in your options trading,

 Stock Options Made Easy Armchair Trader and Cut-to-the-Chase Trader Memberships put everything you need to succeed at your fingertips for just  $39 or $79 per month.

Search Stock Options
Made Easy


Subscribe to our FREE
newsletter for all the latest options news!

Enter Your Email Address

Enter Your First Name

Follow S_O_M_E on Twitter

Subscribe to our FREE
newsletter for all the latest options news!

Enter Your Email Address

Enter Your First Name

Follow S_O_M_E on Twitter