Google: synthesis?
There is so much infomation "out there," all of which pretends to be helpful but most of which is itself misguided, founded on misperceptions. Let's start with this WSJ interview. (My comments follow each, where appropriate...)
URL for this article:
http://online.wsj.com/article/SB113640176690137726.html
January 5, 2006
Defending Google at $600 a Share
By VAUHINI VARA
How high can Google Inc.'s shares go?
The search giant's shares have more than quintupled since the company's initial public offering in August 2004 and finished Wednesday at $445.24. Of 36 analysts surveyed by Thomson First Call, 26 have a "buy" or "strong buy" rating on its shares, while just one recommends selling.
Analysts have been one-upping each other with ever-higher price targets, and this week Piper Jaffray & Co. Internet analyst Safa Rashtchy made headlines with a new $600 target for Google. That's up from his earlier 12-month price target of $445, issued in October.
His new $600 target would put Google shares at a whopping 68 times his projected 2006 pro-forma earnings of $8.82 a share. Mr. Rashtchy cites a somewhat more palatable multiple of 50 times earnings in his report by arguing investors should buy based on his new estimate for 2007 pro-forma earnings of $11.91 a share. Regardless, he says Google is an "iconic" company that warrants a lofty multiple. He talked to the Online Journal about his expectations for the company, and the risks Google faces.
(Mr. Rashtchy doesn't own shares of Google, but Piper Jaffray counts Google as an investment-banking client and makes a market in Google shares.)
You're one of the most bullish Google analysts out there. How do you defend this price target?
We really put Google in the league of companies like Microsoft or eBay: companies that created new markets, became the dominant players and provided several years of continued growth. These companies have traded well above 50 times [earnings estimates] in their peak years. …Search is continuing to grow, and Google is continuing to gain market share. We didn't expect them to gain share in 2005 and yet they gained 5%. That gives us confidence. By the way, I fully expect to increase our [earnings estimates] for 2007, so that the actual multiple could end up being in the 40s rather than in the 50s.
Why compare Google to eBay or Microsoft rather than, say, Yahoo?
A lot of the value Google has, in my book, has to do with its brand. Only companies such as eBay and Microsoft created that kind of brand awareness. Yahoo has been a great media company, but it hasn't created the same type of following that Google has. More than that, it is really paradigm-shifting companies that can deserve this kind of multiple and can have a great following among investors. Microsoft was really the only platform for computing for many years. EBay suddenly created an efficiency in the market that didn't exist before. Google, in the same way, has created a huge, multibillion dollar business that didn't really exist before and created a massive following.
Since initiating coverage of Google in April 2005, you've maintained an "outperform" rating and bumped up your one-year price target five times. Until now, the increase has been pretty incremental. So why the jump this time?
I felt that we were always trying to catch up with Google in terms of fundamentals and stock price because we were always very conservative with our estimates. Perhaps there was good reason to be more cautious as Google was just a young public company, and it didn't have as much of a track record of performance. Now, I feel that given what Google has [accomplished], I have a lot more confidence to be more realistic on our estimates, so that I don't have to do it every quarter. I'm not trying to be heroic or controversial or come up with a huge price target. I really felt that we don't really serve investors if I'm reactive. I like to look ahead.
You've covered the Internet industry through the bubble, the bust, and the recovery. Has your experience made you at all wary to attach high price targets to Internet companies?
I certainly had concerns about how our price target would be viewed, especially as Google had decided not to split the stock. …I don't want to be seen as hyping the market. Then again, when people look at the comparison with the dot-com bubble, at that time, we were talking about three to four times the valuations [we are today]. Most people would come up with "creative" new ways to justify valuation, like the value of an eyeball or a unique visitor. The main difference is that I can confidently go to investors and say this is the right price, because I can show them that this is within the historical range. That was never the case in the dot-com bubble.
Google publicly discloses very little information about itself. How does that affect your ratings?
I don't find it particularly difficult because of a couple of reasons. I've known Google nearly since it started. And also I've covered the search industry longer than other analysts. Google is so big that I liken it to Wal-Mart. If you know the retail market, you have a pretty good chance of knowing how Wal-Mart is doing. I study the broader search market. In reality, Google has a very easy business model. It's basically how many searches they have done times how much revenue they get per search.
Having said that, Google discloses very little. It poses some difficulty for analysts, but it really poses more risk for investors. Right now, it is a boom time for Google, and people aren't that worried about a lack of transparency. Should there be any slip or any miss from expectations, investors could be very concerned and there could be some selloff because investors wouldn't know what caused it. So, yes, it is a factor.
