What a ludicrous statement. Just a blip and you claim that the sky is falling. This reminds me of all those "suicidal" slips Google management made during it's IPO. The venture capital guys just kept their eyes on the technology driving Google earnings and tripled their money or whatever. Nobody gets it. GOOG is not a "search" company. It is a supercomputer. This is their competitive advantage. They can put ** anything ** on that one-of-a-kind custom web-scale supercomputer with custom OS and automatically have a 20-30% cost advantage over MSFT, YHOO, EBAY. They can run GMail at breakeven... while MFST and YHOO compete at a loss. They are experimenting with 10 things because they can do anything... but once they decide, for example, to go ahead and take on the evil EBay/PayPal monopoly... they will win. The stock is probably cheap. Just like MSFT was "overpriced' in 1990. rm+
There revenue 8 years ago was zero, so their average growth rate for the first 8 years has been infinite. GOOG would need 70% annual revenue growth rate to reach 100B in 5 years. That is not a significant slowdown. It does not reflect anything the CFO was talking about - organic growth, law of large numbers, etc. Even in Larry & Sergei's wildest dreams they can't think GOOG will be a 100B company in less than 10 years. So why would they want infrastructure (and cost structure) for that scale now? Martin
Just to follow up... Betting on GOOG means betting on a "paradigm shift" in the PC space... not on increased ad revenues. No more Windows, Office, Outlook, complex hardware, etc... all replaced by a $200 "Google Cube" that plugs into the Google supercomputer giving the ** average person ** all they will ever need... and mostly FOR FREE. Here is a link: http://blog.teledyn.com/node/2373 The dinosaurs never saw it coming either. rm+
That's utter BS. What you call their "competitive advantage" uses dead simple commodity hardware running open source system software. That's not a competitive advantage. Anyone can replicate it. Zero moat. Google has built their success on the fact that they don't want or need a competitive advantage in hardware. The very property that makes Google's search software cost efficient, that it scales smoothly across cheap, unreliable, widely distributed nodes, is what permits their unimpeded growth. Martin
search engines come and go reason why google is so big is because of its legacy following, just like YAHOO was back in 2000 They are thinking of all these wild ideas bullshit, some super computer googleOS cube where nobody ever needs another computer or whatever Sounds more like one of those dreaming geeks you saw in high school dreaming of riding into outer space in a space ship. Doesn't it? Too much freaks working at google. Dungeons and dragons innovation in a public company! When all it comes down to is, They are getting paid for their legacy search engine click traffic. Nothing else.
You misunderstand me. I am not making any comments on the company itself, only that the exec's do not seem mature and thoughtful enough to be entrusted with running a very significant public company. Maybe they should bring in some experienced exec's to deal with Wall Street and the investors and stick to computers. Looking at your points however, you expose a telling weakness in the company's stock. The dominance you envision for GOOG based on paradigm shifts will not, indeed cannot, occur smoothly. There are bound to be periods of stunning disappointment, even if the company emerges triumphant at the end, which in itself seems highy dubious. I mean, how many MSFT's are there? Can you imagine the shellacking the stock will take after a big earnings miss, considering what happened when the CFO made an off the cuff remark about growth?
In 1990 Microsoft had a market cap less than $10 billion. They had a lot more room to grow than Google does today - hence Google's CFO talking about the law of large numbers. If you really want to compare Google with Microsoft, compare with 9 years ago, in 1997, when Microsoft had a market cap of about $100B on about $10B in revenue, much like Google today. Since then Microsoft shareholders have netted less than 12%, annualized. MSFT buyers in 1997 had already missed the boat, just as GOOG buyers today have missed the boat. Now, I'm not sneering at 12% a year, but remember, you are cherrypicking one of the most successful tech companies in history to compare with. There are other tech companies we could talk about that had $100B market caps in the late 90s. Martin
You misrepresented what I said... And also contradicted yourself. I said, "supercomputer" and emphasized the "custom OS". They can scale 100,000 cheap off-the-shelf boxes in a fault tolerant way that no one else can today. They have been doing this since Day One. The boxes may be the shelf, but the OS driving them is one-of-a-kind which they also have been coding since Day One. It might take 5 years to replicate something like this. In contrast, MSFT takes 5 years to grind out each limited and scaled-back Windows upgrade. There may be only a few 100 people in the world that can do this kind of thing... and most of them want to work for GOOG as opposed to a fountain of mediocrity like MSFT. This is another major competitive advantage. rm+
Never going to happen !!! This reminds me of those TV units that allowed you to surf without a computer. nifty idea BUT the consumer will never go for it because of the necessity to rely on GOOG too much.