This Free Service Is Costing Google
In what could be a losing move for Google (NASDAQ:GOOG), the company has extended the free use of the Gmail-to-phone calling feature within the U.S. and Canada for 2013. The voice call feature has been offered freely in those regions since it was first launched in 2010.
Though Google can often be seen shutting down some of its less popular or costly services — ahem, Google Wave — it has continued to extend the free offer of the Gmail voice-calling feature. Though the company may have started saving more money on the application, as there were very few updates to it in 2012, the service could still be proving costly for Google to maintain if it doesn’t get enough users making paid international calls.
Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.
CHEAT SHEET Analysis: Is Google hurting its own value with this decision?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. Google’s decision to continue offering this free service means that the company is choosing to put money into a project that could see very limited returns. It’s quite a gamble but could go either way, as the $0-price-tag may entice users to get familiar with the calling application and continue using it even if Google finally puts a pricet ag on domestic calling. However, Google extending the free service for another year signals that it probably hasn’t gotten enough users to bite, and it may not succeed by simply trying the same tactic year after year.
This calling feature is one that likely requires significant infrastructure and upkeep to offer. As Google is only monetizing international calls at this point, another year of free domestic service could drag on revenues slightly. Fortunately for Google, voice calling is not its main venture, and any losses related to the service shouldn’t be too sorely felt.
Don’t Miss: Is Google Catching Up With Apple’s App Kingdom?