Page Sets the Stage for Google's Earnings Report

Google (NAS: GOOG) used to publish a "founder's letter" every year to keep investors abreast of where the search giant is going. These letters were never the universal educations that Berkshire Hathaway (NYS: BRK.B) sage Warren Buffett presents every year, but they were interesting and insightful nonetheless.

And who can blame Google for keeping a less investor-minded and more technical focus than the Oracle of Omaha? Big G's founders and leaders were never known for their investing acumen, after all. But then, Larry Page and Sergey Brin never intended to make laser-focused investments in the first place.

Hold that thought as you read on.

The letter took a break in 2011 as Google reshuffled its top leadership positions. Now it's back as an "update from the CEO," penned by Page without the usual input from co-founder Brin. Google published this strategy update over the weekend, right before Thursday's earnings report. Digging into Page's pages should give us some idea what to expect in the fist-quarter report.

What's new?
If there's one big takeaway from Page's message, it is that he's very committed to Google+.

The social network is getting baked into pretty much every Google product you'd care to name, from search results to Android smartphones and YouTube videos. Among other things, Plus is helping Google provide more personalized search results. Users should look for "things, not strings," which includes a ton of automated analysis of everything Google knows about you.

This goes hand in hand with the reworked privacy policy that had some users up in arms as an invasion of their private spaces. But Page bills all of it as building "a beautifully simple experience across Google."

In the process, he seems to reduce the importance of Google as a recognizable brand, or perhaps he just wants Google to become even more synonymous with "the Internet" than it already is: "People shouldn't have to navigate Google to get stuff done. It should just happen."

Plenty of critics call Google+ a virtual ghost town, with millions of accounts but very little sharing going on. Larry Page disagrees: "Well over 100 million users are active on Google+, and we're seeing a positive impact across the Web," he says. "We're excited about the tremendous speed with which some people have amassed over 1 million followers, as well as the depth of the discussions taking place among happy, passionate users -- all evidence that we're generating genuine engagement."

Expect more discussion and analyst questions on the progress of Google+ on Thursday. Page is going all in on this project, and he can't afford to have it killed by Facebook or by general user apathy.

The more things change ...
Mobile searches and social networks are changing the face of the Internet, and also the way Google interacts with its users. But some things are not changing.

Page still runs the company with an unusually long-term focus. He takes pains to underscore big bets that paid off in the long run, such as Android, Gmail, and the Chrome browser. In a break with tradition, he even holds up YouTube as an example of revenue-making gambits: "YouTube also generates healthy revenue for Google and our content partners -- in fact, partner ad revenue has more than doubled for the fourth year in a row."

We still don't know how big that revenue stream is, or how much operating profit remains once you account for the costs of running the service and paying out revenue sharing, content license, and ad partner checks, but at least Google is saying something about YouTube's money-making powers now. I'd love to hear more in this week's conference call, but I'm not holding my breath.

The last laugh?
Page rounds out his letter with this thought-provoking tidbit: "Happiness is a healthy disregard for the impossible."

In other words, expect Google to keep making seemingly crazy bets on unproven business models and left-field technologies. The self-driving car and sci-fi Android goggles are not flukes in Google's strategy but calculated bets on a rapidly changing world. "I believe that by producing innovative technology products that touch people deeply, we will enable you to do truly amazing things that change the world," Page says.

If that blunderbuss approach to innovation makes you uncomfortable, Google is not your kind of stock. But I'm a believer in Google's vision, where unfettered access to information changes everything on a very fundamental level. It's the polar opposite of the Apple (NAS: AAPL) model, where strict controls on everything you do drives value across a tightly knit ecosystem. I'm sure Sigmund Freud would have some very interesting things to say about these business models.

Right now, Apple's version arguably works better. It certainly makes more money, if that's your final arbiter. But in the long run, I'm sure that Google's more flexible philosophy wins out. And maybe one day, business schools will build their curricula around Google-style innovation instead of Berkshire's careful fiscal-management techniques.

Whether you prefer Apple's style or Google's substance, there's no question that both companies are changing the world today. You can invest in the smartphone and tablet boom without even choosing sides.

At the time this article was published Fool contributorAnders Bylundowns shares in Google but holds no other position in any of the companies mentioned. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. The Motley Fool owns shares of Berkshire Hathaway, Google, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple, Google, and Berkshire Hathaway and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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