Wednesday, May 24, 2006

Geek Wednesday: The Empire Strikes Front

media policy:

Hey everybody—before you run out and buy the Nike shoes with the Apple logo and the iPod Nano in the sole, ask the question another Nike customer once asked them: "Could you please send me a color snapshot of the 10-year-old Vietnamese girl who makes my shoes?"

Today, I'm disgusted to be writing on a Mac. Will we ever, I wonder, live in a world where the poison of profit does not turn men into monsters, and children into slaves?

How about you, Google? Could you make computer hardware and an operating system as good as Apple's, and still "do no evil?" Can anyone?

Now, on to another visit from Nearly Redmond Nick for the second in his series on Google, The New Empire.

Yes, Season Two. As in, the battle for all the world's search traffic was season one and Google had the best ratings. This statement is easy to make, as stats from all over the place prove me more than right (not to mention their stratospheric stock price and company valuation).

Now, I will restate my earlier prediction: Google will be the next Great Empire. What? You doubt my ability to foresee the future? Let's take a look at some recent news and see how the rest of the pundits sit.

In a recent article on, Chris Kraeuter and Rachel Rosmarin report back on the plans of Yahoo! and Microsoft to "overtake Google". While offering no opinions of their own, a few experts chime in with some comments. If you take the article to heart, you'd be selling off GOOG and buying MSFT as fast as your E*Trade account would let you. And maybe that wouldn't be such a good idea, being that you could buy almost 20 shares of MSFT for each share of GOOG sold. If only Microsoft paid dividends...

But most of the readers of a smart, insightful blog like this would know better than to blindly follow crap like that. They would swiftly debunk all of the claims presented, and comfortably add more GOOG stock to their portfolio. I know I would definitely do the same if I had the money (so click on some advertising, will ya?) and it seems that 2/3 of the general public agrees.

We first hear about Microsoft's new rollout of AdCenter - their foray into paid search marketing. While this should boost Microsoft's profits a bit, their overall search market share is still at 13% - getting less than 30% of Google's traffic. In a business where eyeballs = revenue, it's easy to see why Google will continue to produce results easily trumping their rivals.

But wait! There's more! Mr. Ballmer announced that Microsoft will be pouring over $1.1 BILLION dollars into the company's MSN division! With this investment, he is confident that he can overtake Google and Yahoo within 5 years. Now don't get me wrong, but I find it hard to believe that he can picture what an industry less than 5 years old will look like 5 years down the road! I have a strong feeling that this whole plan of his may not get executed as desired, and it seems the analysts agree, at least in the immediate future. An inside informant at GeekSpeak reports that the new MSN office in NYC is now on a hiring freeze as they approach the end of their fiscal year. We have also seen evidence of MSN turning down some top-notch talent seeking positions with that group. All this while Yahoo! and Google continue to add jobs, Google at a faster pace.

Now, what about Yahoo!? Mr. Semel was probably saying the same thing after all the attention Google attracted during last week's Press Day. Now don't get me wrong, I've always loved Yahoo! and always will. I think their strategy and direction are quite sound, and they've made a ton of great acquisitions (Flickr,, Konfabulator) lately. Unfortunately, they seem poised to be the eternal also-ran in the search market, despite grabbing the most global Web visitors.

While Yahoo! is optimistic about the improvements made to their ad platform (coming in Q3 in the US, Q107 internationally) and search engine, they're not expecting any benefit until at least next year. Even with their estimated 24-31% yearly growth figures, is there some irrational frothiness in those numbers? You would think so after hearing CFO Sue Decker's Greenspan-esque statement yesterday.

Without touting Google any further today, I'll just point to a few positive indicators of their future:
  • An incredible stranglehold on the search market
  • Growing cash reserves estimated at around $10 billion
  • Increasingly diversified product offering
If those aren't enough for you, come back soon and I'll have more! And if you don't agree with my outlook, I'm sure you're wrong, but leave a comment anyway.

--Nearly Redmond Nick

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