Do you think Google is a suitable investment for all investors? Haven't those who have yet to purchase the stock missed out on the lion's share of the gains?
I think that Google is a suitable investment for aggressive investors as well as for long-term investors. Look, our sector is pretty volatile, so it certainly isn't suitable for people who can't handle volatility in the near term. But I think Google is a solid company. If I could buy the stock, I would buy it for my son's college fund.
What would you recommend to those who bought Google more than a year ago when you initiated coverage? Should those investors take some profits or continue to wait it out?
I would continue to hold the stock. Obviously, it depends on each investor's liquidity needs, and I can see the urge to at least take some profit off, but given the outlook we see for the company for [2006] and beyond, I think they would be leaving some money on the table if they took profits now.
You've estimated 2006 revenue of $6.4 billion, up from $4 billion in 2005. Which new business lines do you see contributing significantly to Google's revenue this year, or do you simply expect online ad revenue to grow?
That's the interesting part. We really don't have any new revenue items in there in addition to the core search advertising revenue. We haven't really modeled anything else. Given that search revenue is so big, the additional revenue will take a while to contribute. You just can't move the needle that easily. But by the end of this year, we expect revenue from Google Base [classifieds] and Google's advertising network to become more meaningful.
Of all the new products Google has rolled out in recent months, which do you see as the most significant?
[Some that] have already built a good Google following and have helped Google even though they don't generate revenue are Google Mail and Google Maps. Those two products have become enormously successfully in a very short period of time. We see continued adoption of those two products.
In terms of new products that I'm most excited for, Google Base to me is the most exciting one. That could allow Google to create an entirely new source of information beyond what's available on the Web.
What is the single biggest risk to Google's business model? What about to the stock price?
As they get into new areas of content that haven't been mined yet, off-the-Web content or video content, they may not have the advantage that they had in finding and presenting Web content. …Other companies may gain advantage over them.
Related to that, if ever Google takes its eyes off the focus on user satisfaction, that's where they could really lose out to competition. That could potentially happen if there's an increase in advertisements listed on its pages or in other formats. That is not something I see right now for Google, but if the opportunity is too lucrative, it may hurt them.
In terms of the risk to the stock, probably the biggest risk is that, up to now, most analysts have been conservative with their estimates, simply because the growth was so big that we didn't believe it. Of course, everyone came out of the dot-com era, so we were being more conservative. After a while, analysts may become more bullish and could become too aggressive. Given that Google doesn't give guidance, they could miss [analysts'] expectations at some point.
You're estimating that the paid-search industry will grow to more than $33 billion in 2010 from $10 billion in 2005. Where will all that growth come from?
I think that we will have many more advertisers. Right now, globally, we may have half a million advertisers or so on the Web. I expect to have several million advertisers. Second, many large advertisers are spending very little on search, but consumer packaged goods companies, pharmaceuticals and auto companies, are beginning to realize that search is more than just a tool to find a product or a Web site. Search has become a medium. It's something people spend time on.
Right now, search advertising represents only about 2% of total ad budgets. It's a fairly small amount right now. I expect that to reach 5% or so by about 2010.
What would it take for Yahoo or Microsoft's MSN to win market share from Google? Are there other, smaller rivals that could threaten Google's dominance?
It's very difficult for me to imagine a scenario where an existing competitor can gain market share from Google, unless Google stumbles. In other words, when you build a strong brand like this and have top notch technology to support it, it's not easy for anyone to take away your brand. You have to lose it.
The area where Google will be vulnerable is in new areas of vertical search, like video.
By offering so many products for free and relying heavily on ad revenue, doesn't Google have all its eggs in one basket?
What is helping Google, maybe by accident, is that people aren't consuming media in the same way that they used to in the last 25 years. …It used to be that we would all sit down and watch CBS News with Walter Cronkite, and it would be very easy for a brand manager to reach us. People are consuming content in different ways. One large bucket of that is the way they use search. That trend is helping Google. …Even Microsoft is talking about, instead of charging for software, using advertising. [Google is] aligned with a much broader trend in the market. I can see down the road that it might charge for some of its services, but that's really out there.
Google has tried to downplay rumors that it will unveil a low-budget PC of its own. What kinds of new technologies do you see Google pursuing in coming months and maybe unveiling at the Consumer Electronics Show this week?
