8 ms·

What If Google Is Just a One-Trick Pony?

8 points by ericmsimons 16y ago

ericmsimons 16y ago
I remember someone saying that Google's only successful product (other than search) is Gmail. Actually very true if you think about it.
- jdp23 16y ago
  Ad Words/Ad Sense is very successful. So I'd say 2 1/2 tracks (with Gmail as the 1/2).
  - alanh 16y ago
    I think their ads are considered part of search, it’s “just” monetization of product/trick #1
    - jdp23 16y ago
      Not really. More than half their ad revenue comes from other properties besides search. And they made significant breakthroughs on advertising in its own right that were independent from search.
      - cpeterso 16y ago
        Do you have any more details about Google's non-ad revenue? If I read Google's 2010 financial summary correctly, it seems 97% of their revenue is from ads: * 66% Google Web Sites' Advertising Revenues * 31% Google Network Web Sites' Advertising Revenues * 3% Other Revenues http://investor.google.com/financial/tables.html http://investor.google.com/financial/tables.html
arjunnarayan 16y ago
What a lot of people fail to realize is that a fair amount of Google's products are defensive in nature. Google didn't launch Android to make money: they launched it to protect themselves from the threat that having a closed single-vendor provider of mobile OSes would have near-complete control in directing users to search engines. And viewed that way, Android is a roaring success: it has successfully left the mobile gateway open as a flourishing competitive market between platforms, guaranteeing that search doesn't get whacked by someone in complete control. Similarly, this is why Google funded Firefox for a long time, and then finally waded in themselves with Chrome. If IE had dominated, they were in potential trouble that Msft (ignoring antitrust issues) could down them with an MSN-search default. And so comes in Chrome-OS: to ensure that yet another platform remains neutral so that search isn't a casualty of hold-up. (http://en.wikipedia.org/wiki/Hold-up_problem http://en.wikipedia.org/wiki/Hold-up_problem) It's okay to be a one-trick pony if the one-trick is a massive need for loads of users and is nice and profitable. I don't call Arcelor-Mittal a one trick pony because they only make steel, or Boeing a one trick pony because they only make planes. Search is enough. The rest is defense.
- kenjackson 16y ago
  But it is a potential house of cards. If search goes then everything falls with it. Even Android is absolutely, hands-down, the best in market, without super strong search revenue it becomes s loss center. The same with Gmail as they probably can't fund it simply by the ads on gmail -- it's their search network that makes ads on gmail a value ad. It's almost the inverse of the MS strategy. MS is using their cash from Windows/Office/Servers to try to find another billion dollar business. While Google is using these other products to expand their existing billion dollar business. If I were Google, I'd be thinking that I'd like to have one product that could pay for itself (that is, if I lost all search revenue, could it still make money). Because if Apple runs the tables, they could very well choke off Google's air supply to search, and see the whole house of cards fall. And frankly, I think Apple would be all too pleased to do so.
- cal5k 16y ago
  Well said. We will always need to find things in a vast sea of information.
JonathanWCurd 16y ago
Might be, but at least its a pretty darn good trick.
hugh3 16y ago
The ten largest companies in the world are, as of last quarter, Exxon-Mobil, PetroChina, Apple, BHP Billiton, Microsoft, Industrial and Commercial Bank of China, Petrobras, China Construction Bank, Royal Dutch Shell and Nestle. Of these, Exxon, BHP, Shell and Petrobras have one trick between 'em: dig shit out of the ground and sell it. The banks pretty much have one trick too. Only Nestle, Microsoft and Apple have much diversity in their products.
- obviator 16y ago
  This certainly seems to indicate that great product diversity is not necessary for strong financial performance in the short to mid term. I think the question here is more one of longetivity - how long will this "one trick" remain relevant, and retain a large enough market to keep increasing the profits? All those oil companies would run into a lot of trouble if, say, the oil ran out. On the other hand, Microsoft could keep generating substantial revenue even if people stopped buying the XBox for example. Their other (major) products such as Windows and Office provide enough diversity to keep them relevant, despite the loss of one or two major markets.
  - hugh3 16y ago
    Actually I think the bigger problem with what I said is that the huge one-trick companies I mentioned (all in mining/oil) are insensitive to competition. The market can easily support a large number of mining/oil companies, all plugging away steadily on their own bits of dirt. Google, on the other hand, is the dominant search engine mostly because it's the best, and if anyone ever develops one that's significantly better then Google can have its lunch eaten quite quickly.
- jussij 16y ago
  > Of these, Exxon, BHP, Shell and Petrobras have one trick between 'em: dig shit out of the ground and sell it. I hardly think this is the same. It is very expensive to 'dig shit out of the ground' and you will only make money if you manage to dig in the right place. Many a mining company have gone into the business of digging only to go broke shortly after, because the managed to dig in the wrong place. Sure these companies make massive profits by digging, but they also spend a vast amount of money consolidating these profits by exploring for the next place to dig. Their trick is not so much the digging, but their ability to keep finding other places to dig and their ability to then get the stuff out of the ground at profit.
beoba 16y ago
At this point, their "one trick" is advertising, but that's everything as far as the internet is concerned, and everybody wants to buy some. Sure, someone might switch search engines (I have), but now they've got a huge market of third party sites running their ads for them, too.
patrickgzill 16y ago
The NSA would fund them out of the tiniest portion of the "black budget" if needed. It's all about the data-mining...look at how Facebook is valued so highly vs. MySpace due to better data-mining capabilities (at least I think that is part of their value over MySpace)
- hugh3 16y ago
  Are you implying that Google's revenue is a tiny portion of the NSA's black budget? This is sounding a little bit like conspiracy theorist territory here.
  - patrickgzill 16y ago
    Their operating expenses could easily be covered; the "black budget" was estimated at $30B / year pre-9/11 ; no doubt it is higher now.
fleitz 16y ago
If it is then it's a pretty good trick. You only need one good one. Google's revenue isn't going anywhere anytime soon.
tzs 16y ago
Being a one-trick pony isn't all that bad, if people like the trick. The long term problem that I think Google has not yet had to deal with is the fact that its customers hate it and its one trick. By customers, I mean the people that actually give it money--the people who buy ads. I can't think of any other company whose services we use at work that treats us as arbitrarily, capriciously, and indifferently as Google does.
mikervosters 16y ago
The company changed the world and is making billions of dollars -- which makes the number of "tricks" they have seem pretty minute, no?

