Why Google may not exist in 8-10 years
May 08, 08 by CraigAs I write this, I write only from my vague knowledge of where revenue’s come directly from. However, I do hope to back this up in the future with more numeric backing. My title of the post may be quite strong and negative, but I feel it has reasonable ground to stand on, based on one simple principle. A corporation should stick to and focus on it’s core business, and exhausting resources outside it’s core business could end up costing them their business.
As it is, Google’s primary revenue comes from advertising, they’re the primary source for advertising because of their search engine. While some may say their core business is data, I disagree, as how are they making money off of data. Data simply allows them to better target their ads. With Google’s attitude of “Do no wrong” they are unlikely to profit from the consolidation and sales of such data.
Meanwhile Google is exhausting their resources with little to show for it. Google over the past 5 years has been hiring some of the top talent within Silicon Valley. Paying good salaries for individuals that are supposed to be some of the best software engineers in the industry. I’m not suggesting that the individuals are not sharp, but what has Google truly produced from within it’s own walls? Google has bought many of it’s out lier products, i.e. Google Earth, Google Spreadsheets, Picasa, and others. First if they are to go into these areas they should strictly focus on acquisitions and have a smaller developer base.
Though from my perspective Google should not be investing in any of the three products mentioned above. While cool and arguably good products, how does Google plan on making money from these? If they are exhausting resources and effort into these products, at the expense of improving both search and ad’s they’re not focusing on their core business as they should be
Finally, if Google is not pouring into these two areas, search and ad’s, it only takes being beaten by one to be unseated. As soon as a company is able to do search better, or ad’s better Google will lose the majority, if not all of their revenue. While they may be able to stay around after someone else has become a dominant player, it will only be as a very small fraction of what they currently are.
I’m not predicting that Google will be gone in 8 years, but unless they really start to devote to their core business and quit wasting resources on un-needed areas they will have something to worry about.
Jon Says: 09.05.08 at 12:12 am
I was thinking about the exact same a few months ago when Google was getting a lot of media hits for projects that appear to be digressions from their core business – Android, wireless spectrum bidding, even YouTube (which has yet to prove itself to be more than a bandwidth drain). After looking at Google’s diverse, almost schizophrenic, pipeline it became apparent that their mission is in reality stupifyingly simple:
1. Google owns the internet.
2. ?
3. Profit
Step 1
“Google’s mission is to organize the world’s information and make it universally accessible and useful.” Google’s success in this endeavor has been its most valuable competitive advantage. The majority of Google’s acquisitions and R&D are motivated by furthering this success: Last year over four hundred improvements were made to their core search engine alone. YouTube, Docs, Picasa, Earth, etc. provide valuable training data sets for its researchers to find ways of dealing with non-textual information. And of course, anything Google can’t get its hands on it will destroy: http://www.theonion.com/content/node/40076
Step 2
So what? At the time of this writing, roughly 75% of the world’s population (over 4,500,000,000 people) has never been on the internet. That figure is only going to decrease as we progress 8-10 years in the future – hopefully from more people getting online and not from a giant meteor or the sea level rising. The remainder of Google’s efforts not dedicated toward improving its organization of the world’s information (e.g., Android, open wireless spectrum, free WiFi) are geared toward getting people onto the internet.
Step 3
The logic follows that as these billions find their way to the internet, they will be looking for stuff. If the best place to find that stuff is through Google, they will be willing to put up with their ads. On the other side of the equation – if Google, through their ever improving algorithms and expanding audience, continues to provide the best return for advertisers, then they will pony up and make Google rich(er).
Step 0
Of course, this is all based on the assumption that Google can continue to provide better search results than its competitors. They are definitely well aware of this fact as they have a ludicrous amount of resources devoted for search quality and improvement. Then again, an upstart with a good image and video search engine might come along tomorrow to upset Google’s apple cart…