Alphabet Google: Not Exactly a Car Company
December 13, 2016
Editor’s Note: Oxford University has solved the he/she, himself/herself problem. The proper way to write he, she, him, her, etc. is to use the form “ze.” Beyond Search, ever sensitive to the needs of the Oxford dons and donettes has adopted this usage. Will the Oxford University Press edit texts of books in process to reflect this sage change? Here in Harrod’s Creek we sure hope so. Kentucky means good grammar.
Remember science club? If you are of a certain age, a group of adolescents in secondary school would band together. The leader was a physics or chemistry teacher who fancied ze-self* as a leader and innovator. Perhaps it was the extra pay or the increased chance of a bit more money due to extra curricular activities. The science club was a sporty group. No football or debate team practice encroached on the budding scientists’ enthusiasms. I think of my high school science club when I read articles like “Google Has Reportedly Suspended Development of Its Own Self Driving Cars.” From soap box racer to Le Mans, no problem.
The write up points out:
Google has reportedly stopped work on creating its own fully autonomous vehicles, as part of a shake-up of its development efforts on self-driving car technologies. Google has been working on such vehicles for years now, revealing its first complete self-driving car two years ago. But it now faces intensifying competition from other firms, some of which appear to be making swifter progress.
My thought is that the slow down is a result of Alphabet Google’s new sense of financial controls. Search delivers the money; inventing a car delivers big costs. Distraction has been a watchword at the GOOG for decades. Mama Porat counts pennies and hundreds of millions in direct and indirect spending.
Google may tie up with the Fiat Chrysler outfit. Is a Googley Fiat 500 in one’s future?
The fix?
Aloha, self driving car sort of. The fun loving Mountain View outfit has embraced Ferrari. Actually Google has embraced the maker of the Fiat 500. But the idea is similar. Put Google’s smart software in a mini van and nuke the folks who are already wheels down and rolling.
The question I ask is, “How bleak are Alphabet Google’s revenue projections?” My hunch is that the costs of just doing the AdWords thing are getting increasingly difficult to control. The fix is to trim the science club’s plans. Instead of an F1 vehicle, let’s go with a Fiat 500 or stable mate. Makes sense.
Nevertheless, if the Google cannot control its operational and indirects for its core business, Amazon’s idea of off loading the costs of its infrastructure to folks who would pay to rent time on Amazon’s computers looks more and more like a financial home run. Amazon’s cloud revenue really gnaws away at the overhead for the eCommerce giant. By comparison, Google is trying to find alternative, substantial sources of revenue.
Amazon has diversified its revenue: eCommerce, Cloud, weirdness like the Echo, original videos, etc. The Alphabet Google thing has diversified its spending.
So the pressure to cut costs is about:
- The pressure created by the shift from desktop rich ads on boat anchor PCs to the not much screen real estate of the mobile device. Sure, more screens but less ad space. Yikes, bad.
- The rising costs of infrastructure and indirects. These costs are tough to control. Like a cruise ship approaching the dock in Naples, slowing down and getting organized takes time. A mistake can be expensive.
- The failure to diversify revenue leaves Google looking silly. Amazon has already figured out the diversification thing. Poor, hapless Microsoft also has revenue coming in from products and services other than a Word upgrade. Imagine: Microsoft.
Net net: Each little tap on the science club’s brakes signals a new world for the Googlers. I don’t know about you, but are Fiat 500s among the least reliable vehicles on the road? An Alphabet Ferrari? Interesting. A Google minivan? Hmm. Soccer moms, white paint, and spilled Gatorade. Delightful.
Stephen E Arnold, December 13, 2016
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