What Is Google Turning Into?
What business is Google in? We used to think it was a search engine
. Way back in the beginning when they started, roughly ten years ago, they were. In the last several years it has been transforming itself and getting into many new businesses. Their strategy is not just to compete, but to transform a business, or at least a part of it and to lead like they did in search.
Google jumped into the search space when there were a number of large search engines doing just fine. The Internet was still new and companies like MSN and Yahoo were the leaders. That's when this new, small company with a big idea decided they can punch their way in. OK fine, there is plenty of room, everyone thought. Come on in, the waters great.
That was just a few short years ago and suddenly Google has changed the search world and taken the lead. Their claim to fame was its speed. It would give loads of search information almost as soon as you hit the return key. Others took a few seconds on every page.
When there was no alternative we accepted this, but when Google changed the expectations of the customer the industry changed and they were suddenly in the focus of search customers.
The company grew up thinking of creating a new model, and they did. How do they make money? Ads. They have a world-class search engine, doing the job better and faster than existing competition, but they give it away. That attracted huge numbers of users who saw ads on top and on the side. Everybody wanted to be part of this amazing success story. It gave advertisers new ways of reaching out.
In addition it changed the rules of the ad game. Internet advertising was the next big wave. Everything was changing. Things that worked on broadcast or print did not work here.
So Google knows what customers want and how to give it to them and has been growing like crazy. That is the American way right? But Google is not satisfied. They want more. They want to put their thumbprint on other industries.
The question we all should be asking is what will Google do to these industry segments? Will they cause the entire industry to rethink the way it charges and does business?
Remember when an industry is starting no one really knows what to expect. It takes the early competitors to shape the industry. What is being sold or offered, and for what in return?
Then once the lines are drawn in the sand the competitors and the customers know what to expect. Entire industries are built on this model. The model could have been different if it was set up differently in the beginning. However usually only one model works. The early birds set the rules of the game.
Google doesn't play by the rules of business that we have known. They do not see the rules of the industry they want to move into and figure out how to structure their company and their offer to compete.
Instead they take on the bigger job of re-inventing the industry, at least one slice of it, and then leads. They have no intention of getting into a business as just one of the players. They see themselves as a leader and will be a leader in an industry or not get in, period.
That's what happened with their search engine. That's what happened with other Google products over the last few years. That is what is happening with their entry into wireless.
There are two parts to this new strategy. One is Android, which is the software they put on a variety of handsets. It's not a Google handset, but they do play a large roll. That is very successful so far.
The other part is their own handset called Nexus One. This has not been a big success in its first few months since launch.
So what is next for the company and the handset? I think Google is currently re-thinking the opportunity. It is still too big to walk away from, but perhaps the wireless industry is strong and fast growing enough with a lot of key competitors and the game will be harder than they originally thought.
Same thing happened when companies like Comcast and Time Warner entered the wireless space, failed, and exited. They did things their way, and they failed.
I think Google intends to stay in wireless, they just need to rethink the opportunity and the best way to grow in it as a leader.
Perhaps they will have to market and advertise, which is a different concept for the company who does not have to do that in their core search business.
Remember what Google is. It is a search company and they earn income from advertisers. Period. Everything they do plays off that fact. Drive customers to choose a Google search product on a variety of different devices, and sell ads to companies.
This is a company that likes to reinvent strong industries with big results. However no one company hits the bulls-eye every time. I remember when MCI was so successful in the 90's. They had several home runs. However they also had more strike outs than I can remember. At the end of the day all we remember are the hits.
Google won't be successful at everything they touch. They will have hits and misses, but it is still one of the most successful and exciting businesses to watch.
This company is growing so fast and is so profitable I think we can expect them to continue morphing into other businesses and changing the model of industry after industry. I do think they will be successful in wireless, but like Tiger Woods, occasionally they don't hit a perfect game.
by: Jeff Kagan
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