The PC thing didn't make sense to me, because that is a pretty low-margin business and it does not by itself address a big problem for a large group of people. That's typically what Google goes after. What is a problem is connectivity: Once you buy the PC, can you get it hooked up to the Internet and get it going? If Google comes up with something, it could be something that addresses the ease of connecting your various devices, which is where the rumors of this Google Cube have come from: A device that allows you to very quickly and without any settings connect to the Internet or connect to various devices.
I think access is still an area Google will go after. In reality, the biggest problem we have right now is that we don't have universal access to broadband. The real opportunity is to have always-on and anywhere-on. No one is really looking at this. That kind of connectivity requires massive investment, a long-term vision, and that's the kind of thing I can see Google working on. Not only would it solve a big problem, but it would also increase Internet usage massively.
So what happens if Google hits $600 within the year? Will you downgrade the company, or lift your price target again?
That depends on several things. Google stock is pretty volatile. If it reaches $600 in intraday [trading] or for a few days, I don't intend to change my price target. If our [financial] estimates aren't changing materially, yes, that is a time that we would downgrade. If there are major changes to our outlook, we would look at potentially changing [to] our target. We're basically saying: If things don't change in a significant way and by the end of our year Google has reached our price target, it has achieved its valuation.
Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved
Analysts have a responsibility to analyze every measure of corporate performance. (Otherwise who needs them?) In general, these measures prove helpful, as they provide guidelines to investors. But such is not the case with Google/GOOG for some very specific reasons. Please recall that, from my first recommendation to purchase/invest in Google/GOOG, I have counselled to value the company/stock on only one metric, market cap. This inclination is due primarily to the recognition that Google/GOOG had, and has, an atypical relationship with Wall Street. Moreover, the company would regularly and repeatedly blow away all other measurements of fundamental performance, as it also has achieved. Thus, the one true and valid measure, or so I believe, is market cap. (Until, that is, the investing community finally wraps its collective mind around the size of this opportunity.) Check this blog's archives, if interested to know more.
-----------------------------
Google: $600 or bust?
The risks to the Internet giant's growth trajectory
"Given the amount of risk associated with Google's business, it appears to be approaching this run-and-hide territory today, let alone at $600. Despite its glowing successes, Google still gets almost all of its business from a single source of revenue -- one that's maturing and slowing in growth. In addition, Google faces deep-pocketed competitors that will likely figure out how to mount a more successful challenge to Google's search stronghold and at least slow its advance across the globe."
This article is fraught throughout with misunderstandings; the one paragraph I quote above contains several:
1) "Given the amount of risk associated with Google's business..."
Um, what business is not "associated with risk"? Risk is the very nature of business: where there is risk, there is opportunity. Is this comment supposed to be insightful?
2) "it appears to be approaching this run-and-hide territory today, let alone at $600"
Like most journalists (really, like most people) the writer conflates stock price with business venture. And a high and climbing stock price with ... what, precisely?
3) "a single source of revenue"
And what a source of revenue that is! And this level of success is achieved before the company broadens its product base.
4) "one that's maturing and slowing in growth"
Oh, really...? The writer (or his editor) shows a startling lack of either understanding or insight. Google, along with Yahoo, Microsoft, and even LookSmart, are busy broadening and deepening the advertising base -- which grows dynamically. It appears obvious this author misses that fact, among many.
5) "Google faces deep-pocketed competitors..."
Hmm, I guess Google lacks 'deep pockets'. Pity, that. What do you call $6 billion and rising, net of the AOL agreement? Really, what is this author smoking?
6) "... that will likely figure out how to mount a more successful challenge"
Yeah, I guess Google can kick back now and rest on its laurels. Game over.
Sheesh, what claptrap, what poppycock, what pettifoggery! And people pay for this garbage? :-)
---------------
So I return to Robert Cringely, whose comments might be in error -- recall that Google's modus operandi is 'tight-lipped'; however; correct or incorrect, Robert never lacks for insight.
"Google has turned beta code into a weapon, creating "beta" programs that in the case of Gmail had more than three million testers signed-up before it went from beta to production. A beta test is a wonderful thing because it can be ended with a whimper but not with a lawsuit. Betas for Google are sometimes real statements of product direction and sometimes not, but Google competitors have no way of knowing which is which until they, too, have devoted resources to competing with something that may have no long-term existence. The greatest impact of Gmail, for example, was on HotMail and Yahoo Mail, forcing them to dramatically increase their cost structures to keep users from fleeing for Gmail's greater storage allowance.
"To understand what Google really means, however, I keep coming back to the core values of the company -- search and advertising. What does each new product or service do for search or advertising? Because until they come up with a third revenue source as big as those two, Google will always be looking for its livelihood in those two directions..."
