This post is part of a series of observations entitled I heart_______. Each long form observation is specifically a look at why I like the prospects of the subject. In some cases, it may involve multiple posts/parts on the same subject. In my analysis, I can & will include inferences, speculation, and hope. Hopefully, it will also be grounded in educated reason. In all, it’s just supposed to be fun. Let’s begin.
Point of Disclosure: Long Google in accounts &
adding added yesterday.
Here’s the thing– Google is Search. I don’t think that should or will ever leave their DNA. It’s made them what they are– and finding the answer to search is a multi-billion dollar idea (today). Maybe even a trillion dollar idea…
For Google they already have the keys to the kingdom– all of the world’s public knowledge indexed for their pleasure. It’s what they do with it that matters.
Here’s the other areas where I see promise:
Behind Android is the notional idea that the platform will create more search/ad revenue and secondarily more users of Google’s current Core offerings: Docs, YouTube, Gmail, & Maps. Bigger is the App store opportunity.
According to Talk Android, “Making a serious bid for consumer dollars, however, is Google’s Android Market, which will see the fastest growth in 2011. Android Market revenue will soar 295.4 percent this year to $425.36 million, on its way to become the second-largest application store.”
Right now that’s child’s play, but once Google plays out the ubiquity strategy of Microsoft of yesteryear Google Android does look like a platform poised to dominate. That’s not to say Apple isn’t going to still win big or lose as much share as they did to Microsoft in the PC market, but it does mean Google Android market is probably going to get A LOT bigger than it is today.
Now, puzzler for me is this— Google doesn’t make money on apps. Unlike Apple which takes a cut, Google splits the money between the developer and the carrier. So, it leaves us with a notion that most don’t think about — They’ll be monetizing your usage data somehow — and probably outside of the traditional ad network. You can see hints of how important user data is in the email expose’ from Business Insider about the kerfuffle with Skyhook. Either way, while not nearly as sweet as Apple’s deal, the volume of users is becoming increasingly valuable, no question.
Google is sitting on all of the World’s digital data. That’s valuable. And you are starting to see them monetize it. Google Maps is a perfect example. They are starting to charge for premium access. This is going to be big. Really Big. They’ll start locking up things we’ve come to depend on as essential in the 21st century. Because they can. Sure Microsoft can undercut them for now, but the inevitability is whoever wins will eventually do the same thing– charge for essential services. With Data, how Google wins will be a lot like GE, no one division of the company will be the end all be all of the company (except maybe GE Finance — that was a close one), but each division will be strong and meaningful. While really small now, I see data licensing being a source of strength eventually.
This is probably the most brilliant thing I’ve ever seen a company do in recent history. Sergey and Larry granted $1billion in shares to Google.org to explore world changing technologies in a non-profit, altruistic setting. BUT if the idea is huge enough — It can be pulled back into the Google mothership to be monetized. That’s like a PR win, Tax win for the company, and still a long term capitalism win for the company if they hit something big.
Microsoft’s to lose, Apple and Google’s to gain. And they will. I see Apple probably making more in-roads with private companies, becuase it just works (and works with devices most of their employees love) — Google will win in governmental work. Why? Apple is more expensive than Google, in a bidding war that’s not going to win. And besides the inroads Eric Schmidt now has made with Washington (and the comparatively lower prices), Google is stronger on the web & cloud right now. Why? They live on the web, they have to be. This is definitely a competitive edge for Google. As the government looks to revamp & retool over the next 5-10 years this is going to matter. Anything to squeeze out maintenance costs of the network is going to be a huge focus. Google’s web-based OS looks really smart against that backdrop.
So, that’s what’s churning in my brain… it’s not exhaustive. I could write more, but I’m tired of writing now so I’m going to stop.
So, I’ll close with this– Google’s biggest asset in the future will be trust. I hope they remember to value it always. Thanks for reading.Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.
iheartWallStreet.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com and affiliated sites.