Is Google a $50 Billion "One Trick Pony"?
"BusinessWeek reports a handful of analysts increasingly are questioning whether Google's laser-like focus on search may be something of an Achilles' heel.
"According to the article, Google remains almost entirely dependent for growth on search -- a business that's poised to slow. Google also is just beginning to entice big traditional advertisers to search. Of the world's 1,000 largest companies, Google can boast only 227 as advertisers. (This fact is an opportunity for even more growth, obvious to Google and even to me. Imagine the explosion in revenues when the tipping point occurs, and those other 773 companies realize the folly of their theretofore ways. -- dmg) But Google's belief in search may be blinding the company to other opportunities.
"To see what they risk missing out on, Google executives need look no further than key rival Yahoo/YHOO, which tirelessly looks for new business models. (And yet, I am privy to comments from within Yahoo that Google has them on a leash; that Yahoo slavishly mimics everything Google doesn and not as well. -- dmg) While search accounts for 45% of Yahoo's sales, the portal also snares one-third of its revenues from so-called display ads that contain graphics and multimedia, as well as 16% of sales from subscription services, such as online personals and fantasy football. By comparison, Google gleans 98% of its sales from text ads, primarily placed around search results.
"Meanwhile, one of Google's best shots at building a new revenue stream receives scant attention. Last May, the company began experimenting with display ads -- which run atop or along the side of a Web page. It's enticing for big advertisers who are often as concerned with building their brand as they are with driving traffic. The article notes Google, rightly, has plenty to tackle in its core business of search. But those aren't the only opportunities for the search kingpin. Others deserve exploration, lest its narrow focus become a case of tunnel vision." (End quote from Briefing.com)
Yawn. This is no mere misunderstanding of the company's goal; it is not understanding it at all. This article, from the Washington Post, states clearly the leadership that Google represents.
"Bring it on, Google. Bring us more shortcuts, one-click look-ups and Googlespeak, that strange language your engineers cook up to make it easy for us to pose queries. Do whatever it takes to save us time and tedious typing."
"Google doesn't face Microsoft's monopoly worries (not yet, anyway), and its implementation seems more considerate of both Web users and publishers. One big difference is that Google shows pages with no hyperlinks added first and lets users decide when to add them. Users have to click the AutoLink button every time they visit a new Web page if they want to add hyperlinks."
We already know the short term breakdown for GOOG shares (~$185), which would usher in tests of ~$176, and then possibly ~$160. The upside breakouts, however, remain at $190, $193, and then $200. If GOOG were to surmount these points of resistance, then watch for ~$220+…