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Here's Why the Google I/O Conference Is Good for Google's Stock

NEW YORK (TheStreet) -- When the major computing ecosystem companies -- Google (GOOGL - Get Report), Microsoft (MSFT) and Apple (AAPL) -- host their annual developer conferences, they typically make long lists of announcements. It can be difficult hard to sift out what is important.

In order for a company to make a clear impact on its earnings per share and its stock price, it must do one of the following:

  1. Offer products at lower prices.
  2. Gain market share.
  3. Expand the size of its market.

Obviously, all developer conferences are also about product innovation and new features. Many of those improvements and advancements, however, can be a little amorphous. Many new features are either catching up to the competition or offering something that nobody was asking for and will never use. And then you have stylistic updates, from colors to fonts to new menu systems and notification pop-ups.

Still, what you want is more significant announcements that are not soft-soapy stuff that will be devoured mostly by the platform's already faithful. In this regard, I think Google delivered to varying degrees, and this was reflected by the increase in its share price during the Google I/O presentation:

1. Android One

Think of Android One as a cheap Nexus or "Google Play Edition" (GPe).  Google will help hardware makers to establish a reference platform for smartphones priced at $99 or less, which is what required to sell to the next billion people.  It will be a clean version of Android and get updates directly from Google.

Android One achieves all three impact objectives mentioned above: It enables the product to be sold for less, expanding the size of the market, and increases market share. Hence, it should lead to higher EPS and a higher stock price.

2. Ninety-Three Percent of Android Users Are on the Latest Version of Google Play Services

One of Apple's strongest arguments is that so many Androids are on old operating system (OS) versions. That is a legitimate complaint, but it is not the whole story. You have to look one layer deeper. A couple of years ago, Google started pulling important functions out of the OS itself and putting them into something called Google Play Services. The important core apps that you use -- Gmail, apps, maps and equivalent -- are being updated separately from the OS, and they contain more of the system experience within them. This partially compensates for the OS version itself being behind the current Android version.

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