8 points by ericmsimons 16y ago

I remember someone saying that Google's only successful product (other than search) is Gmail. Actually very true if you think about it.

jdp23 16y ago
Ad Words/Ad Sense is very successful. So I'd say 2 1/2 tracks (with Gmail as the 1/2).
- alanh 16y ago
  I think their ads are considered part of search, it’s “just” monetization of product/trick #1
  - jdp23 16y ago
    Not really. More than half their ad revenue comes from other properties besides search. And they made significant breakthroughs on advertising in its own right that were independent from search.
    - cpeterso 16y ago
      Do you have any more details about Google's non-ad revenue? If I read Google's 2010 financial summary correctly, it seems 97% of their revenue is from ads: * 66% Google Web Sites' Advertising Revenues * 31% Google Network Web Sites' Advertising Revenues * 3% Other Revenues http://investor.google.com/financial/tables.html http://investor.google.com/financial/tables.html

arjunnarayan 16y ago

What a lot of people fail to realize is that a fair amount of Google's products are defensive in nature. Google didn't launch Android to make money: they launched it to protect themselves from the threat that having a closed single-vendor provider of mobile OSes would have near-complete control in directing users to search engines. And viewed that way, Android is a roaring success: it has successfully left the mobile gateway open as a flourishing competitive market between platforms, guaranteeing that search doesn't get whacked by someone in complete control. Similarly, this is why Google funded Firefox for a long time, and then finally waded in themselves with Chrome. If IE had dominated, they were in potential trouble that Msft (ignoring antitrust issues) could down them with an MSN-search default. And so comes in Chrome-OS: to ensure that yet another platform remains neutral so that search isn't a casualty of hold-up. (http://en.wikipedia.org/wiki/Hold-up_problem http://en.wikipedia.org/wiki/Hold-up_problem) It's okay to be a one-trick pony if the one-trick is a massive need for loads of users and is nice and profitable. I don't call Arcelor-Mittal a one trick pony because they only make steel, or Boeing a one trick pony because they only make planes. Search is enough. The rest is defense.

