What Is Google's Strategy To Remain Relevant?
Caris & Company analyst Mark Stuhlman was quoted earlier this year as saying Google could hit $2,000 a share.
http://blog.searchenginewatch.com/blog/060109-123535
It might but more than likely the answer is something more akin to what the hell are you talking about Jack? That's a market cap of $600 billion dollars and this is a $5 or $6 billion company today with ONE crude product. A product that I believe could have a limited life as our web experience transforms. So, $2,000 a share is about the same market cap as GE and Exxon combined. Yet these two companies have combined revenues of $500 billion and a combined gross profit of $240 billion dollars. Plus, these companies have tangible assets to the tune of $250 billion in book value. That includes massive reserves of black gold, patents galore for both companies, refining capacity, manufacturing capacity, research labs, etc. Google on the other hand has a gross profit of $3.5 billion and a book value of $10 billion.
You gotta be smokin some mean crack to even THINK about putting such as assinine price target on any stock. It is irresponsible and it is Wall Street at its finest in my opinion.
So, what is Google? A glorified search engine. I'm sure one with great technology but still a search engine. And how do they get revenue? By you clicking on ads interspersed with search results. And, we are talking a market capitalization of $600 billion? I don't care if it ten years from now. We have no idea what the net will be like ten years from now and Wall Street definitely has no idea. You want to know how fast Google could become nothing? Look how quickly Google ate Yahoo's lunch. They were a dream in someone's eye just a few years ago. Technology is a brutal business and with 6 billion people on the face of this earth and a few thousand working for Google, the chances are the next big thing on the net aren't coming from the 8x10 to the -5th of one percent of the world's population working for Google.
So, enough cynicism. Let's look at the net and how it could likely unfold. I don't have any insight that others don't but let's take a stab. I see many parallels to the net and the evolution of corporate computing over the past forty years. And, as odd as it sounded when Sun Microsystems coined the term, "The net is the computer" it was indeed a truism.
So, in the beginning God created computers. They were used to store reams of information and process it in manner that was significantly faster than the mountain of people who did it by hand. Then, we developed the ability to organize the data and slice it many ways in an ad hoc fashion. That was about thirty years ago. That's where the net is now. Google is that vehicle. Crude ability to manipulate data. But when I do a search, I can get back ten million results and five may be relevant to what I'm looking for. Is that great or what? As an advertiser, how confident are you that the people clicking on your ads are interested in your product? What's the ROI for ever increasing costs of advertising with Google? That might not matter when companies are spitting out record profits but it will matter soon enough. Yes, Google is the leader in search. They do one thing better than anyone else. But they still are very bad at it. So, what happened next in corporate computing? Applications. Integration of many applications. Access to real time data on business results with the click of a button. Access to customer data in real time. Collaboration. Access to supplier information in real time. Sharing of ideas. Micro-granular data down to the penny of what you are looking for in real time. The net is one massive intelligence in its infancy. Over time, it will evolve. Into what? Well, that cannot be answered by the limits of any individual's mind. Long term the net will transform human existence both at work and at play. Today we have eBay tomorrow we have The Matrix.
So, as the net develops, we will all become tied to the "system" in some form of "awareness" or "oneness" where we are always "online". It likely isn't going to be staring at a 19" LCD monitor that I am using to type this. The majority of the world's population will experience the net via some type of handheld or mobile device as it grows. Maybe next is an earpiece with voice command. Maybe next is a pair of glasses with a type of "heads up" display built in. Maybe we won't even be using a display of any type. Maybe it will be voice driven access to applications, content, personal information, Q&A, search, entertainment, etc. You see Spock baby on Star Trek hammering on a keyboard staring at a Google search result and clicking on an ad for beer? And, a new paradigm will likely develop very rapidly from where we are today. We are currently doubling computing power every six months. If that does not accelerate, and I believe it will, that means we will have 1 million times the computing power we have today within ten years. (2 to the 20th power) Your PDA is one million times faster? Your earpiece is one million times more capable? The computers behind the net are one million times faster. With software capabilities that will likely boggle the mind. You gonna be hackin on a PC and clicking on Google results? For that matter, what's the chance you are going to be carrying around a single use MP3 iPod from Apple? You gonna be using the net for rudimentary search? Are you kidding me? So, if Google's revenue stream is via paid search and it requires you to be sitting in front of a PC and to click on the ad, is that in our future? It might be in yours but it isn't in mine.
