A Bad Economy May Boost Google
November 15, 2008
Garett Rogers is an analyst who can join my flock anytime. His “Worsening Economy Could Actually Help Google” takes a different view of how the GOOG will fare in the present economic climate. He wrote on November 13, 2008, in a ZDNet Web log here:
One major expense (and headache) for small, medium and large businesses are licensing fees for things like Microsoft Exchange, Share Point, Office, etc. As costs are being cut, these Microsoft products may well go on the chopping block with Google being the cheaper (or free) alternative.
The idea is that as organizations seek to reduce costs Google’s cloud services will become more and more appealing. I agree. The infrastructure costs that some organizations are now making in cloud computing are going to be an additional burden. Google continues to invest, but the company has the plumbing in place. If my analyses are accurate, Google could trim its infrastructure investment without great risk to its present lead in data centers and back end services.
The real plus for Google is that the company spends comparatively little on marketing. Granted, the company’s sales and marketing operations are not the well oiled machines one sees running for consumer products. But the market demand for things Google seems to be chugging along. Google has some operating cost advantages as well. In short, I agree with Mr. Rogers. Quack!
Stephen Arnold, November 15, 2008
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