Good day, everyone and welcome to the Google Inc. Second Quarter 2012 Earnings Conference Call. Today’s call is being recorded. At this time, I’d like to turn the conference over to Willa Lo, Investor Relations Manager. Please go ahead, ma'am.

Good afternoon, everyone, and welcome to today’s second quarter 2012 earnings conference call. With us are Pat Pichette, Senior Vice President and Chief Financial Officer; Nikesh Arora, Senior Vice President and Chief Business Officer; Susan Wojcicki, Senior Vice President, Advertising. Also, as you know, we distribute our earnings release through our Investor Relations website located at investor.google.com. So, please refer to our IR website for our earnings releases, as well as the supplementary slides that accompany the call. This call is also being webcast from investor.google.com. A replay of the call will be available on our website later today. Now, let me quickly cover the Safe Harbor. Some of the statements that we make today may be considered forward-looking, including statements regarding Google’s future investments, our long-term growth and innovation, the expected performance of our businesses, and our expected level of capital expenditures. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Please note that certain financial measures that we use on this call, such as operating income and operating margin, are expressed on a non-GAAP basis and have been adjusted to exclude charges related to stock-based compensation. We have also adjusted our net cash provided by operating activities to remove capital expenditures, which we refer to as free cash flow. Our GAAP results and reconciliations of non-GAAP to GAAP measures can be found in our earnings press release. With that, I will now turn the call to Larry.

Thank you, Willa, and good afternoon everyone. Thank you for joining us. So, well, this is a special call as we enter into a new chapter in our history at Google here with our recent acquisition of Motorola, and with it comes a new set of financial information for all you both at a consolidated, but also at the segment level. So speaking of Motorola, it’s worth noting that given the recent close of the transaction, we can expect this specific segment of our financials to continue to show some accounting variability. So for example, this quarter it’s a stub period, so meaning it only reflects the results since the acquisition dates rather than the full quarter. And as a result of the close, we did a number of accounting adjustments typical for such transactions. So we’ll try to do our best to answer your questions on this call. And our investor relations team will also continue to support the analyst and the investor community during this transition. So now, let’s quickly cover our consolidated result as well as segmented reporting for both Google and Motorola. Our gross total consolidated revenue grew 35% year-over-year to $12.2 billion and 15% quarter-over-quarter. So again, please remember that these total consolidated numbers include the stub period for Motorola. Additionally, there was a significant year-over-year currency headwind in Q2. In fixed FX, revenue would have grown to 39% year-over-year instead of 35%. Google on a standalone gross revenue grew 21% year-over-year to $11 billion and 3% quarter-over-quarter. Our Google website revenue was up 21% year-over-year to $7.5 billion and 3% quarter-over-quarter, which trends across most major geographies and verticals. Google network revenue grew 20% year-over-year to $3 billion, and 2% quarter-over-quarter. Our other revenue line grew by 42% year-over-year to $439 million and 5%…

Thank you, Patrick, and hello everyone. Our business had a very strong quarter as you’ve heard with over $11 billion in revenue. I’m going to talk about three broad themes today. First, how our recent big bets in the ad business are coming together into integrated platforms. I think digital advertising is really in defrag mode. secondly, we’ll take a look under the hood that how our investments and search advertising adds quality by helping our search business accelerate. And third, we’re going to talk a bit about our enterprise business, which I believe is reaching a real turning point, then I’ll discuss some ways for driving success for our customers and some marketing highlights. So first, our big bets. In about four years, DoubleClick has gone from strength to strength at Google. Now it is the foundation of our display business. this quarter, we announced DoubleClick digital marketing, the first modern ad platform for the modern digital world. This was the biggest ever overall for DoubleClick ad platform. It is used by thousands of agencies and marketers and we managed billions in marketing spend across the world on this platform. It now spans the best of display, rich media, exchange buying, surge and measurement. Some of our recent display acquisitions, Teracent and Invite Media, which both grew by over 50% last year, are also seamlessly integrated into this platform. At the same time, AdMeld, which we acquired, is helping provide publishers control, flexibility and more revenue opportunities. Our display platform helps direct response in brand marketers navigate the whole web. For brands, this quarter we unveiled the Brand Activate initiative. As seas of measurement and planning solutions baked directly into our platform, with our partners are building an online measurement for GRPs or gross rating points in a way…