Continue reading here....
URL for this article:
http://online.wsj.com/article/SB113640176690137726.html
January 5, 2006
Defending Google at $600 a Share
By VAUHINI VARA
How high can Google Inc.'s shares go?
The search giant's shares have more than quintupled since the company's initial public offering in August 2004 and finished Wednesday at $445.24. Of 36 analysts surveyed by Thomson First Call, 26 have a "buy" or "strong buy" rating on its shares, while just one recommends selling.
Analysts have been one-upping each other with ever-higher price targets, and this week Piper Jaffray & Co. Internet analyst Safa Rashtchy made headlines with a new $600 target for Google. That's up from his earlier 12-month price target of $445, issued in October.
His new $600 target would put Google shares at a whopping 68 times his projected 2006 pro-forma earnings of $8.82 a share. Mr. Rashtchy cites a somewhat more palatable multiple of 50 times earnings in his report by arguing investors should buy based on his new estimate for 2007 pro-forma earnings of $11.91 a share. Regardless, he says Google is an "iconic" company that warrants a lofty multiple. He talked to the Online Journal about his expectations for the company, and the risks Google faces.
(Mr. Rashtchy doesn't own shares of Google, but Piper Jaffray counts Google as an investment-banking client and makes a market in Google shares.)
You're one of the most bullish Google analysts out there. How do you defend this price target?
We really put Google in the league of companies like Microsoft or eBay: companies that created new markets, became the dominant players and provided several years of continued growth. These companies have traded well above 50 times [earnings estimates] in their peak years. …Search is continuing to grow, and Google is continuing to gain market share. We didn't expect them to gain share in 2005 and yet they gained 5%. That gives us confidence. By the way, I fully expect to increase our [earnings estimates] for 2007, so that the actual multiple could end up being in the 40s rather than in the 50s.
Why compare Google to eBay or Microsoft rather than, say, Yahoo?
A lot of the value Google has, in my book, has to do with its brand. Only companies such as eBay and Microsoft created that kind of brand awareness. Yahoo has been a great media company, but it hasn't created the same type of following that Google has. More than that, it is really paradigm-shifting companies that can deserve this kind of multiple and can have a great following among investors. Microsoft was really the only platform for computing for many years. EBay suddenly created an efficiency in the market that didn't exist before. Google, in the same way, has created a huge, multibillion dollar business that didn't really exist before and created a massive following.
Since initiating coverage of Google in April 2005, you've maintained an "outperform" rating and bumped up your one-year price target five times. Until now, the increase has been pretty incremental. So why the jump this time?
I felt that we were always trying to catch up with Google in terms of fundamentals and stock price because we were always very conservative with our estimates. Perhaps there was good reason to be more cautious as Google was just a young public company, and it didn't have as much of a track record of performance. Now, I feel that given what Google has [accomplished], I have a lot more confidence to be more realistic on our estimates, so that I don't have to do it every quarter. I'm not trying to be heroic or controversial or come up with a huge price target. I really felt that we don't really serve investors if I'm reactive. I like to look ahead.
You've covered the Internet industry through the bubble, the bust, and the recovery. Has your experience made you at all wary to attach high price targets to Internet companies?
I certainly had concerns about how our price target would be viewed, especially as Google had decided not to split the stock. …I don't want to be seen as hyping the market. Then again, when people look at the comparison with the dot-com bubble, at that time, we were talking about three to four times the valuations [we are today]. Most people would come up with "creative" new ways to justify valuation, like the value of an eyeball or a unique visitor. The main difference is that I can confidently go to investors and say this is the right price, because I can show them that this is within the historical range. That was never the case in the dot-com bubble.
Google publicly discloses very little information about itself. How does that affect your ratings?
I don't find it particularly difficult because of a couple of reasons. I've known Google nearly since it started. And also I've covered the search industry longer than other analysts. Google is so big that I liken it to Wal-Mart. If you know the retail market, you have a pretty good chance of knowing how Wal-Mart is doing. I study the broader search market. In reality, Google has a very easy business model. It's basically how many searches they have done times how much revenue they get per search.
Having said that, Google discloses very little. It poses some difficulty for analysts, but it really poses more risk for investors. Right now, it is a boom time for Google, and people aren't that worried about a lack of transparency. Should there be any slip or any miss from expectations, investors could be very concerned and there could be some selloff because investors wouldn't know what caused it. So, yes, it is a factor.
Do you think Google is a suitable investment for all investors? Haven't those who have yet to purchase the stock missed out on the lion's share of the gains?
