“From now on, the [gross margin] of search is going to drop forever,” Nadella said in an interview with the Financial Times.
“There is such margin in search, which for us is incremental. For Google it’s not, they have to defend it all,” he added, referring to the competition against Google as “asymmetric”.
Because my understanding is that about 60% of Google's total revenue is search ads, and if you include network ads (which would be relevant since they are at risk from AI as well) then it is more like 70%.
No, it's not mixed. It's related to the saying about the people who get rich off a gold rush being the ones who sell shovels. In the buggy-whip case, it's about a company not understanding the market changing entirely to make them obsolete. The transportation market moved to cars, and so nobody needs a buggy whip.
The original reference is probably Levitt's "Marketing Myopia" (https://books.google.com/books?id=Zn4foOUm3AoC). Levitt uses it to illustrate that companies should focus on customers rather than products.
Note the imprint, "Harvard business review classics." What I linked to is a 2008 republication of a book from 1975. The buggy-whip analogy also appears in a journal article of the same name by the same author in 1960. More info here: https://hbr.org/2016/08/a-refresher-on-marketing-myopia
I'm surprised that a court-proven antitrust violator Microsoft would speak so openly about abusing it's dominant position in a different business to finance dumping a different product at low price to destroy a competitor.
I was surprised as well for the same reason.. but then I thought about how Google has directly attacked Office, Windows, and Windows Mobile in a pretty similar way.
“From now on, the [gross margin] of search is going to drop forever,” Nadella said in an interview with the Financial Times.
“There is such margin in search, which for us is incremental. For Google it’s not, they have to defend it all,” he added, referring to the competition against Google as “asymmetric”.
https://www.ft.com/content/2d48d982-80b2-49f3-8a83-f5afef98e...
https://archive.is/4JOW1
It's 50% of Google's revenue, and they'll suffer immensely if this goes away.