Thanks, Nikesh. We also had a busy and productive second quarter for all of our consumer products. Let me start with Search. Our goal is to deliver technology that just works. Larry has described the perfect search engine as something that understands exactly what you mean and gives you back exactly what you want. We’ve made a start for a more intelligent search, thanks to the Knowledge Graph which understands real world thing, their defining characteristics and their connections to one another. Our Knowledge Graph currently includes more than 500 million thing, people and places, more than 3.5 billion facts about them. This includes entities like landmarks, celebrities, sport team, works of art and a lot more. For a summarizing related content all at one place people not only find what they’re looking for, but they also make (inaudible). For example, I was checking [films] this weekend, so I searched for the movie The Dark Knight Rises, from the Knowledge Graph results that’s showed up on the right hand side of my search results, I was able to find out that the movie is coming on tomorrow, some information about the film and which actors star in it. Since, I didn’t recognize all the actors, I clicked on the photos displayed and I was able to see biographical information as well as other movies they’ve been in. The Knowledge Graph results also should need related movies that other people have searched for. I discovered a number of movies, including movies scheduled to come out later this year and next year that I also want to see. The Knowledge Graph also works great on mobile. If you voice search for Julia Roberts movies on your phone, you will see a list of her latest films in the search results. And if…

Thank you, Susan. I’m never going to jump off with one of these balloon plane. So it was an absolutely unbelievable experience and thanks for Sergey’s innovation on that one. One more thing just before we turn to Q&A, just a couple of announcements, one, we have just launched our Google+ Investor Relations page, which is designed really to be a great source for Google products updates and company news relevant to investors and shareholders. So please be sure to check it out and let the IR team know what you think of it. So that’s just launched about an hour ago. And as we are about to open the lines, I just also want to invite David Drummond, our Chief Legal Officer, he will be joining Nikesh, Susan, and myself to answer any questions that you may have. So welcome David to the call as well. And we are going to turn on now Jamie to the Q&A section. So let us know how we want to operate.

Thank you, sir. (Operator Instructions) And we will take our first question from Mark Mahaney with Citi.

Great. Thanks. Two questions please. First on Motorola, the comments at the time of the acquisition is that it would accretive, do you still feel that that asset can be in any thoughts would give us as to how you would make, what has been pretty consistently a loss leading asset that Motorola Mobile, how you make that accretive? And then a product on Search and what you find in terms of the appetite with the interest in voice search, Google has had a voice search capability for a while. But as you’ve noticed over time, people are more interested in using that less the quality of that versus whatever regular search. How interesting do you think that is as a growth area for Google in the future voice search? Thank you.

So I’ll just answer the Motorola question, and then let Susan jump in on the Search. On the question of Motorola, look we’re totally excited about this opportunity that we have with Motorola, and our management team has been there only a few weeks. Clearly, everybody should expect some changes at Motorola that we have already talked about in the public domain and when we said, Dennis and the management team is there resetting and retooling it. but we have nothing really to announce right now. I think we have to let them do their work. but I can tell you that was a probable excitement in MMI for all the employees, but also for the clients. So I just want to come back, Mark to your point on accounting. If you actually took out the accounting issues that were related to closing the transaction where it’d be just upgrade, the amortization of intangibles, and some of the adjustments that were related to the acquisition, in fact on the mobile side, they didn’t have – they had a pretty stable and good quarter, and there’s a lot of accounting noise in the data. So I think it’s going to take one or two quarters before all that noise comes out. Susan, do you want to comment on the voice search?

