Search,Watch Good Looking Girl Online clicks and views aren't everything for Google anymore.
Alphabet, the technology giant formerly known as Google, still makes majority of its revenue from ads, but it's starting to build big gains elsewhere.
SEE ALSO: Google's PR team penned the mother of all repliesGoogle reported $3.7 billion in other revenue, including hardware and leaving out advertising, for the fourth quarter of 2016. In the grand scheme of Alphabet, that's quite small. It was bump up by 62 percent from the year prior. For Google, that's good.
“Our growth in the fourth quarter was exceptional," said Ruth Porat, CFO of Alphabet, in a statement. "This performance was led by mobile search and YouTube. We’re seeing great momentum in Google’s newer investment areas and ongoing strong progress in Other Bets."
"Exceptional" hasn't really been visible for "other bets" prior. Other bets are still such a tiny part of Google's revenue, but it's finally starting to move the needle -- and not into the red.
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That's an important move for Google. The company is still winning in the ad department, despite fake news sites being purged from using its ad service. But that's a shrinking market.
Web and mobile ads are dropping in value. Google’s cost-per-click dropped 15 percent in the fourth quarter from the same period the year prior.
Google CEO Sundar Pichai said the company is prioritizing YouTube, integrating more machine learning to improve content and advertising. Facebook, Snapchat and other over-the-top services are biting into that as they all look to pull from TV budgets.
"I think it's important for us to work in the intersection of hardware, software and services," Pichai said Thursday on a call with analysts.
Google has been making big moves in hardware. The company released its new line of smartphones called Pixel and Pixel XL in October, which is competing with Apple's iPhone.
Google didn't break out how much money is coming from the new smartphones. Analysts predictions are all over the place, some pegging it at just over 500,000 and others at 1 million. It's still early days for Pixel smartphones. For now, it's limited to Verizon customers.
Google later released Google Home, its answer to Amazon Echo, a home speaker powered by a digital assistant.
"We are committed to this to the longterm as a great way to bring a seamless Google experience," Pichai said. "You can expect to see us expand our offerings thoughtfully."
Google Daydream is its first VR headset, a step down from Facebook's Oculus Rift and HTC Vive. It competes with the likes of Samsung Gear VR.
But the concern around Facebook's competition extends beyond the digital ad duopoly and into video and VR. Facebook is also betting on video consumption in its platform. Facebook revealed earlier Thursday a new emphasis on longer videos in News Feed, and, on Wednesday, CEO Mark Zuckerberg announced Hugo Barra (a well-respected former Googler) will run its virtual reality division.
In a move that'll please investors, Alphabet has cut its losses on some efforts, known as "Other Bets." The company halted the expansion of Google Fiber, its internet project, in October last year. Those cutbacks included layoffs of employees. Craig Barratt, CEO of Google Access, also stepped down.
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This post was updated after the 4:30 p.m. EST earnings call to include executive insights.
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