Google’s Arora: Google Apps Should Be $1 Billion Business Within 4 Years

There was a lot of talk of revenues and the outlook for Google’s revenue in a brief chat between Google’s Nikesh Arora, president, Global Sales Operations and Business Development for Google (NSDQ: GOOG), and Mike Arrington at a mid-morning session on day-three of the Techcrunch Disrupt conference. Since he joined Google in 2004, the search giant has seen revenues grow 12 times to $24 billion today. Arora offered some thoughts as to where the next big growth would come from, citing video and Google apps, both of which he hastened to add were in the early days. He also responded to some of the comments made on Monday by Yahoo (NSDQ: YHOO) CEO Carol Bartz when she was facing off with Arrington.

Bartz had referred to Google as a “one-trick pony,” as it relies on search for 90 percent of its revenues. Arora was amused, saying, “It’s a pretty good trick, right?” He then dismissed that, noting that the company is building a lot of new tools and products that will buttress the search revenues in their own right. But search will remain central to digital advertising and Arora sees no reason to disregard it either.

“The advertising market is $500 billion worldwide and about $250 billion in the U.S.,” Arora said. “In the next five years, 50 percent of the consumption will happen through digital paths. That number is going to grow four-fold during that time.”

Arrington: “And you want to own half of it.”

Arora: “I wouldn’t say own.”

Earlier this week, Google was forced to reveal some details about its AdSense revenue sharing in response to requests from the Italian government. Some 68 percent of AdSense revenue goes out the door to Google’s network, or roughly $6 or $7 billion a year are funding a part of the ecosystem. Arrington tried to get Arora to say how much revenue YouTube is generating, but Arora told him he lacked the persuasiveness of the Italians. “You could ask the Italian government to ask us about YouTube, but I don’t think they’re interested,” Arora said.

He did say that whoever figures out how to drive revenues from video will be the big winner, saying that neither Google nor anyone else had figured it out. In response to what’s taking so long — after all, YouTube has been around for five long years — Arora asked the audience if they knew when TV hit the market. “It was 1949, and 10 years later, the best that advertisers could do was have a guy holding a Mattel Barbie doll while a little jingle played,” he said, as the video of the first Barbie spot played on two large screens. “We’re all going to need a little more time.”

While Arora waits for someone to figure out online video advertising, Google is betting on its cloud as the best chance to drive more revenue. “Is Google apps the next trick?” Arrington asked. “Clearly, things will move to the cloud. There are 2 million small businesses that have signed up. In perhaps three- or four years, I hope it will be more than a billion dollar revenue stream.”