Sure. Yeah, so I mean voice search has been an area that Google has been investing in for a number of years. we believe like we have really good technology here, because we’ve invested for so long on this. and as I mentioned in my – when I talked before hand, now with the Jelly Bean release, we have the ability not only to ask a question, but also to have the answers given back to you. And so, I definitely recommend that you test it out. it is very powerful and we think in the right circumstances, users will want to – some users will want to type and some users will want to have voice. And so in the circumstances where they do, was developed a really amazing technology that is leading edge on that.

Thank you, Susan. Thank you, Patrick.

Thanks for you questions, let’s go to the next question please.

We will take our next question from Spencer Wang with Credit Suisse.

Thanks, I guess one question and two parts for Patrick on Motorola. You talked a little bit about some of the accounting noise, Patrick, and it doesn’t sound like it’s finalized. Yeah, but, I was wondering if you could give us a rough sense of the purchase price allocation in terms of the hard assets, versus goodwill versus other intangibles so we can sort through some of that noise. And the second part is, I was wondering if you can just talk a little bit about the Motorola home business in terms of how that fits in, if you guys consider that strategic? Thanks.

Okay, so on the details of the purchase price we haven’t given in terms of the asset and obviously the IR team can follow up with you on that, but I think in our disclosures the press release like, you will see like for example, intangibles was 30 some million in the case of Motorola and 32 I believe for Google. Just on the intangibles, so it gives you a sense of numbers for the step periods. As it relates to the home business, I mean, again a bit of the same story that I told Mark prior, which is, we’ve just got into the place and we’re in the process of evaluating every business of MMI, in every division of it. So it’s a little bit too early for us comment on big changes right now. So I just need a bit of patient for us to complete our home work as we’ve been there just for a few weeks.

Sure, thanks a lot Patrick.

Thanks Spencer. Let’s go to the next question please.

And we will take our next question from Carlos Kirjner with Sanford Bernstein.

Hi thanks for taking my questions. I have two questions, one on mobile and one on YouTube. On mobile, have you conducted any studies on the impact of mobile adoption or search query demand by end users. And do you have a perspective on what portion of mobile queries are incremental versus cannibalistic for handsets and tablets. And on YouTube, I think one or two quarters ago, Nikesh referred to Google Analytics as the unsung hero of the business. Thinking about YouTube brand advertisers, how do you give them visibility into brand advertising ROI in YouTube, and do you think you will be able to do that to get the dollars to flow and overcome the obvious challenges that you may have there?

So, Nikesh would answer the second question; Susan on cannibalization of mobile versus desktop.

Yeah, definitely; maybe we’ve spent a lot of time looking at that to trying to understand how those two different types of devices and how those searches are interactive with each other. And this is very complicated, but I will say we believe that mobile searches are mostly incremental. For example on weekend, when you – those are out and about, you usually see a raise in mobile activity. And then when users are back on Monday, we see a raise of desktop. So, although it’s not a one-for-one, we do believe that they are mostly incremental.

And does it value Susan between handsets and tablets.

In terms of queries?

No, on the incremental versus cannibalistic.

I mean we’d look – I think we’re still in the process of trying to have run our analysis and trying to figure that out. I mean I think that the thing that handsets and tablets have in common is they’re both on the go and people are willing to take their mobile, people use tablet certainly in the office environment as well. So, I would say, we’re still doing the analysis on that.

Okay. Yeah, so we have a clear view on the handsets and on the tablet there’s more analysis to be done; on YouTube, Nikesh?

(Inaudible) Carlos, hi, so in YouTube there are two different issues. And if you’re talking about performance advertisers, they’re able to look at ROI on YouTube versus other performance media on the online space. I guess more interesting when you start talking about brand, because brand is not just about the online space, brand is also about the television space. And we’ve done very exciting things, with single source panels, where we worked in Germany with thousands of users and try to look at advertising effectiveness and efficiency, not just on YouTube and online video, but also compared to television and we’re incorporating data into our analytics and our sales pictures to show how the ROI is available on YouTube. We’ve noticed only doing at higher ROI, but we also get higher reach and higher frequency capabilities on YouTube, because you are looking at users on a very large online platform.