kenjackson 16y ago
But it is a potential house of cards. If search goes then everything falls with it. Even Android is absolutely, hands-down, the best in market, without super strong search revenue it becomes s loss center. The same with Gmail as they probably can't fund it simply by the ads on gmail -- it's their search network that makes ads on gmail a value ad. It's almost the inverse of the MS strategy. MS is using their cash from Windows/Office/Servers to try to find another billion dollar business. While Google is using these other products to expand their existing billion dollar business. If I were Google, I'd be thinking that I'd like to have one product that could pay for itself (that is, if I lost all search revenue, could it still make money). Because if Apple runs the tables, they could very well choke off Google's air supply to search, and see the whole house of cards fall. And frankly, I think Apple would be all too pleased to do so.
cal5k 16y ago
Well said. We will always need to find things in a vast sea of information.

JonathanWCurd 16y ago

Might be, but at least its a pretty darn good trick.

hugh3 16y ago

The ten largest companies in the world are, as of last quarter, Exxon-Mobil, PetroChina, Apple, BHP Billiton, Microsoft, Industrial and Commercial Bank of China, Petrobras, China Construction Bank, Royal Dutch Shell and Nestle. Of these, Exxon, BHP, Shell and Petrobras have one trick between 'em: dig shit out of the ground and sell it. The banks pretty much have one trick too. Only Nestle, Microsoft and Apple have much diversity in their products.

obviator 16y ago
This certainly seems to indicate that great product diversity is not necessary for strong financial performance in the short to mid term. I think the question here is more one of longetivity - how long will this "one trick" remain relevant, and retain a large enough market to keep increasing the profits? All those oil companies would run into a lot of trouble if, say, the oil ran out. On the other hand, Microsoft could keep generating substantial revenue even if people stopped buying the XBox for example. Their other (major) products such as Windows and Office provide enough diversity to keep them relevant, despite the loss of one or two major markets.
- hugh3 16y ago
  Actually I think the bigger problem with what I said is that the huge one-trick companies I mentioned (all in mining/oil) are insensitive to competition. The market can easily support a large number of mining/oil companies, all plugging away steadily on their own bits of dirt. Google, on the other hand, is the dominant search engine mostly because it's the best, and if anyone ever develops one that's significantly better then Google can have its lunch eaten quite quickly.
jussij 16y ago
> Of these, Exxon, BHP, Shell and Petrobras have one trick between 'em: dig shit out of the ground and sell it. I hardly think this is the same. It is very expensive to 'dig shit out of the ground' and you will only make money if you manage to dig in the right place. Many a mining company have gone into the business of digging only to go broke shortly after, because the managed to dig in the wrong place. Sure these companies make massive profits by digging, but they also spend a vast amount of money consolidating these profits by exploring for the next place to dig. Their trick is not so much the digging, but their ability to keep finding other places to dig and their ability to then get the stuff out of the ground at profit.

beoba 16y ago

At this point, their "one trick" is advertising, but that's everything as far as the internet is concerned, and everybody wants to buy some. Sure, someone might switch search engines (I have), but now they've got a huge market of third party sites running their ads for them, too.

patrickgzill 16y ago

The NSA would fund them out of the tiniest portion of the "black budget" if needed. It's all about the data-mining...look at how Facebook is valued so highly vs. MySpace due to better data-mining capabilities (at least I think that is part of their value over MySpace)

hugh3 16y ago
Are you implying that Google's revenue is a tiny portion of the NSA's black budget? This is sounding a little bit like conspiracy theorist territory here.
- patrickgzill 16y ago
  Their operating expenses could easily be covered; the "black budget" was estimated at $30B / year pre-9/11 ; no doubt it is higher now.

fleitz 16y ago

If it is then it's a pretty good trick. You only need one good one. Google's revenue isn't going anywhere anytime soon.

tzs 16y ago

Being a one-trick pony isn't all that bad, if people like the trick. The long term problem that I think Google has not yet had to deal with is the fact that its customers hate it and its one trick. By customers, I mean the people that actually give it money--the people who buy ads. I can't think of any other company whose services we use at work that treats us as arbitrarily, capriciously, and indifferently as Google does.

mikervosters 16y ago

The company changed the world and is making billions of dollars -- which makes the number of "tricks" they have seem pretty minute, no?