I think that Google is a suitable investment for aggressive investors as well as for long-term investors. Look, our sector is pretty volatile, so it certainly isn't suitable for people who can't handle volatility in the near term. But I think Google is a solid company. If I could buy the stock, I would buy it for my son's college fund.
What would you recommend to those who bought Google more than a year ago when you initiated coverage? Should those investors take some profits or continue to wait it out?
I would continue to hold the stock. Obviously, it depends on each investor's liquidity needs, and I can see the urge to at least take some profit off, but given the outlook we see for the company for [2006] and beyond, I think they would be leaving some money on the table if they took profits now.
You've estimated 2006 revenue of $6.4 billion, up from $4 billion in 2005. Which new business lines do you see contributing significantly to Google's revenue this year, or do you simply expect online ad revenue to grow?
That's the interesting part. We really don't have any new revenue items in there in addition to the core search advertising revenue. We haven't really modeled anything else. Given that search revenue is so big, the additional revenue will take a while to contribute. You just can't move the needle that easily. But by the end of this year, we expect revenue from Google Base [classifieds] and Google's advertising network to become more meaningful.
Of all the new products Google has rolled out in recent months, which do you see as the most significant?
[Some that] have already built a good Google following and have helped Google even though they don't generate revenue are Google Mail and Google Maps. Those two products have become enormously successfully in a very short period of time. We see continued adoption of those two products.
In terms of new products that I'm most excited for, Google Base to me is the most exciting one. That could allow Google to create an entirely new source of information beyond what's available on the Web.
What is the single biggest risk to Google's business model? What about to the stock price?
As they get into new areas of content that haven't been mined yet, off-the-Web content or video content, they may not have the advantage that they had in finding and presenting Web content. …Other companies may gain advantage over them.
Related to that, if ever Google takes its eyes off the focus on user satisfaction, that's where they could really lose out to competition. That could potentially happen if there's an increase in advertisements listed on its pages or in other formats. That is not something I see right now for Google, but if the opportunity is too lucrative, it may hurt them.
In terms of the risk to the stock, probably the biggest risk is that, up to now, most analysts have been conservative with their estimates, simply because the growth was so big that we didn't believe it. Of course, everyone came out of the dot-com era, so we were being more conservative. After a while, analysts may become more bullish and could become too aggressive. Given that Google doesn't give guidance, they could miss [analysts'] expectations at some point.
You're estimating that the paid-search industry will grow to more than $33 billion in 2010 from $10 billion in 2005. Where will all that growth come from?
I think that we will have many more advertisers. Right now, globally, we may have half a million advertisers or so on the Web. I expect to have several million advertisers. Second, many large advertisers are spending very little on search, but consumer packaged goods companies, pharmaceuticals and auto companies, are beginning to realize that search is more than just a tool to find a product or a Web site. Search has become a medium. It's something people spend time on.
Right now, search advertising represents only about 2% of total ad budgets. It's a fairly small amount right now. I expect that to reach 5% or so by about 2010.
What would it take for Yahoo or Microsoft's MSN to win market share from Google? Are there other, smaller rivals that could threaten Google's dominance?
It's very difficult for me to imagine a scenario where an existing competitor can gain market share from Google, unless Google stumbles. In other words, when you build a strong brand like this and have top notch technology to support it, it's not easy for anyone to take away your brand. You have to lose it.
The area where Google will be vulnerable is in new areas of vertical search, like video.
By offering so many products for free and relying heavily on ad revenue, doesn't Google have all its eggs in one basket?
What is helping Google, maybe by accident, is that people aren't consuming media in the same way that they used to in the last 25 years. …It used to be that we would all sit down and watch CBS News with Walter Cronkite, and it would be very easy for a brand manager to reach us. People are consuming content in different ways. One large bucket of that is the way they use search. That trend is helping Google. …Even Microsoft is talking about, instead of charging for software, using advertising. [Google is] aligned with a much broader trend in the market. I can see down the road that it might charge for some of its services, but that's really out there.
Google has tried to downplay rumors that it will unveil a low-budget PC of its own. What kinds of new technologies do you see Google pursuing in coming months and maybe unveiling at the Consumer Electronics Show this week?
The PC thing didn't make sense to me, because that is a pretty low-margin business and it does not by itself address a big problem for a large group of people. That's typically what Google goes after. What is a problem is connectivity: Once you buy the PC, can you get it hooked up to the Internet and get it going? If Google comes up with something, it could be something that addresses the ease of connecting your various devices, which is where the rumors of this Google Cube have come from: A device that allows you to very quickly and without any settings connect to the Internet or connect to various devices.