Thanks for your question Carlos.

Thank you.

Let’s jump to the next one please, Jamie?

We’ll take our next question from Ben Schachter with Macquarie.

And just two questions, I was wondering first, give an update us on Larry’s health situation and then I know it’s early, but can you update us on the usage of Chrome for iOS devices, and any comments you can give to help us understand the importance of that product and also how you plan to market it. And then also, historically you’ve talked about self driving cars and some of these other projects as relatively low investment, high media profile projects, but it seems with Google Glass and some others and they are taking more management time and focus, should we be thinking about those differently? Thanks.

Yes, I want to let Nikesh talk about Larry situation, Susan can talk about the second question on iOS Chrome and then I’ll just take it to run, so Nikesh.

There is no more new news on Larry. Larry has lost is voice and we said that means he cannot do any public speaking engagements for the time including today’s earnings call, but he continues to run the company and he is here and involves in all the strategic business decisions that we’re making.

Susan.

And on Chrome for the iOS device from the moment we launched it was a very popular in the app store and we’ve seen this one of the top apps and it’s something we’ve invested for many years on Chrome. It’s got a lot of really compelling features, from security, being very fast and we continue to expect to see growth just because of the users using it for the different features that make it a really great product. From the other things, the self driving cars and Google+, I mean those continue to be projects that from a headcount perspective are very – are small, we’ve talked about them being they are small, but they have the potential to be very big. And I think they are also projects that – we sort of think about them as moon shops a lot of time, like projects that we think can have really amazing capabilities, but again, and they get the company excited, but in terms of actual resources, it is a very small number.

Yeah, the fact that Sergey is actually leading the Glass project doesn’t change any of the strategy. So from that perspective just very exciting and fun to share it with people when we have such exciting demos. But I wouldn’t change any of the strategy in terms of the real focus of management and our capital intensity.

Thanks, Ben. Let’s go to our next question please.

And we will go next to Scott Devitt with Morgan Stanley.

Thanks for taking my questions. I had two please. You’ve previously referenced the Talent or in last year increased the cash compensation by 10%. I was just wondering given the transition of a number of companies that you compete with for Talent into the public markets, could you just give an updated view on the cost and availability of the Talent in the Valley? And then secondly on a last 12 months basis, Google has generated $12.5 billion in unlevered free cash, so you now have an 8% unlevered free cash yield and you are generating cash at an run rate that equates to about 30% of the current cash positions. So I was wondering if you could just talk a bit about the way that you are currently thinking about capital allocation or specifically a share repurchase? Thanks.

Okay. So let me start with the second one first. We continue, and I know that sound a bit like a broken record on this, but on a very regular basis, we actually debated with our board. In our – our cash position is really a strategic asset to us given all of the innovation that's happening, and all of the options that are available to us. I mean it has been such, and you just take Motorola, which we just closed, I mean it was a real strategic asset to us to actually be able to pounce. So we haven't changed our position in terms of share repurchases or dividends or any of the others for a time being, which does not mean we don't evaluate. We do take a good look at it. We just think that it continuous to be a strategic asset for us, and so that's why we haven't changed our position yet. In the case of the talent, I think that the Valley continues to be hot, I mean it's a hotbed of innovation. There's a lot of need for that talent, especially the very high, the engineering front, and we're delighted by our strategy. I mean we continue to see really benchmark levels for our retention purposes, and we continue to attract the very best talent. So for us, it is an absolute strategic asset again for the company. I mean, Googlers, the engineers that are here in the salespeople and they've really make a huge difference to the velocity of the company. So the Valley has not change, it content despite everything else is going on in the world out there are. The Valley continues to be absolutely hot, and we’re still pleased to have seen our strategy pay out so well. So thanks for your question Scott. Very good question. Let's go to our next question please Jamie.

And we'll go next to Heather Bellini with Goldman Sachs.

