Google

[theoldwizard]

Google just took a big dive but there is serious talk about them getting into a new market space, wireless broadband.

Sounds like a good time to throw some "mad money" at it or maybe buy a couple of options

Comments

[cute fuzzy bunny]

I commented on this about 2 years ago when google started making noises about offering free wireless broadband in a number of large cities.

Without going back into the archives, I believe my comments were that strategically google would do pretty well to offer free wireless broadband to much of the US, access to their web based email, calendar, office suite apps and online storage all with advertising and targeted placement.

They'd make microsoft, most of the local telephone vendors, all the "thick" pc manufacturers, television and possibly radio all but irrelevant.

Pretty big capital commitment up front, but it'd probably be worth it long term.

Edit: hah...http://www.early-retirement.org/foru...-to-18928.html

[twaddle]

Why am I reminded of the Excite/@Home disaster?

A high-margin software company getting into a cut-throat capital intensive commodity hardware/services biz? Pass.

[cute fuzzy bunny]

Hmmm...

Just a search engine vs rich set of web based apps
Limited hardwired broadband capabilities vs wide open access

I'm having a hard time seeing the connection.

And last time I checked, google wasnt much of a software company. Its an advertiser.

[twaddle]

Quote:

Originally Posted by cute fuzzy bunny And last time I checked, google wasnt much of a software company. Its an advertiser.

Well, I see them as a software company who distributes their programs on the net rather than installing them on PCs (for the most part). And it's an ad-supported model just like a bunch of the old shareware.....

In any case, given the risks in a broadband play and their current valuation, you would have to find it a *very* compelling story to buy their stock.

[cute fuzzy bunny]

How much money did google make last year selling software programs or access to software programs?

I think you've got their profit model a little backwards. They're selling advertising/placement and using their search engine and apps to drive eyes to it.

By the way, I wouldnt touch their stock with a custom order 20 foot pole.

However, the idea of being able to load an old computer with a google client (or get one for $50), access apps and store my data for free, no updates, no backups, yada yada...all I've gotta do is look at a few ads...seems pretty appealing to me as someone in the consumer segment.

[twaddle]

How much would google make if they didn't have any software? When I build an application, I don't really care what the distribution or monetization strategy is. It still looks like software to me.

[cute fuzzy bunny]

I believe google is making exactly as much with the software as they made without it. In the meanwhile, lots of companies with search engines that were just as good or better made no money and blew up. I think Altavista was better than google, while it lasted.

You know, I liked Wab better. Seemed somewhat smarter.

[twaddle]

I know there were other search engines. I know there were other pay-per-click ad platforms. In fact, I believe goto.com even had an earlier ad auction model open to mom-and-pop advertisers. There were certainly other ad banner servers and context-based ad servers.

Teach me, oh wise one.

How did google win without being better? And without software? I really haven't been paying attention since I didn't buy GOOG at their IPO....

[cute fuzzy bunny]

Ah you're such a turkey.

Google didnt really develop any applications until rather recently, so I'm not sure what 'software' you're all hung up on, unless you're counting the search engine.

Google succeeded where others failed via an interesting strategy. They gave up a lot of opportunities to focus on an (initially) simple goal: provide a bare bones search tool that was pretty effective, ad-free and uncluttered.

With that success in hand, they were able to go back and add in other ventures...quietly and seamlessly. Search placement, then actual ads, then applications, then desktop replacement apps...now...infrastructure?

The other guys were all trying to do it all, all at the same time. Mostly by jamming together disjointed companies and products in ill conceived partnerships.

All run by a bunch of 20-somethings.

Not gonna work.

[twaddle]

Yes, I do consider search engines and other web services to be software. At least until Intel puts it in on a chip, at which time I'll call it hardware.

IMHO, google kicked butt because they had better search results (via the PageRank algorithm), which gave them killer organic distribution.

Then they doubled-down with a very easy-to-use AdSense software application, which enabled a lot of third-party distribution.

In other words, it's all software, and they won because they had the better software.

[cute fuzzy bunny]

Our recollections seem to differ, which is not particularly surprising. My recollection is that googles search results were consistently not in the top two, but that people got tired of the every thickening page of crud they got from googles competitors.

I'm also having a hard time figuring out what your point is/was, which is also not particularly surprising.

[twaddle]

Quote:

Originally Posted by cute fuzzy bunny I'm also having a hard time figuring out what your point is/was, which is also not particularly surprising.

I was just curious to see how long you would engage in an argument about semantics and how you would squirm out of it when you figured out you were wrong.

[theoldwizard]

Quote:

Originally Posted by cute fuzzy bunny I think you've got their profit model a little backwards. They're selling advertising/placement and using their search engine and apps to drive eyes to it.

Their model seems to have worked pretty good for them so far

Quote:

However, the idea of being able to load an old computer with a google client (or get one for $50), access apps and store my data for free, no updates, no backups, yada yada...all I've gotta do is look at a few ads...seems pretty appealing to me as someone in the consumer segment.