Or will you be talking into your earpiece and asking the net to pull up your favorite tunes? Or chatting with your friend with a holographic visual of their face right in front of you just like on Star Wars? Or watch a movie with your heads-up display glasses or holographic generator on the train ride home? Or have the news you care about read to you by the net? Or you telling your coffee maker to turn on, add a dash of sugar and two tablesspoons of cream before you come home? Or talking your college exam into a virtual voice processor then shipping it off via a voice command to your professor? Or hopping into the Matrix for some pleasurable passtime? Or who knows what? The point is the net will be part of your very existence and it will be an extension of your daily life to be used as a productivity and entertainment tool running applications that have not been dreamed up.
So, tell me how does Google get to $2,000 selling you paid search in that environment? In the future would they plan to have voice ads? Commercials on the net fed to your earpiece? Not! And, why would the application providers of the future want to pay Google some type of fee? Maybe that fee is as an aggregator of data. Maybe they provide the "feed". But that is not their business model today. They'd better hope web access is free in the future because if I'm using an earpiece on a Cingular network, you can bet they want to control any ad revenue if there are any ads at all. Uh, I hope Google has alot of people strategizing on what their future is and maybe a few less people working on a kludgy spreadsheet in some half assed attempt to meddle with Microsoft. Listen guys, Microsoft Excel or the grip Microsoft has on PC's is not your biggest threat. How does this future translate into revenue for Google? They need to constantly innovate and find meaningful new ways of generating revenue while their current model allows them to print money.
I think I've convinced myself. I'm going to go buy Google tomorrow and ride it to $2,000! Can anyone tell me what the qualifications are of being a Wall Street analyst? JEEZ, it's a bloody search engine not the cure for cancer.
http://blog.searchenginewatch.com/blog/060109-123535
It might but more than likely the answer is something more akin to what the hell are you talking about Jack? That's a market cap of $600 billion dollars and this is a $5 or $6 billion company today with ONE crude product. A product that I believe could have a limited life as our web experience transforms. So, $2,000 a share is about the same market cap as GE and Exxon combined. Yet these two companies have combined revenues of $500 billion and a combined gross profit of $240 billion dollars. Plus, these companies have tangible assets to the tune of $250 billion in book value. That includes massive reserves of black gold, patents galore for both companies, refining capacity, manufacturing capacity, research labs, etc. Google on the other hand has a gross profit of $3.5 billion and a book value of $10 billion.
You gotta be smokin some mean crack to even THINK about putting such as assinine price target on any stock. It is irresponsible and it is Wall Street at its finest in my opinion.
So, what is Google? A glorified search engine. I'm sure one with great technology but still a search engine. And how do they get revenue? By you clicking on ads interspersed with search results. And, we are talking a market capitalization of $600 billion? I don't care if it ten years from now. We have no idea what the net will be like ten years from now and Wall Street definitely has no idea. You want to know how fast Google could become nothing? Look how quickly Google ate Yahoo's lunch. They were a dream in someone's eye just a few years ago. Technology is a brutal business and with 6 billion people on the face of this earth and a few thousand working for Google, the chances are the next big thing on the net aren't coming from the 8x10 to the -5th of one percent of the world's population working for Google.
So, enough cynicism. Let's look at the net and how it could likely unfold. I don't have any insight that others don't but let's take a stab. I see many parallels to the net and the evolution of corporate computing over the past forty years. And, as odd as it sounded when Sun Microsystems coined the term, "The net is the computer" it was indeed a truism.