Hi, great, thank you. I had two questions. First, what are you seeing in terms of mobile CPC trend, and how do you see these trends playing out over the course of the next 12 months. And then, the second question is, with the Nexus 7 on the market, can you talk a little bit about your plan to accelerate content acquisition in particular in video and book? Thank you.

I think Nikesh is perfectly suited for both.

Hi, Heather. Thank you for your question. Well, I think the good news is that we’re seeing phenomenal growth in the mobile queries across the board, whether it’s tablets, whether it’s mobile phones, whether it’s geographical or whether we are seeing phenomenal amounts of mobile queries across the board. I think as I said, mobile is right now where Search was in 1999. we had a situation where Susan’s team was doing phenomenal product innovation to keep driving more and more efficiency for the advertisers. we were working with advertisers to get them to get better landing pages, better sites, get them to understand truly the opportunities on the mobile space for example. You can make phone calls, so we have a product called Click-to-Call. Now the Search takes on a whole different meaning, because there’s a better conversion and people actually click and make phone calls. So we are seeing mobile CPCs are healthy and we expect them the long-term that they will continue to be healthy and sort of follow this trajectory that Search has followed, more inventory, more effectiveness, more ROI for the advertisers, better pricing in the market. In terms of your second question on Nexus 7, I think we have made tremendous amounts of headway in the content space that we have a lot, lot of content on Google Play. we are working very closely with the music industry, with Hollywood studios et cetera, to get more and more content on the platforms, so I think given that there are models out there where other people are offering content to the platforms. it is becoming to the standards that you can have the ability to offer content to the end user and we are making tremendous amounts of progress across the board.

Thanks for your question, Heather. Let’s go to our next question please.

And we’ll take our next question from Doug Anmuth with JPMorgan.

Great, thanks for taking the question. I just wanted to ask two things, just first following up on the mobile CPC question, can you just give us some color on what percentage of advertisers are bidding on smartphone to N tablets in addition to the desktop? and then secondly, Patrick can you also just help us understand the accounting around the Nexus 7 tablet and how we should be thinking about that on a growth versus net basis and the impact it may have going forward? Thanks.

Okay. So I will let Nikesh cover the CBC and I also come back after.

Yeah, actually I think I already said that in my prepared remarks that we have over 1 million advertisers working with us in mobile advertising and it gets over 300,000 mobile apps. So I think it’s a substantive number in terms of number of advertisers are involved in mobile space. And I think usually people will get enrolled in mobile space don’t distinguish between smartphones and tablets, they actually, they want to find the most effective ROI they can get and they want to capture as many queries as you get on these device. Patrick?

No, the issue for the Nexus S, Nexus 7, the – I mean we have two sets of accounting, obviously, it’s distributed on it’s own by others like, you can get it at Best Buy and otherwise when you use the Play Store to actually buy it right, we book the revenue and then we book the cost as well and the cost will be in other cost of revenue rather than CAC or TAC, they’re neither of them and that’s how the accounting is set.

Yeah, and this is Susan, just one more thing I would add Doug on your question about the mobile CBCs and the percentage that are bidding, is a lot of campaign structures are setup so that when an advertiser participates in a bid, they actually bid, they can instead of one campaign and it can run across everything. And we adjust those prices dynamically for them, we have – it’s called Smart Pricing. And so some advertisers do bid specifically on mobile and then some advertisers have bundled campaigns and we adjust those prices. So it’s not just advertiser that are bidding only for mobile that are participating in mobile.

Thanks for your question, Doug. Let’s go to the next question please.

And we will go next to Justin Post with Merrill Lynch.

Great. When you look at your international result ex-FX, they actually were stable or even accelerated. Yeah, we are hearing a lot of issues over there. Can you talk about geographic mix, what countries are doing well or vertical mix and any product enhancements or new products you’ve launched that are really helping your revenue growth there. And then secondly, TAC to distribution partners was up about $40 million quarter-over-quarter and continues to be a bigger chunk of your Google website revenues. What drove the quarter-over-quarter increase, was that mostly mobile or are there other factors? Thank you.