And that is what exactly those advertiser are paying for !

With TiVO and channel surfers (like me) television advertising doesn't have as big of an impact as it used to.

I love Google services, especially Gmail !

[Webzter]

twaddle. I'm pretty sure you're living up to your name.

[cute fuzzy bunny]

Its a pretty good morning when you can add TWO user names to your ignore list. Unfortunately they're for the same person.

Daring Fireball: Google Is an Advertising Company

[twaddle]

Quote:

Originally Posted by Webzter twaddle. I'm pretty sure you're living up to your name.

With a name like Webzter, I would have hoped you'd have more to contribute to this thread than lame one-liners.

Give it your best shot. Connect the dots of all of Google's acquisitions, including their broadband play, and tell us their strategy.

Or at least play the semantics game with us and tell us why google is not a software company and can easily transform themselves into a wireless broadband services company and make a killing where others have failed.

[Webzter]

Quote:

Originally Posted by twaddle With a name like Webzter, I would have hoped you'd have more to contribute to this thread than lame one-liners.

Considering that I've posted one observation in this thread, semantically, I think you'd be hard-pressed to state that I'm using one-liners. More correctly, I have made one observation.. prior to this adroit post, of course.

And, with a namesake bespoken of a cheap PC manufacturer that went bankrupt, what exactly were you looking for?

We're going to have to break your observations down a bit since you insist that it's a semantic issue at this point.

First, how do you feel Google started in life? Was it selling software or monetizing a service? And, more to the point of the discussion, what difference does it make? Does being one or the other really matter in terms of leverage and market share?

Second, what parallels do you draw between Excite / @Home and Google's play (assuming they go with something like a Google / Earthlink play)? Many things have changed since the heady days of the gold boom. Maybe the fundamentals haven't, though. So, what are the main liabilities with this type of service offering that you see? On the other side of the analysis, what are the main differences between Google's expected play and the previous play?

As for the 'what is Google' question, it seems to me that would be easy to define. First, does Google make money from selling you software or getting you to click on advertisements when you're using its services. Second, pick a technology index and pick an advertising / marketing index. As a baseline, what is the correlation between the technology and advertising indices. Then, assuming those have a low beta, does Google have a stronger beta with one or the other?

[utrecht]

Googles PEG ratio is 1 which is amazing for a stock that has risen as much as this one. I think its going much higher.

[twaddle]

Quote:

Originally Posted by Webzter First, how do you feel Google started in life? Was it selling software or monetizing a service? And, more to the point of the discussion, what difference does it make? Does being one or the other really matter in terms of leverage and market share?

I believe I already addressed this. If I'm building software, I don't really care how it's monetized, it's still software. They build software.

The reason it matters? Because it's their core expertise. It makes a lot of sense for them to diversify, but there's a difference between spreading your bets and entering a new market in which your existing structure provides no leverage, you have a ton of capital expenditures, you lose your core focus, yada yada.

Quote:

Second, what parallels do you draw between Excite / @Home and Google's play (assuming they go with something like a Google / Earthlink play)? Many things have changed since the heady days of the gold boom. Maybe the fundamentals haven't, though. So, what are the main liabilities with this type of service offering that you see? On the other side of the analysis, what are the main differences between Google's expected play and the previous play?

I feel that I'm repeating myself. It makes zero sense for high-margin software companies (or whatever you want to call google) to enter low-margin capital-intensive commodity businesses.

Does anybody seriously believe that directly offering thin clients and broadband services, as CFB proposes for example, will increase their "eye ball" share?

Puuulease. Many have blown themselves up with that strategy. I don't believe the google team is stupid.

But there's always the possibility that they feel invulnerable and have more money than they know what to do with. If so, they wouldn't be the first company to blow themselves up due to hubris.

Quote:

As for the 'what is Google' question, it seems to me that would be easy to define. First, does Google make money from selling you software or getting you to click on advertisements when you're using its services. Second, pick a technology index and pick an advertising / marketing index. As a baseline, what is the correlation between the technology and advertising indices. Then, assuming those have a low beta, does Google have a stronger beta with one or the other?

Whatya talkin bout, Webzter? Do you think they really care where the money comes from? If people were willing to pay for their software services directly, do you think they'd refuse that money?

If I write a book, that makes me an author, right? If my book becomes a TV program, and I get royalties from that, do I suddenly become an advertising company because the TV network made their money by selling time slots to advertisers?

Does that mean that I, as an author, now have the core compentencies to launch, say, a movie studio and I should expect to leverage my book into a successful competitor to MGM et al?

Do these semantic arguments really interest anybody?

Anybody want to look at google's acquistions and make a reasonable guess as to what they're up to? I've looked, and I really don't have a clue. Looks like a shotgun strategy to me.