Google Rises as Page Updates Music to Maps Services

May 15 (Bloomberg) -- Google plans to start a subscription music-streaming service as soon as this week as a developer meeting gets under way in San Francisco, people with knowledge of the matter said. Jon Erlichman recaps the Google I/O event on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Google Inc. (GOOG) shares rose to a record after the company unveiled a subscription music-streaming service and overhauled its online maps, part of several product updates aimed at attracting more users and advertisers.

The world’s most popular search provider also showed off enhancements to the search engine, the Android mobile operating system, Glass computing spectacles and other initiatives at the I/O conference in San Francisco yesterday. By getting developers to write software for such products, Google is seeking to broaden the appeal of its services.

Keeping a fresh lineup is critical as the Mountain View, California-based company vies with Amazon.com Inc. (AMZN), Apple Inc. (AAPL) and Microsoft Corp. (MSFT) for Web consumers of information and entertainment. Google shares rose past $900 for the first time, a sign of shareholders’ optimism that Chief Executive Officer Larry Page will outpace software and services competitors.

“To see such a large company attack so many fronts with such agility is rare and, evidently for the market, inspires confidence,” said James McQuivey, an analyst at Forrester Research in Cambridge, Massachusetts.

Google shares rose to a record, partly boosted by an increased price target to $996 from $932 by Morgan Stanley analysts. The stock climbed 3.2 percent to $915.89 at yesterday’s close in New York, the highest since the initial public offering in August 2004. Google has advanced 29 percent this year, compared with a 16 percent gain in the Standard & Poor’s 500 Index.

Photographer: David Paul Morris/Bloomberg

By offering music, Google is seeking to give consumers more reasons to use the Android operating system, already the most widely used software in smartphones. Close

By offering music, Google is seeking to give consumers more reasons to use the Android... Read More

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Photographer: David Paul Morris/Bloomberg

By offering music, Google is seeking to give consumers more reasons to use the Android operating system, already the most widely used software in smartphones.

Music Boost

By offering music, Google is seeking to give consumers more reasons to use the Android operating system, already the most widely used software in smartphones with more than 900 million activations.

Google’s All Access music service will cost $9.99 a month, making millions of songs available on Web browsers as well as mobile devices. Universal Music Group Inc., Sony Music Entertainment and Warner Music Group Corp. have reached agreements to license songs, according to people with knowledge of the matter, who asked not to be identified because the details weren’t public.

The company is also challenging online-music providers like Spotify Ltd., which lists more than 6 million paying subscribers and more than 24 million active users in 28 countries.

“Not only is it a new music subscription service, but it’s built into everything else,” said Michael Facemire, an analyst at Forrester Research. “That was a big focus -- having all of my stuff, all of my content, with me wherever I go.”

Maps Revamp

A central feature for smartphones, mapping applications have become a key tool for software and hardware makers to lure more users. Apple introduced its own maps app in September to replace one that relied on Google’s data. Following poor reviews of Apple’s product, Google rolled out its own version that’s become popular with iPhone users.

The upgrade to Google Maps provides more context and recommendations, whether for a particular restaurant or museum, according to Jonah Jones, lead designer at Google Maps.

While Google’s preview of Maps is tailored for the desktop and not yet for mobile devices, a new version will eventually be available across all platforms, Jones said. Google Maps also competes with a Microsoft desktop version, and the revamp will let users quickly zoom into a location without running into fuzzy images, thanks to technology that constantly renders the map, depending on the speed of the browser.

Android Development

Google also unveiled improvements for Android, such as tools to make money from software purchases or ads. Revenue per user on the Google Play store, which features games and other software, rose 2 1/2 times in the past year, according to Hugo Barra, vice president of Android product management.

“Over the last four months this year, we’ve already paid out more money to Android developers in Google Play than in all of last year,” Barra said.

Google+, the social service, is getting more than 40 updates. That includes improvements to its photo service, including a new feature that can automatically make photos appear more professional by adjusting lighting or contrast. The software can also identify the best photos from a group of images, say from a vacation, and provide users with the top selections.

YouTube Opportunity

Google is also devoting part of the conference this week to YouTube. The online-video service could grow into a business with $20 billion in sales by 2020 from $4 billion this year, according to Scott Devitt, an analyst at Morgan Stanley. In video, YouTube reaches about 80 percent of viewers of online video, and Google’s measuring tools can help advertisers target precise audiences, Devitt wrote in a research note.

“We believe that Google has been aggressively courting video-advertising dollars,” wrote Devitt, who has an overweight rating, or the equivalent of a buy, on Google stock.

“We’re only at 1 percent of what’s possible and even only less than that,” Page told software engineers at the event. “Despite the faster pace of innovation in the industry, we’re still moving slow relative to the opportunities that we have.”

Page, whose appearance at the event was not announced in advance, had disclosed this week that he’s been diagnosed with left vocal cord paralysis, a condition that has impaired his ability to speak.

Google’s Web search also got an upgrade, with the introduction of voice-based queries for the desktop version, a feature already available on smartphones.

Google rose 2.7 percent during three days at the 2012 I/O conference and the impact this year “should be positive,” according to Brian Pitz, analyst at Jefferies & Co.

“As in prior years, we expect news coming out of Google I/O should move the stock, but this year’s impact may be more muted,” Pitz, who has a buy rating and a $1,000 target price for the stock, wrote in a research report.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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