So, let me jump on TAC, and then let Nikesh answer to the first question. So TAC, it's really a mix, right, obviously TAC reflects a mix of the different distribution methods that include toolbars, chrome distribution, mobile distribution, and also obviously the AFS business as well. So there's a – if you look at our revenue mix between Google properties and network, right network will attach stronger, so that will drive TAC as well. And then, mobile is also one of these contributing factors. So we don't break down all these specifics, but it’s not only mobile. I mean, we have a number of factors that are at play here. On the first question, I’ll let Nikesh circle back to you.

Yeah, I alluded to some of this in the prepared remarks. I think, as I said growth in the Americas and Asia has been steady this quarter. The U.S. and Canada have stayed strong, and as I mentioned, as you’ve said there have been some issues internationally. Southern Europe, we saw slide dip as we think it is hampered both by pure macro economic conditions and all ad industry concerns. Spain was a notable sort of lowlight or highlight depending on how you look at it in that conversation. On the other hand, performance accelerated for us in northern Europe driven by the UK and the UK has been a little depressed over the last few quarters. So it is finally coming back and sort of we are seeing strength there again. In terms of your question and on the sectors, I think travel has been strong pretty much across the board in the U.S. and the UK and around the world. Auto was strong in the U.S. for us, healthcare has been strong in the UK, and generally across the world, we've seen strong sort of performance both in finance and local, and we're seeing more and more sort of excitement and enthusiasm in sectors like CPG and entertainment given the shift to brand. But I’d say, this is the snapshot in time and these things change quarter-over-quarter.

Thank you.

Thanks, Justin. Jamie, let’s go to our next caller please.

And we’ll go next to Anthony Diclemente with Barclays.

Hi, thanks. One, I think for Susan, just if you can help us with the order of the magnitude the drivers of the divergence that we continue to see between CPCs and volume. I think in the past you’ve talked about, of course mobile is one of those drivers, but then FX, we have a sense of that, property mix, emerging markets and add quality changes, all driving that. So I was wondering if you guys could give us like a ordered magnitude of how important each of those key drivers were in the quarter and then how we should think about those trending going forward, if we should expect that divergence to normalize or should we actually expect it to continue to diverge? It will be helpful. Thank you very much.

Susan, do you want to give some comments on it or Nikesh.

I think, I had the CPC (inaudible) on this quarter and you can’t have a good earnings call, if you don’t talk about CPC, so here we go. CPC is an important metric for us, but if you take that independently, it’s not necessarily a reflection of the fundamental health of our business. This quarter, I’d say the biggest impact on CPC was actually FX. We have four or five factors that impact CPC, but the biggest impact this quarter was FX. We have clearly an impact of mobile versus tablet versus desktop, we have an impact of emerging versus developed markets, and what’s happening from a macro economic point of view, that we’ve talked about, we have an impact on google.com versus network, so as you see the network playing a bigger role, it impacts CPC. And finally as quality changes, also impact CPC, but I’d say this quarter the impact has been felt because of FX, but from a positive perspective we see any time there was a change in CPC, which is more attractive for the advertiser that allows the advertiser get a bit of ROI, but for us it’s an opportunity for the advertising.

Yeah, it’s important to know that the 16%, there was a big chunk of it, that was CPC versus the last quarter. I mean, as the euro kind of went down 9% year-over-year, I mean it obviously makes a big difference. So thanks for your question.

Okay, and that’s a nice one. Thank you.

Cheers. Let’s go to the next question please, Jamie.

And we’ll take our next question from Ken Sena with Evercore Partners.

Hi, thank you. Can you just maybe talk a little bit more about the Offers business and do you feel strongly about that business as you did in the past. And maybe how that business actually will come into play with Google+ or on payments or (inaudible)? Thank you.

