Why the Google Play business is increasingly important for Google

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Google Play business growing in importance for Google

In the previous part of this series, we discussed Google’s (GOOG)(GOOGL) ambitions to make a comeback in China to further grow its Google Play business. Google Play is becoming an important business for Google. Google reported that the revenues from its “Other” segment grew by 50% year-over-year and 15% sequentially (quarter-over-quarter). Although Google’s “Other” segment consists of its non-advertising business such as Google for work (for enterprises) and hardware in addition to Play Store, its growth is driven by its Play Store business.

As the chart below shows, the “Other” segment’s revenue contribution in Google’s overall revenues has increased from 8.9% in 3Q13 to 11.1% in 3Q14, signifying an increase in this business’s importance for Google.

Google Other revenues

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Google Play business was considered slow-moving

It wasn’t long ago that Google Play was considered a slow-moving business, especially when Apple (AAPL) continued to dominate the app store business. In fact, earlier this year, Apple revealed that its App Store business generated 85% more global revenue than Google Play in the March 2014 quarter, citing App Annie.

This was despite the fact that Android dominates the smartphone operating system market, with Apple, Microsoft (MSFT), and BlackBerry (BBRY) all comparatively smaller players. According to a report from Strategy Analytics, Android’s share in the smartphone operating system was around 84% as of 3Q14, with Apple at 12%, Microsoft at 3.3%, and BlackBerry at 0.7%.

But things have started to change. Google continues to add new features to Play to monetize it better. What are these new features? Find out in the next part of this series.

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