Will Google Be Forced to Downsize?
February 15, 2015
With the founders cashing in some of their shares, I am sensitive to allegedly accurate information about the future of the GOOG. I read “Google Layoffs Inevitable.” The write up references a third party, so the info may not be spot on. I noted this passage:
With ad revenues leveling off and expenses skyrocketing (G&A has quadrupled in 5 years), Google is headed for a financial meltdown, and when it happens, the company will need to shave $2 billion a year off its $16 billion/yr in R&D and G&A costs, which means, if we count the fully burdened cost of a Google employee at $200K per year, it needs to On a percent-of-income basis, Google outspends Apple on R&D six-to-one. Where is that money going? Driverless cars, Google Glass, body odor patents. Stuff that doesn’t have a chance in hell of generating revenue any time soon. On the one hand, Google is to be credited with thinking long-term, something American companies don’t tend to do very well, but on the other hand, Google needs to execute well on the revenue side. Right now, most of its revenue is tied to search ads, which are receding in relevance. It competes, in the cloud space, with Amazon (which no one should have to do). Will that save the company? No. It would have, already, if it were going to shave 10,000 jobs.
Then there was some information about the fuzzywuzzy research investments. I highlighted:
On a percent-of-income basis, Google outspends Apple on R&D six-to-one. Where is that money going? Driverless cars, Google Glass, body odor patents. Stuff that doesn’t have a chance in hell of generating revenue any time soon. On the one hand, Google is to be credited with thinking long-term, something American companies don’t tend to do very well, but on the other hand, Google needs to execute well on the revenue side. Right now, most of its revenue is tied to search ads, which are receding in relevance. It competes, in the cloud space, with Amazon (which no one should have to do). Will that save the company? No. It would have, already, if it were going to.
I find these negative Google analyses interesting. Keep in mind that I don’t have a dog in this fight. I find the Yandex, iSite, and Ixquick search systems increasingly useful. I do love the strapping teenager with the dinosaur on its campus. Even though Apple is allegedly developing a vehicle, it seems that Apple may hit a financial high water mark which Google cannot achieve as the mobile revolution spawns new, competitive life forms. Is that frost on the Google dinosaur’s snout this morning?
Stephen E Arnold, February 15, 2015
Comments
-
- Subscribe to Beyond Search
Feature archive
News archive
-