Hi, Ken. So yeah Offers continues to be an area that we are investing in, we have, I mean we think that there is a lot of things that are really important about Offers the way it’s a local business and works with both small and large business it’s got, there is a lot of user interest in it. So it is an area that we are continuing to invest in. We’re also, as we continue to develop our business model continues to evolve. And for example, we are putting a little – we’re working with a lot of the different Offers and providing distribution for them in addition to generating our own Offers with our own sales team. So, but it continues to be an important area for us, and we’ll continue to invest in the cities that we’re currently operating in.

Thank you.

Sure.

Thank you, Ken.

Jamie, our next question please.

And we will take our next question from Ronald Josey with ThinkEquity.

Great, thanks for taking my question. Going back to mobile and the opportunity there, Nikesh I thought that might be interesting if you could talk a little bit about, perhaps what you are seeing in terms of the campaigns and there has been an acceleration, now that AdMob is fully integrated in AdWord, knowing that there is over a million advertisers and 300,000 apps. I’m wondering if there is been accelerations since that's happened? Thank you.

Hi, thanks for the question. I think as I said, we are seeing phenomenal amount of growth in the mobile query space and it’s a consequence of more device, it’s a consequence of more adoption of tablets around the world. It's also comfortable with the devices and using them more often. So with the number of questions they asked on the AdMobs. so AdMobs just got completed in early June. So it’s a bit early to say, we're seeing acceleration. but generally, our performance throughout that integration has been very strong and we’ve effectively had a very, and what we’ve done about six months ago, as we took all of our sales efforts and we took our specialized mobile sales people, we had them trained all of our sales forces around the world. So that impact has even contributed more than just that integration part. but we think the integration is just going to turbocharge that effort and hopefully continue to help us drive mobile. and mobile is going to be here for a while. I think it’s a fact of life for us now. So we are mobile sort of becoming as core, as desktop search was, so we’re making sure that all of our sales people around the world are fully equipped and working with every advertiser, not just 1 million to make sure that people can see ROI in both mobile and desktop simultaneously.

Great, thank you.

Thanks, Ron. Let's go to our next question, please.

And we'll go next to Jason Maynard with Wells Fargo.

Hey, good afternoon. I have one question just on the shifted mobile and specifically around this will be both Nexus as well as Motorola. How important do you think it is for ultimate mobile modernization to actually control the whole experience on the device and given that you’ve got all sorts of different competitors some who subsidize evidently, some obviously telling full price, hardware, software combos, what do you think the right mixes for Google and when do you think you’ll sort of sort this out and be a little bit more declarative in the market with your intentions? Thanks.

I think, hi this is Nikesh again Jason. thanks again for your question. And as I said, mobile is very, very important. I think it’s better to go back and think about what’s happening in the marketplace. We said we’re very committed to mobile; it’s evident in our commitment to Android in our ecosystem as well as Motorola acquisition. So we believe that mobile us very and very important critical to the future. Now, I know it seems a little complicated when you look at the different competitors, and how you talked about subsidies et cetera. We simplify that by focusing on, how do we provide the best experience to the user. Now providing the best experience to user, is effectively working really hard with Andy Rubin, Stephen Android making sure he is getting the best experience for the end-user and in that process he works with the best OEMs in the marketplace to make sure that the combination of hardware and software allows for the best experience to be delivered. I think, for us what's important as to get that experience delivered and we will work with whatever the industry models that are out there, either we work direct with operators, trying to make sure that happens behind the end-user and more often they’ll not be work with OEMs, to see how we can get the best agreed experience in the hands of the end-user. I think that's what we're going to focus on. So, I think that's quite declarative in terms of intention.

Yeah. I mean just to close, open is really important to Google and in that context you see our strategy is very focused on end-users and been open and we are going to get a lot of benefit that we already have and continue to get a lot of benefit out of that. So, it's a complex question, there is no doubt about it. Thank you, so much for your question. Let’s go for the next question please.

Now we’ll take our next question from Lloyd Walmsley with Deutsche Bank.

Thanks, I'm wondering if you could tell us a little bit about the rollout of the shift to paid inclusion for Google shopping and when you expect it to be fully rolled out and kind of what you're seeing today in terms of Paid Clicks and CPCs, now that some of the shopping links have been moved to high end results and where do you think CPCs there can go relative to just core paid search?

