The Future of Google
September 8th, 2010 by ravi

Google has transitioned from a “growth company to a cash cow” — that’s the conclusion of Michael Copeland and Seth Weintraub, writing for Fortune:

Long-term projections for growth in the search business are more in the 15% to 17% range. Yet analysts estimate that 91% of Google’s revenue still comes from the AdWords and AdSense business model that Google built around Page and Brin’s breakthrough PageRank algorithm. Even more telling, an estimated 99% of its profit does too. This year’s projected earnings growth of 18% is a third of what Google averaged over the past five years. A lot of companies would kill for that growth, but for technology companies, and Google in particular, those numbers don’t impress. Google is rounding a corner that all the fruit smoothies at its Silicon Valley campus make it hard to pull back from. This year Google has joined the ranks of just about every great technology company before it, including IBM, eBay, Cisco, Microsoft, and Oracle. Google, against its will, and defying its massive cash hoard, is transitioning from a growth company to — and there is no kind way to put it — a cash cow.

And, they note, Marissa Mayer isn’t all too worried about Google’s inability to establish itself in the social networking space:

Marissa Mayer, head of search at Google, says the company doesn’t provide financial guidance, but contends that Google doesn’t need a huge second act, a collection of smaller businesses will suffice.

Mayer of course is one of the lead players in the infamous “41 shades of blue” episode that caused designer Doug Bowman to flee Google. I tend to mention that incident a lot because I think it points to one reason (among surely many) why Google fails frequently at engaging it’s user in a long-term relationship (see: Google Buzz).

Google is genuinely oblivious to the effect their user interfaces, spartan and devoid of styling, might have on non-technical users. Not only might an engineering-focused and engineering-driven company fall back to a comforting process where “data eventually becomes a crutch for every decision” (to quote Bowman), but alpha engineers with their hyper-dominant left brains (if you will forgive the pop science indulgence) might see the measure of aesthetics as nothing more than maximal utility. Speaking of utility, more from Fortune:

Critics question whether Google can make the leap. “They are just not that good at it,” says Tom Coates, until recently the head of product at Yahoo’s defunct Brickhouse lab. “Google is very good at building these utility-type products — search, e-mail, and messaging. They are sort of like the power company of the Internet. But what they lack is a sense of how people share and collaborate.”

In the end, Mayer’s nonchalance that search (with advertising) will remain the core and dominant part of Google’s empire might prove pragmatic and even wise. It’s not a business that’s going away and honing it and expanding on it might be a lot smarter than attempting to teach a middle-aged dog new tricks.

To repeat Coates’s thoughts, Google’s engineering strength makes it a perfect utility company. Though the prospect might be as unsexy as Google’s UIs, it might be time to embrace that strength and build on it. Amazon beat them to utility computing and storage with AWS and EC2, but Android demonstrates that Google is willing to consider a future in which their [invisible] engineering prowess underwrites the visible products of others. It’s a good sign.

Leave a Reply

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

If you need help with one of my software projects, please click: Using that link, you might even find a previous report of (and solution for) the issue!
»  Substance: WordPress  »  Style: Ahren Ahimsa