Google has grown within just a few years from a garage based search engine to the biggest and most successful search engine in the world. The one with the most revenue off all. On the way to become that big, they kicked a few other engines out of business and brought others on the edge of going out of business. But, is that all?
John Dvorak, a very well recognized writer, wrote on Marketwatch.com: “Google Inc. does two things well. Search for things and sell ads by the boatloads. Everything else is ancillary and at best a loss leader. This includes Google Voice, Gmail, Google maps and navigation, YouTube and probably the entire online “cloud” services as well as the Android OS along with Chrome”. He further writes, “Did I leave anything out? Probably. But nothing that makes scads of cash for the firm”.
Well, one wonders what made John such an exceptional writer and expert. So, let’s take a look at Google and what they do? I asked my girlfriend. She stated, without thinking for long, “Google is an Oracle for many people”. Boing, there you have it! She is right, when people search for stuff, they use Google, first. But is that really all? Is the entire advertising money just coming from search? No, it is not! Everyone that has a Gmail account finds advertising in the inbox. Everyone that uses Maps finds advertising around the results. That is revenue from properties other than the search box, isn’t it? There are some other revenue sources, Google Docs. While free for consumers, Google sells the Doc program to businesses. Not only small businesses, big corporations, municipalities and other that pay some nice change for it. Well, they haven’t reached Microsoft yet, but still…. .
I use a lot of other Google services and appreciate them very much. Besides the above mentioned, I use calendar, navigation, notebook, translation, dictionary, voice, finance, photos, sites, talk and quite a few others. Are they money machines like search? No! They are not, but they keep me around and when I have to do a search I don’t switch around, I can search right there. While these are not a direct revenue creator, they help make that revenue a re-occurring thing. As a shareholder, I would like that.
Yes, Google burned a few properties on the way to the top. Orkut and a few others. So what? As a technology company that is what you do. You invent new stuff and try it out. Because others didn’t do it, Yahoo! Microsoft and others, now they have to chase Google, or watch completely from the outside. Oh, Android! I almost forgot. That system has caught up to Apple in a very short time. While they are not selling it, it is used as an investment in mobile search. John, have you heard of that? Smart phones? Tablets? Loss leader? What?
Let’s talk about what Google not is, and what could possibly bring them down from their leading position, at least in my opinion. Call me John, if I am wrong. Greed! Google was/is called the best search engine around. Yes, we can argue about that. That has made them an Oracle for many, many people. In order to increase revenue and satisfy those that always cry and scream for more money, Google has “adjusted” their algorithms in their search engine. That means that competitor directed sites, blogs and other don’t appear at the place they would appear, if they wouldn’t be directed by a competitor. In other words, if you write a research report based on Google results, and a lot of people do, you might not get first hand information! That’s bad! And that is something that would make a loyal user “jump ship” and try something else. I am a living example for that and I consider it. Will that kill Google? Of course not, but if it happens in bigger numbers, it will count at the end of the quarter. In fairness, I am not saying that all the others are honest. I just don’t know.
What Google does in products to create and secure revenue, is top notch and will not make them fail. The way how they apply these products and technology, is a different story. It is what will make Facebook fail, and it will hurt Google as well, if not changed.