I’ll let Susan answer this one. Susan?

Yeah, so Lloyd, so we made this decision to move to a commercial model because we saw that ultimately this would drive a better experience for users and having more up to date information and more accurate price and inventory availability and so we are in the process of rolling that out. We think it will be rolled out. We expect probably completed around the Q4 timeframe. And we are working really hard with all the merchants to get them all on board, and again we think this is actually really good for both the merchants and the users. We actually don’t refer to this as feed inclusion, just because that actually is a term from the people who have been in the industry for a really long time meaning putting in, paid things into the search results, in a non-marked way. And we’re very, very clear when we show this, we do mark everything very clearly as sponsored, and again we believe that actually moving to this model is good for both the users and for the merchants and we’re really looking forward to this transition.

Thank you.

Thanks for your question, a very important piece for us. Let’s go to our next question please.

We will take our next question from Kevin Kopelman with Cowen and Company.

Hi, thanks. Could you give us a sense of how big your mobile search queries are, as a percentage of total search queries? And also on Motorola, I know you’re not giving us a business update, but could you give us what the Android unit growth was in the quarter on a pro forma basis? Thanks.

Well, on the last one, on the mobile side, the non-home side, it’s all Android. And on the search queries, we don’t actually provide the details. We provide the geographics, but we don’t give the details of the other one. So, I am sorry Kevin if we can’t be more helpful on the granular details on this issue. Let’s see, we have time for one more question, let’s jump on one last question, Jamie?

Thank you, sir. We’ll take our last question from Jason Helfstein with Oppenheimer.

Thanks for taking my question. I’ll ask you just two. One, can you just talk about the growth of Google+ number growth, are you happy? I think you alluded to how that's going. What can you do to drive faster member growth and is that kind of part of the strategy or you just led it organically evolve. So kind of a push versus, I guess the pull strategy there. And then second, can you give us the breakdown of depreciation between Motorola and MII for the quarter? Thanks.

Well, you’ll have, in the segmented reporting you'll find that information. So, after the call, so this is for your second question, Jason. On the issue of depreciation, I think that the team can circle back which would give you the split, because we do the segmented reporting. On the first question, which is about Google growth and our success there, I’ll let Susan cover that one.

Sure. Yeah, so, overall we've been really pleased with the growth that we've seen, you’ve talked about the $250 million accounts that we have, Google+ accounts. And I do think it's also really important to remember that Google+ just celebrated its one-year anniversary. We actually celebrated that at IO. And so, we see that Google+ account growth has growing really well. We think that one of the most important things is that when you have a Google+ account you have the ability to share. And we've talked about Google+ being the social spine across all of our products ability to make all of our products better. Not just the stream, which is an important part, but also for example your search experience. So that if I have a friend, a friend went to hotel, and +1 that hotel, if I’m ongoing to that same location, I would you be able to see that information at the time that I'm doing that search. And so we have many, many use cases where we think being part of Google+ will be a better experience. And so we’re working across the board to make sure that our products are integrated, we have a number of integrations across the products, probably local with the most significant one that we did this quarter, and we find that having those integrations by making the products better, also tried to more usage of Google+. So yeah, so thank you Jason, that was an important question.

Thank you.

And with that with an eye on the clock, we’ve got to run. I just wanted to do couple of things; one is thank Nikesh and Susan as well as David for joining us for the call, and Q&A. I also thank all our Googlers, I mean these last 90 days and the great results that we are posting now and beginning of the collaboration and integration of Motorola, all these things are possible because our Googlers do a phenomenal jobs every single day. So I want to thank everybody and then as I close, remember to go and take a look at our Google+ website for investor relations. And I think you will find it pretty interesting. So with that Jamie, I’ll let you close the call, and I wish everybody a happy summer.

Thank you, sir. That does conclude today’s conference and we do appreciate everyone’s participation.