

What If Google Is Just a One-Trick Pony? - ericmsimons
http://www.businessweek.com/technology/content/jan2011/tc20110128_084457.htm

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arjunnarayan
What a lot of people fail to realize is that a fair amount of Google's
products are defensive in nature. Google didn't launch Android to make money:
they launched it to protect themselves from the threat that having a closed
single-vendor provider of mobile OSes would have near-complete control in
directing users to search engines. And viewed that way, Android is a roaring
success: it has successfully left the mobile gateway open as a flourishing
competitive market between platforms, guaranteeing that search doesn't get
whacked by someone in complete control.

Similarly, this is why Google funded Firefox for a long time, and then finally
waded in themselves with Chrome. If IE had dominated, they were in potential
trouble that Msft (ignoring antitrust issues) could down them with an MSN-
search default.

And so comes in Chrome-OS: to ensure that yet another platform remains neutral
so that search isn't a casualty of hold-up.
(<http://en.wikipedia.org/wiki/Hold-up_problem>)

It's okay to be a one-trick pony if the one-trick is a massive need for loads
of users and is nice and profitable. I don't call Arcelor-Mittal a one trick
pony because they only make steel, or Boeing a one trick pony because they
only make planes. Search is enough. The rest is defense.

~~~
kenjackson
But it is a potential house of cards. If search goes then everything falls
with it. Even Android is absolutely, hands-down, the best in market, without
super strong search revenue it becomes s loss center.

The same with Gmail as they probably can't fund it simply by the ads on gmail
-- it's their search network that makes ads on gmail a value ad.

It's almost the inverse of the MS strategy. MS is using their cash from
Windows/Office/Servers to try to find another billion dollar business. While
Google is using these other products to expand their existing billion dollar
business.

If I were Google, I'd be thinking that I'd like to have one product that could
pay for itself (that is, if I lost all search revenue, could it still make
money). Because if Apple runs the tables, they could very well choke off
Google's air supply to search, and see the whole house of cards fall. And
frankly, I think Apple would be all too pleased to do so.

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hugh3
The ten largest companies in the world are, as of last quarter, Exxon-Mobil,
PetroChina, Apple, BHP Billiton, Microsoft, Industrial and Commercial Bank of
China, Petrobras, China Construction Bank, Royal Dutch Shell and Nestle.

Of these, Exxon, BHP, Shell and Petrobras have one trick between 'em: dig shit
out of the ground and sell it. The banks pretty much have one trick too. Only
Nestle, Microsoft and Apple have much diversity in their products.

~~~
jussij
> Of these, Exxon, BHP, Shell and Petrobras have one trick between 'em: dig
> shit out of the ground and sell it.

I hardly think this is the same.

It is very expensive to 'dig shit out of the ground' and you will only make
money if you manage to dig in the right place. Many a mining company have gone
into the business of digging only to go broke shortly after, because the
managed to dig in the wrong place.

Sure these companies make massive profits by digging, but they also spend a
vast amount of money consolidating these profits by exploring for the next
place to dig.

Their trick is not so much the digging, but their ability to keep finding
other places to dig and their ability to then get the stuff out of the ground
at profit.

~~~
Lewisham
That's the rub. Google's trick was created by a bunch of CS grad students at
Stanford, and annihilated Yahoo! (who had a very similar trick) in less than a
decade. One of Google's biggest competitors was started by an undergrad in his
doom room at Harvard.

The barrier to entry on the web is incredibly low in comparison to other
industries. There are thousands of other people ready to eat your lunch, and
it only takes one to bring everything toppling down.

I think Google's previous attempts at monetization, like the swiss cheese
Google box for your intranet, Google Apps, etc. were decently good ideas.
Google now seems hell-bent on open-source, in the hope of drawing more
eyeballs onto the one trick. As awesome as the self-driving cars are, I'd
worry about trying to find some cash flow on something a bit closer to home.

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tzs
Being a one-trick pony isn't all that bad, if people like the trick. The long
term problem that I think Google has not yet had to deal with is the fact that
its customers _hate_ it and its one trick.

By customers, I mean the people that actually give it money--the people who
buy ads.

I can't think of any other company whose services we use at work that treats
us as arbitrarily, capriciously, and indifferently as Google does.

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JonathanWCurd
Might be, but at least its a pretty darn good trick.

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ericmsimons
I remember someone saying that Google's only successful product (other than
search) is Gmail. Actually very true if you think about it.

~~~
jdp23
Ad Words/Ad Sense is very successful.

So I'd say 2 1/2 tracks (with Gmail as the 1/2).

~~~
alanh
I think their ads are considered part of search, it’s “just” monetization of
product/trick #1

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jdp23
Not really. More than half their ad revenue comes from other properties
besides search. And they made significant breakthroughs on advertising in its
own right that were independent from search.

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cpeterso
Do you have any more details about Google's non-ad revenue?

If I read Google's 2010 financial summary correctly, it seems 97% of their
revenue is from ads:

* 66% Google Web Sites' Advertising Revenues * 31% Google Network Web Sites' Advertising Revenues * 3% Other Revenues

<http://investor.google.com/financial/tables.html>

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beoba
At this point, their "one trick" is advertising, but that's everything as far
as the internet is concerned, and everybody wants to buy some.

Sure, someone might switch search engines (I have), but now they've got a huge
market of third party sites running their ads for them, too.

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mikervosters
The company changed the world and is making billions of dollars -- which makes
the number of "tricks" they have seem pretty minute, no?

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fleitz
If it is then it's a pretty good trick. You only need one good one. Google's
revenue isn't going anywhere anytime soon.

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patrickgzill
The NSA would fund them out of the tiniest portion of the "black budget" if
needed.

It's all about the data-mining...look at how Facebook is valued so highly vs.
MySpace due to better data-mining capabilities (at least I think that is part
of their value over MySpace)

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hugh3
Are you implying that Google's revenue is a tiny portion of the NSA's black
budget? This is sounding a little bit like conspiracy theorist territory here.

~~~
patrickgzill
Their operating expenses could easily be covered; the "black budget" was
estimated at $30B / year pre-9/11 ; no doubt it is higher now.

