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Will Google Become Another Netscape?
kaluta asks: "The Economist has a typically clear and concise story about bringing Google to the stockmarket. Basically, is it going to be the next eBay or Amazon, or will it 'simply be the next overhyped share sale to make its founders rich only to wither away miserably, either for lack of a sustainably profitable business model, or, like Netscape, because it finds itself in the path of that mighty wrecker, Microsoft?' Cool picture too."
This quote from the article is the key issue I think. (The IPO is rumored to be for a total of $15 billion)
Google is doing great, but they can't expect to dominate internet searches any more than they do. In fact, their business plan should allow for their market share in that area to decrease significantly. Each time a the next great new SE comes along, it quickly takes a big bite out of the market as Google itself has done most recently. Where might they expand their business in the future? (And how much revenue and/or profit do they need to justify a $15 billion market cap, anyway? I know it's alot more than the profit numbers in the article).
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it still provides a good search engine with no ads it can't become another Netscape. If it becomes too bloated on the main search engine page it'll still be a good search engine. However, if they change the search engine code so much that it no longer functions efficiently and smoothly without problems (the way it does now), it may become a failure.
When anger rises, think of the consequences.
Confucius (551 BC - 479 BC)
Google is so immensely popular, it is practically "a must" for most web surfers now. It is hard to imagine Google losing advertisers any time soon, and easy to see Google using its new money to pioneer further innovations. In the least, you would expect Google to expand more into other markets, with a portal like Yahoo, more appliances, or even web hosting (host on Google, get a bump in your search rating?).
I'd like to see google stay small and private. An IPO opens google up to stockholder pressures, and all sorts of not-good things. Besides, part of the appeal of google, at least for me, is that it is lean and has few ties, obligations, or partnerships with EvilCorportations.
The real problem is it being overvalued.
From what I've read they're going to generate anywhere from 20 to 45 billion during the IPO. How can a company that relies on ad revenue and provides only a search engine (albeit a very good one) be worth that much?
Google is now more than a business: it is a cultural phenomenon. But where will it be in a few years?
IF THE ultimate measure of impact is to have one's name become a new verb in the world's main languages, Google has reason to be proud. When they founded the company five years ago, Sergey Brin and Larry Page, friends at Stanford University, chose a word play on "googol"--the number 1 followed by 100 zeros--because their ambition was to organise the information overload of the internet in a transparent and superior way. These days, singles "google" suitors before agreeing to a date, housewives "google" recipes before cooking, and patients "google" their ailments before visiting doctors. Dave Gorman, a comedian, even has a popular show, the "Googlewhack Adventure"--a Googlewhack being what happens when two words are entered into Google and it comes back with exactly one match.
As search engines go, in other words, Google has clearly been a runaway success. Not only is its own site the most popular for search on the web, but it also powers the search engines of major portals, such as Yahoo! and AOL. All told, 75% of referrals to websites now originate from Google's algorithms. That is power.
For some time now, Google's board (which includes two of Silicon Valley's best-known venture capitalists, John Doerr of Kleiner Perkins Caufield & Byers and Michael Moritz of Sequoia Capital) has been deliberating how to translate that power into money. They appear to have decided to bring Google to the stockmarket next spring. Bankers have been overheard estimating Google's value at $15 billion or more. That could make Google Silicon Valley's first hot IPO since the dotcom bust, and perhaps its biggest ever.
Will Google go public?
Feb 21st 2002
That alone is enough to have some sceptics whispering "Netscape". Now that the worst of the dotcom hangover is clearing, they wonder, will Google become one of the few valuable internet survivors, joining Amazon and above all eBay? Or will it simply be the next overhyped share sale to make its founders rich only to wither away miserably, either for lack of a sustainably profitable business model, or, like Netscape, because it finds itself in the path of that mighty wrecker, Microsoft?
The search for profits
Google, naturally, is determined to avoid Netscape's fate at all costs. This was why it made Eric Schmidt its chief executive in 2001. Mr Schmidt was 46 at the time--Messrs Brin and Page were in their twenties--and was the boss of Novell, a software firm decimated by Microsoft but given another lease of life under his leadership. He seemed suitably "adult" to turn Google into a money-making machine.
