Google: Is the One Trick Pony Limping?

January 30, 2015

You should work through the Googley report about the GOOG’s financial results. I would suggest purging your mind of thoughts about Apple’s revenue and Google’s involvement with the Apple Board of Directors. I would also suggest sponging the data about Amazon’s cloud and prime gains, not to mention the world’s smartest man’s delivering a profit.

Properly prepared, now we can consider “Google Inc. Announces Fourth Quarter and Fiscal Year 2014 Results.” There are two attachments, which you may want to peruse as well. For me the key point in the write up was this passage:

Other Revenues – Other revenues were $1.95 billion, or 11% of total revenues, in the fourth quarter of 2014.  This represents a 19% increase over fourth quarter 2013 other revenues of $1.65 billion.

The way I interpret this sentence is that after a decade of real effort, Google has been able to generate a couple of billion dollars in revenue from non-ad, non-search, and non-network related activities. In the early days, Google earned zero money from anything. Then the company stumbled upon in a moment of inspiration the methods of GoTo, Overture, and Yahoo. After a legal flap, Google emerged with a business model; that is, pay to play for traffic and traffic.

Several thoughts:

  1. Google is a money machine. The company has to find a way to generate more of the stuff in order to maintain its reputation as Googzilla. In my view, Loon balloons and related initiatives are the supporting cast. Another Broadway hit or three are needed.
  2. The financials do not touch upon the management and interpersonal storms buffeting the company. One Google professional was the focal point of a TV news program involving yachts, alcohol, a person without a degree from Cal Tech or INSEAD, and interestingly enough a banned substance. There was the dust up about Glass, inter company extracurricular activities involving a high profile Googler, and the departure of a nano-tech whiz to Amazon’s digital jungle. Then there were management changes. So much in just 12 months.
  3. Finally, there was the company’s business decisions that roiled the Google Earth world, the procedural shifts for APIs, and rise of irrelevancy in search results. The grand and glorious visio0n of “the world’s information” dimmed as book scanning seemed to fizzle. Somewhere I have a list of orphaned services. I will start a new list for fiscal 2015-2016 and use a bigger note card.

I find Google fascinating. I began work on The Google Legacy in 2003, Google Version 2.0 in 2005 when the company was approaching its miracle year, and Google: The Digital Gutenberg in 2008. [Alas, the unstable finances of the publisher of these still useful analyses put these volumes out of print. Publishers are also fascinating, almost like Oedipus.] After these three monographs, I was able to state with some conviction that Google had to find a way to monetize mobile at the same profit level as old school desktop search or find new revenue streams. It was obvious that the Google Search Appliance was not going to be a big winner.

Google remains an important company. Many MBAs live and die by Google’s apparent dominance of all things nifty. For me these financial results suggest that Google may need an overhaul in its senior management. The vision thing is just not ringing my bells.

I no longer can do a query on Google to answer this question, “What’s next for Google?” I think I know after 15 years of watching. More ads, more thrashing, and more Loon balloons. I sort of miss getting those nifty tsotchkes at conferences. My LED illuminated Google pin has gone dim. My Google mousepad has worn out. My Google T Shirt has faded.

Mobile online access has arrived, and it is more of a threat than desktop searchers realize.

Stephen E Arnold, January 30, 2015


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