Google Coasting

I am doing a review of the OReilly book, Google Apps: the Missing Manual, and it brings up a key point about the Google empire. It is accidental and becoming static. But it is an Empire because Google has just gotten Yahoo to sign a deal that will have Yahoo displaying Google Search ads on Yahoos site. I dont understand the technical reasons for this because Yahoo has its own Search Marketing ads and Yahoo Publisher Network for publishing those ads on user websites. The argument is that the Yahoo Publishers Network version is still nascent and so Yahoo needs to borrow Googles ad engine for awhile. And since this is a non-exclusive arrangement that Yahoo can terminate(but when and at what cost, undetermined) – Yahoo is still considered in the drivers seat on monetizing its properties and search engine capabilities.

However, the net effect of the deal is the expectation that Google share of the Search ad market will go above its current 60% – call this the apogee of Googles Search success.

Google like Microsoft before it has an accidental empire – admittedly a self-made accidental empire. Why accidental ? Because for the first 4 to 5 years of its existence, Google did not have a model for monetizing itself. It was looking for businesses to pay for having search engine software or software+hardware added to their websites. Nice but not huge. But at the sametime Google was mastering the science of supporting monstrously huge Linux based computing centers that could deliver the very fast response time and more relevant search than any other provider. Not until late 2003 early 2004 did Google start Adsense which charged clients for clicks on clients small Google placed ads. And because advertisers didnt pay until clicks were made on their ads – this has become one of the predominant advertisng method on the Web.

But where are those Google ads ?

On tens of millions of users websites. How much does Google pay for the click revenue it gains – well Goggle is not telling. But if you go to the other side and bid for keywords and Google ad placements, one can see the payment is not much more than 10 cents on the Google revenue dollar. This is the small amount yet highly voluminous and profitable revenue stream that Bill Gates declared he was looking for way back in the early 1990s. Sergy and Larry, almost by accident, got their first. And for some reason, neither Yahoo nor Microsoft have been able to duplicate or find an inroad onto Googles tens of millions of advertising sites.

But where does Google go next ?

Stronger search capabilities? Actually, Ask.com and others are leading Google in delivering new ways to do searches and get more relevant results quickly. More contxtual search and look up. I admit I use Wikipedia for Contextual Searches and that its use now dominates Google and all other search engines. And now Powerset is supercharging Wikipedia with Natural Language that still seesm to elude Google. However, Wikimedia Foundation does not accept any ads.

Use of media and collaboration as revenue streams? Google Mail, Calendar, Chat, Talk are all Google ad sponsors but otherwise free services. SaaS-Software as a Service ? Google Apps is an online Apps offering equivalent to roughly Microsoft Office and is free for up to 5 related users and then charges on annual basis. Google Media – Google images, You Tube, Google Earth, and Google Maps are all free services in which ads sponsors provide sources of revenues.

From this listing it appears that Googles next major revenue stream, not advertising dependent, will come from SaaS. Which SaaS is hard to ascertain because Google makes so much money from such easy ad sources, it is likely to become victim of the Schumpeter Disease or The Microsoft Effect – “Easy sources of revenue are hard to displace until it becomes too late”. But the bottom line is that Google, which has largely ignored good GUI design(Google Mail like Google Apps are no great GUI shakes nor is Google Widget Toolkit. And with touchscreen and gestures coming to PC desktops well before the Web, Google has some real GUI catching up to do) and customer service(hence the OReilly Missing Manuals), – Google is not a shoe-in in the SaaS world.