I think access is still an area Google will go after. In reality, the biggest problem we have right now is that we don't have universal access to broadband. The real opportunity is to have always-on and anywhere-on. No one is really looking at this. That kind of connectivity requires massive investment, a long-term vision, and that's the kind of thing I can see Google working on. Not only would it solve a big problem, but it would also increase Internet usage massively.
So what happens if Google hits $600 within the year? Will you downgrade the company, or lift your price target again?
That depends on several things. Google stock is pretty volatile. If it reaches $600 in intraday [trading] or for a few days, I don't intend to change my price target. If our [financial] estimates aren't changing materially, yes, that is a time that we would downgrade. If there are major changes to our outlook, we would look at potentially changing [to] our target. We're basically saying: If things don't change in a significant way and by the end of our year Google has reached our price target, it has achieved its valuation.
Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved
Analysts have a responsibility to analyze every measure of corporate performance. (Otherwise who needs them?) In general, these measures prove helpful, as they provide guidelines to investors. But such is not the case with Google/GOOG for some very specific reasons. Please recall that, from my first recommendation to purchase/invest in Google/GOOG, I have counselled to value the company/stock on only one metric, market cap. This inclination is due primarily to the recognition that Google/GOOG had, and has, an atypical relationship with Wall Street. Moreover, the company would regularly and repeatedly blow away all other measurements of fundamental performance, as it also has achieved. Thus, the one true and valid measure, or so I believe, is market cap. (Until, that is, the investing community finally wraps its collective mind around the size of this opportunity.) Check this blog's archives, if interested to know more.
-----------------------------
Google: $600 or bust?
The risks to the Internet giant's growth trajectory
"Given the amount of risk associated with Google's business, it appears to be approaching this run-and-hide territory today, let alone at $600. Despite its glowing successes, Google still gets almost all of its business from a single source of revenue -- one that's maturing and slowing in growth. In addition, Google faces deep-pocketed competitors that will likely figure out how to mount a more successful challenge to Google's search stronghold and at least slow its advance across the globe."
This article is fraught throughout with misunderstandings; the one paragraph I quote above contains several:
1) "Given the amount of risk associated with Google's business..."
Um, what business is not "associated with risk"? Risk is the very nature of business: where there is risk, there is opportunity. Is this comment supposed to be insightful?
2) "it appears to be approaching this run-and-hide territory today, let alone at $600"
Like most journalists (really, like most people) the writer conflates stock price with business venture. And a high and climbing stock price with ... what, precisely?
3) "a single source of revenue"
And what a source of revenue that is! And this level of success is achieved before the company broadens its product base.
4) "one that's maturing and slowing in growth"
Oh, really...? The writer (or his editor) shows a startling lack of either understanding or insight. Google, along with Yahoo, Microsoft, and even LookSmart, are busy broadening and deepening the advertising base -- which grows dynamically. It appears obvious this author misses that fact, among many.
5) "Google faces deep-pocketed competitors..."
Hmm, I guess Google lacks 'deep pockets'. Pity, that. What do you call $6 billion and rising, net of the AOL agreement? Really, what is this author smoking?
6) "... that will likely figure out how to mount a more successful challenge"
Yeah, I guess Google can kick back now and rest on its laurels. Game over.
Sheesh, what claptrap, what poppycock, what pettifoggery! And people pay for this garbage? :-)
---------------
So I return to Robert Cringely, whose comments might be in error -- recall that Google's modus operandi is 'tight-lipped'; however; correct or incorrect, Robert never lacks for insight.
"Google has turned beta code into a weapon, creating "beta" programs that in the case of Gmail had more than three million testers signed-up before it went from beta to production. A beta test is a wonderful thing because it can be ended with a whimper but not with a lawsuit. Betas for Google are sometimes real statements of product direction and sometimes not, but Google competitors have no way of knowing which is which until they, too, have devoted resources to competing with something that may have no long-term existence. The greatest impact of Gmail, for example, was on HotMail and Yahoo Mail, forcing them to dramatically increase their cost structures to keep users from fleeing for Gmail's greater storage allowance.
"To understand what Google really means, however, I keep coming back to the core values of the company -- search and advertising. What does each new product or service do for search or advertising? Because until they come up with a third revenue source as big as those two, Google will always be looking for its livelihood in those two directions..."
Continue reading here....
posted by David M Gordon | 4:10 AM
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