Mr Schmidt understood that the key to monetising all those customer searches (now 200m a day) was to place small, unobtrusive and highly relevant text advertisements alongside Google's search results. Advertisers like this system because they pay only if web surfers actually click on their links. And consumers either do not mind, or even learn to love these commercial links for their relevance, just as they appreciate the Yellow Pages.
Google did not pioneer this "paid search" advertising. That honour falls to Overture, a Californian firm bought this year by Yahoo! which still has about half of the $2 billion-or-so market. Nor did Google's founders readily embrace the concept. Mr Page was once heard to say at a trade show that commercial exploitation was "bastardising" the search industry. Mr Schmidt made the concept uncontroversial at Google, thereby helping paid search to become the fastest growing part of the advertising industry today.
The next step is to take this approach to advertising from the results pages of search engines and on to other web pages. Increasingly, web publishers--from hobby bloggers to small businesses--allow firms such as Google to crawl through the content of their pages and place relevant text advertisements in the right margin. Once page visitors click on the links, the webmasters share
Geeks like Google because it doesn't try to do too much for them. Mundanes will probably like a super-powered MSN search because it will do everything for them. The best part is that there is room for both mindsets. Just as IE coming with windows does not prevent people from installing Mozilla or some other browser and using it nigh-exclusively (MSNM client, for example, still runs iexplore explicitly, rather than using the system's default browser) MSN search being the default will not stop you from using Google. Especially if you don't use IE. The fact that IE will be ever more closely tied to the OS in no way changes this.
I don't use MSN search at all any more. Even on the rare occasion I'm using IE (usually at school) and I somehow end up with MSN search results, I don't even look at them any more, I just close them and visit google. Or retype my URL :)
If I wanted free email, I go get free email. If I want to play java games, I go play java games. If I want to read news, I go read news. If I want to search the net, I search google.
It's simple, plain, and to the point. Sure, it has a bunch of features-in-testing that are full of maybe less than useful, but it still keeps the Search Engine aspect of Google a priority.
A logo, text input box and a couple of buttons is all it takes.
I will keep using Google unless it starts cluttering itself up with too many useless features on its front page.
- shazow
How about the Google text ads? A lot of sites, slashdot being one of them, run these ads. Instead of a banner, you get 3-4 text ads that use Google magic (tm) to make them relevant to the content of the page. These are the only ads I ever click on, since these are the only ads that ever have anything to do with that I'm doing. As far as I know, Google is the only company that provides context sensitive ads. Running ads that people will actually click on seems like a very good way to make money. Plus Google also provides fee services to large companies, and they keep adding new stuff all the time. As long as Google remains as innovative as they have been, they'll last a very long time.
That source code is not worth diddly without thirty or so million dollars worth of computer power to run it on.
I think that the article conflates two separate issues. The first issue is whether Google is going to IPO at some obscene valuation that quickly declines to a more realistic level as nmore shares reach the market. Yep, probably the case unless Google have the foresight to do what Gates and Balmer did when Microsoft IPO'd and talk down the launch price.
The second issue is whether Google will repeat the Netscape business history. This is completely separate and there is no reason to think it will.
Mosaic Communications Corp (Netscape) started out with a business model of give away the browser and make money selling the server. That model started to show its weakness when Apache started to appear. People were just not as excited about a Web server with the latest kewl feature as Netscape thought.
Netscape deliberately gave away the browser in order to take spyglass out of the market. Spyglass was charging for its browser, Netscape was giving it away to most users. They did sign some for pay deals but these were usually loss leaders for the server code.
The other problem at Netscape was that they were selling themselves as the cutting edge of Web technology but they systematically alienated the Web Developer community. Netscape simply did not bother to show up to standards working groups, they thought that they did not need to, they would set the standard by shipping the next release. That did not work so well as Microsoft started to gear up. Microsoft did try to do some of the same tactics initially (marquee tag anyone?) but quickly realised that Netscape never showed up to standards meetings. Microsoft did, and that is why they got most of what they wanted from the HTML4 standard, Netscape got diddly.
The final nail in the coffin was when W3C got its PR machine worked up and started to promote Tim Berners-Lee as the inventor of the Web. Journalists who had been told Marc Andressen was the wunderkind were somewhat annoyed they had been lied to. Add to that the fact that Tim gave much better press availability and the history was substantially rewritten - correctly this time. Marc became just the face of Netscape, not the face of the Web.
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