So, in the beginning God created computers. They were used to store reams of information and process it in manner that was significantly faster than the mountain of people who did it by hand. Then, we developed the ability to organize the data and slice it many ways in an ad hoc fashion. That was about thirty years ago. That's where the net is now. Google is that vehicle. Crude ability to manipulate data. But when I do a search, I can get back ten million results and five may be relevant to what I'm looking for. Is that great or what? As an advertiser, how confident are you that the people clicking on your ads are interested in your product? What's the ROI for ever increasing costs of advertising with Google? That might not matter when companies are spitting out record profits but it will matter soon enough. Yes, Google is the leader in search. They do one thing better than anyone else. But they still are very bad at it. So, what happened next in corporate computing? Applications. Integration of many applications. Access to real time data on business results with the click of a button. Access to customer data in real time. Collaboration. Access to supplier information in real time. Sharing of ideas. Micro-granular data down to the penny of what you are looking for in real time. The net is one massive intelligence in its infancy. Over time, it will evolve. Into what? Well, that cannot be answered by the limits of any individual's mind. Long term the net will transform human existence both at work and at play. Today we have eBay tomorrow we have The Matrix.
So, as the net develops, we will all become tied to the "system" in some form of "awareness" or "oneness" where we are always "online". It likely isn't going to be staring at a 19" LCD monitor that I am using to type this. The majority of the world's population will experience the net via some type of handheld or mobile device as it grows. Maybe next is an earpiece with voice command. Maybe next is a pair of glasses with a type of "heads up" display built in. Maybe we won't even be using a display of any type. Maybe it will be voice driven access to applications, content, personal information, Q&A, search, entertainment, etc. You see Spock baby on Star Trek hammering on a keyboard staring at a Google search result and clicking on an ad for beer? And, a new paradigm will likely develop very rapidly from where we are today. We are currently doubling computing power every six months. If that does not accelerate, and I believe it will, that means we will have 1 million times the computing power we have today within ten years. (2 to the 20th power) Your PDA is one million times faster? Your earpiece is one million times more capable? The computers behind the net are one million times faster. With software capabilities that will likely boggle the mind. You gonna be hackin on a PC and clicking on Google results? For that matter, what's the chance you are going to be carrying around a single use MP3 iPod from Apple? You gonna be using the net for rudimentary search? Are you kidding me? So, if Google's revenue stream is via paid search and it requires you to be sitting in front of a PC and to click on the ad, is that in our future? It might be in yours but it isn't in mine.
Or will you be talking into your earpiece and asking the net to pull up your favorite tunes? Or chatting with your friend with a holographic visual of their face right in front of you just like on Star Wars? Or watch a movie with your heads-up display glasses or holographic generator on the train ride home? Or have the news you care about read to you by the net? Or you telling your coffee maker to turn on, add a dash of sugar and two tablesspoons of cream before you come home? Or talking your college exam into a virtual voice processor then shipping it off via a voice command to your professor? Or hopping into the Matrix for some pleasurable passtime? Or who knows what? The point is the net will be part of your very existence and it will be an extension of your daily life to be used as a productivity and entertainment tool running applications that have not been dreamed up.
So, tell me how does Google get to $2,000 selling you paid search in that environment? In the future would they plan to have voice ads? Commercials on the net fed to your earpiece? Not! And, why would the application providers of the future want to pay Google some type of fee? Maybe that fee is as an aggregator of data. Maybe they provide the "feed". But that is not their business model today. They'd better hope web access is free in the future because if I'm using an earpiece on a Cingular network, you can bet they want to control any ad revenue if there are any ads at all. Uh, I hope Google has alot of people strategizing on what their future is and maybe a few less people working on a kludgy spreadsheet in some half assed attempt to meddle with Microsoft. Listen guys, Microsoft Excel or the grip Microsoft has on PC's is not your biggest threat. How does this future translate into revenue for Google? They need to constantly innovate and find meaningful new ways of generating revenue while their current model allows them to print money.
I think I've convinced myself. I'm going to go buy Google tomorrow and ride it to $2,000! Can anyone tell me what the qualifications are of being a Wall Street analyst? JEEZ, it's a bloody search engine not the cure for cancer.
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