The limits of Google's limitless business model
By Tom Foremski - May 15, 2006
(A distributed column.)
Is it OK for Google to launch numerous businesses and not seek to monetize those businesses? Is it OK for Google to take advantage of its huge scale, its global operations to muscle into new markets and create businesses and not monetize those business groups?
Is GOOG acting in a similar way to Microsoft, when it used its huge scale, its global operations to muscle into new markets and businesses and not monetize them?
When I was at the Googleplex HQ last week for the annual Press Day, Google announced four products. It already has a multitude of products, ranging from web based email, to desktop applications, and even drawing and photo management software. Also, sophisticated web analytics, web site creation software, maps, instant messaging, news, and lots more.
Only a tiny fraction of those products are monetized, the rest are free, and free of advertising. Larry Page, co-founder called them "experiments" and said that they are "beta" products.
He can call them what he wants but each one of those products competes with many much smaller companies, and the fact is that the smaller competitors cannot compete. Because Google has the scale, it can integrate those products into a global operation and global platform because of its size.
And it can continue doing this again and again. Its organizational structure is that its engineers spend one-fifth of their time creating new online products and services. Its development teams are self-forming, and don't require any extra investment, Google already pays their salaries for their regular jobs, it gets the innovation for free.
This means it will continue to produce ever more products and services, again and again. At the Press Day event Eric Schmidt, the CEO announced a "limitless" business model for Google, he said the company saw no limit to its expansion and predicted that it would become a $100bn revenue company.
(Please continue reading part two....)
By Tom Foremski - May 15, 2006 | Permalink | Comment
| Category: Google [GOOG]
| SVW Toolbar | SVW Newsletter | SVW Mobile
- NEW STORIES:
- Intel Experiment Could Save Millions in Data Center Power Costs
- Will East Coast Flood West Coast in Search of Jobs?
- GOOG Founders Could Buy All US Newspapers and Still Have $12bn
- Microsoft in Bay Area Recruiting Blog Sites for AdCenter Ad Network
- Silicon Valley Rocks! Charity Event for Local Schools
- Fishwrap: Changing Media and PR . . . Plus a Great Pep Talk
- Top of my 2008 Watch: Berlin Based Plista . . . and Online Dopplegangers
- The "Experiential Gap" . . . and the Growing Cosmos of Twitter Applications
- FT Anger on AIG Bailout
- Shift Happens . . . A Visit With One of My Favorite PR Companies
Comments (6)
I think that Google should lay its full focus on web search industry, maintaining its reputation and superiority, and stop expanding into new areas which may not afford similar quality at, as it does with web search.
Posted: May 15, 2006 6:10 AM
At the Press Day Google stressed "Yes, we are still about search" and that it is working to improve search but the products it announced seemed far removed from that statement. It introduced products such as Google Co-op in which other people share their links on specific subjects (no GOOG algorithms here) and Google Notebook which allows you to clip text and images from web pages, Google Desktop a collection of applications, and Google Trends, a collection of trends in search terms...can you spot where the "improved search experience" fits in?
Posted: May 15, 2006 11:10 AM
They are expecting collective consciousness whether derived through the madness or wisdom of crowds to provide even better search results.
Posted: May 16, 2006 10:40 AM
That's true Tim, the ultimate goal of GOOG is the distillation of the human essence...
Posted: May 16, 2006 11:36 AM
Sure, Goog is the new rich kid in town, driving the nicest car, taking the prettiest girls AND scoring the winning touchdown. So of course there's angst. To me the real message of Google is that it is possible to have a huge IT infrastructure and roll out lots of new apps to millions of people while cutting costs to the bone. Great!
Everyone talks about Service Oriented Architectures, but Google has built one that really works. That piece of their competitive advantage is good for another 3-5 years, IMHO. They've destroyed the economic model of the modern data center and its suppliers. That is the Google tsunami.
Posted: May 18, 2006 7:56 AM
Robin, GOOG is destroying the business model for many different businesses simply because it can, not that it wants to make money out of them, it doesn't. I think GOOG provides a fantastic search service and I love all the free stuff I get, Picassa, GMail, Desktop, even the new Notebook. And once the calendar syncs with my Treo, I'll be using that too. But the Google Tsunami is drowning a lot of businesses and people, in the same way the MSFT Tsunami was drowning a lot businesses and people. That is not illegal, and MSFT committed illegal actions, GOOG is not like that and I'm sure will never be like that. But is it ethical to use its massive, global scale to put businesses and people out of work and not even be bothered abut trying to monetise its business groups? Even a playground bully will take the lunch money and buy lunch (and beer)...
Posted: May 18, 2006 1:26 PM