The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

GOOGL Stock Prediction

Summary:

Android One was Google’s initiative to disseminate pure stock Android OS-equipped low-cost phones for budget-constrained customers.

Unfortunately, since its launch in 2014, Android One phones have failed to gain mainstream success in its first target market, India. Indian phone vendors were Google’s manufacturer partners for Android One phones.

Google has recently unveiled its lightweight Android O operating system specifically designed for low-cost Android One handsets with 512MB RAM.

I say it’s high time for Google to put its top-ranked global brand on Android One handsets to attract buyers.

GOOGL still enjoys positive buy signals from its algorithmic forecasts provided by I Know First.

Google (GOOGL) recently unveiled the Developer Preview of its Android O lightweight operating system. Android O is aimed at cheap Android devices with less than 512MB RAM. It’s obviously created to help Google’s struggling Android One initiative. People need a lightweight, bloat-free Android operating system that’s suitable for Android smartphones that got built with lower-than-average memory, slower processors, and other cheaper components.

The many background processes that the stock Android operating system does is due to Google’s pre-installing so many apps and APIs (Application Programming Interface) bundled with its Google Mobile Services package. This is why even phones with 1GB of RAM get sluggish when there’s three or more apps opened. Android O appears to be a pared-down version of Android OS, less memory and processor demanding.

Why Google Needs Android One To Succeed

More people might be tempted to buy low-cost Android One handsets if they could get a faster Android O experience. Google’s future revenue stream from mobile advertising is influenced by getting more citizens of planet earth to own phones with stock Android like Android One models.

Poor people who can only afford sub-$100 Android One handsets are still desirable targets for Google’s core advertising business. Google can afford to subsidize the production costs of Android One handsets because it could recover that cost from future ad impressions from future Android One phone owners.

Just imagine 500 million Android One users clicking mobile ads or watching 10-second video ads every day for the next five years. We can guesstimate that Android One’s success could help Google gain $3 or $4 billion additional income from ad clicks every year.

Furthermore, owners of Android One handsets are also potential long-term customers for in-app purchases, subscriptions, and media purchases via the official Google Play Store. A person who could afford a $99 Android One handset could become a repeat buyer of in-game currency, songs, movies, and e-books from the Google Play Store.

Android One Also Needs A Universal Google Trademark

Android One was Google’s grand plan to populate the world with low-cost phones running stock Android Operating System. Unfortunately, Android One handsets released since 2014 have yet to gain commercial success even in India. Sadly, handsets with Indian brands like Spice, Karbonn, Cherry Mobile, and Micromax are far from gaining mainstream success.

May I suggest that instead letting Android One languished with local brands, Google instead use its own top-ranked trademark on future Android O/Android One handsets. Instead of contracting so many local/regional phone brands, Google can just hire Foxconn to build Google-branded Android One handsets for emerging and developed markets.

Google is now the world’s most valuable brand, surpassing that of Apple’s and Microsoft’s. Google’s sudden emergence as the world’s most valued trademark could be used to boost Android One’s global dissemination. It will help, not hurt, sales of low-cost Android phones if they tout Google’s trademark instead of local brands like Cherry Mobile or Micromax.

(Source: Brand Finance)

Look at the chart below, Google’s trademark is valued much higher than social network giant Facebook (FB). It means industry experts acknowledge that just like Apple (AAPL), Google’s trademark or brand name already has enough power to push any product to consumers. Google has built up global customer recognition and a solid base of loyal customers it can stop contracting other companies/brand names to sell its products.

(Source: Brand Finance)

Conclusion

Releasing a lightweight Android O operating system is not enough to raise consumer interest in Google’s Android One. Google also needs to change its previous strategy of partnering with country-specific brand names to sell different of essentially very similar Android One smartphones.

A global-wide commercial success for Google-branded Android One smartphones can notably increase the total population of audience for Google’s advertising and Play Store business segments. There is still money to be made serving ads to people who can only afford to buy sub-$100 Android phones. A well-crafted personal mobile advertisement will still get clicked regardless of a phone owner’s income tax bracket.

An advertiser will still pay Google even if it was a poor man (not a rich one) from the Philippines who clicked a mobile ad for luxury watches.

I have a Buy rating for GOOGL. The algorithmic forecasts from I Know First also indicate that future market trends are favorable to GOOGL.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Past I Know First Success With Google

I Know First has been bullish on GOOGL shares in past forecasts. On October 13, 2016, an I know First Analyst wrote about GOOGL. In the article, it mentions Alphabet entering the Software as a Service (SaaS) space. As well as competing in the high end market for smartphones against the likes of Apple and Samsung. Since then, GOOGL shares have risen 17.92% in line with the I Know First algorithm’s forecast. See chart below.

his bullish forecast for GOOGL was sent to I Know First subscribers on October 13, 2016. To subscribe today click here.