Google, king of the Internet today and tomorrow

October 13, 2010

To say that Google is the industry leader of its core business segments is an understatement. When it comes to pay-per-click advertising and web search, it is the the unrivaled king of these industries. But Google is also thinking of the future.

In both cases, it has a commanding lead over its rivals with a dominating 80% market share. Text ads and search are definitely an essential part of today's Internet experience. But the Mountain View, California company knows firsthand how disruptive technologies can quickly move large a large audience to another medium. Predicting the increasing popularity of online video and wireless communication, they have made investments in those sectors as well. And it has been a resounding success insomuch as the number of users is concerned. Google already has a comfortable lead as the top provider of web video through its YouTube acquisition, but is also poised to become the number two mobile Operating system through its Android product. It has done this in only a few short years (see the video anouncing the product in only 2007).

The financial benefits of those two expeditions has not been so convincing however. YouTube has in fact only lost money since being acquired at great cost. Also, some analysts have questioned the monetization strategy for their mobile platform. We believe there are two likely scenarios that will occur. First, a licensing fee for use of the Android brand name could be leveraged. The source code may be open to anyone, but users will pay a little extra for a “real” Android phone rather than one that appears to be a knockoff. Secondly, they will utilize the platform for advertising and share revenue with application publishers or wireless providers. They have the experience and the advertiser network, so the latter seems like an obvious avenue to follow.

So it would seems everything Google touches turns to gold, except for the coveted social media user base that has thus far eluded them. This must be troublesome for a forward-thinking company such as Google, since the demographic is young and is the future by definition. However, on a positive note, young users are fickle and quick to jump when the next great thing comes out; so there is hope that Google can win them over as well and reign uncontested.


Google spending spree tests nerves on Wall Street

Follow us on Facebook!