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."

Comments

IPO=Death?

[chmod_localhost]

It actually depends on the expectations of the shareholders, if an IPO leads to the death of a company. Normally a company is expected to be worth a certain multiple of its earnings (or better, the cashflow, because cashflow is difficult to forge). A normal multiple would be 10, which gives me a 10% return rate (I buy the company for 100 and get 10 out of it every year). If google has USD 100 Mio of earnings, it's worth would be USD 1000 Mio, if valued this way. This of course would be a fair value, because it enables them to pay their investors an annual dividend of 10% of the stock price, even without any growth. In this scenario, they could stay in their search-engine-business, something they can (obviously) handle successful. The problem is, google will not aim at a valuation of one billion, they will aim at a valuation that is about ten times higher. And that means, they will have to grow a lot in a short time, something that will propably kill them.

Re:IPO=Death?

[tarzan353]

By becoming public, google loses the ability to continue with constant steady growth and innovative R&D. These things will invariably lead to short sighted planning by the management to "make the numbers" for the next quarter, 6 months, or year. "Growth" will be expected year after year - the innovative ideas that have made google so successful will give way.

No, I won't bid on a share. I would hope that the IPO never happens, as google is still a quality company. I would hate to see that all change.

A word of warning from an economist:

[SiliconBateman]

Although 'The Economist' can be thought provoking [good thing] its economic analysis is trash [bad thing] - articles brush over facts, present dodgy one sided (and often politically biased) analysis and present conclusions as fact. So draw your own opinions from the article but do not take anything from The Economist served on a plate.

Re:A word of warning from an economist:

[Edmund Blackadder]

I completely agree. I usually like the Economist, because it does not work under the assumption that its readers are stupid (which is true for most popular printed publications nowadays).

However there are several issues, most having to deal with international investment and banking, where the Economist is so biased it can not be trusted at all.

Why don't we ask google?

[XaXXon]

define google -- look at the top listing where it says: Web Definition.

Google has a couple neat things I never knew about like definitions..
define linux
define irc

It also has a calculator and unit converter:
1.21 GW / 88 mph

1 parsec in lightyears

Re:Why don't we ask google?

[bobrk]

It's a phone book, too, just put in a name and town, and you'll get that person's address and phone number.

I doubt it...

[wrinkledshirt]

My own two cents on why it won't happen.

Microsoft hasn't been a big enough fast-follower to take over Google's stranglehold. Microsoft was quick enough to get a browser out there while the internet was still in the process of popularizing itself.

Given that you can get search results from Microsoft's website content quicker through Google than through Microsoft's own search engine, I think it's too late for them to edge Google out short of buying it.

Google's business model is like eBay

[Baric]

One reason eBay survived the dot-com crash was because their particular business model thrived on a large, centralized system. This creates significant entry barriers for other auction websites.

Google is the same way and they are expanding the breadth of their content like Amazon. If you want to find something on the web, newsgroups or news, you go to Google first.

I don't see how anyone else can easily overcome the economies of scale that Google has already attained.

Is Howard Dean's candidacy doomed?

Netscape has only itself to blame for its dying

[Anonymous Coward]

"that Google will become another Netscape is if Microsoft abuses their desktop monopoly to force them out of business."

Netscape has only itself to blame for dying. While Microsoft was improving their browser technology, Netscape decided to downgrade it, making it much slower and crash-prone. Things might have been different if Netscape had bothered to improve their browser.

I stopped using Netscape because Netscape made their browser unusable.

Even now, they can't be bothered to compete. "Pop-up blocking" is a greatly desired feature. MSIE doesn't offer it. Netscape is too damn lazy to offer it themselves: it is like there are no brains left at the company (go to Mozilla, which has brains, for a pop-up-blocker version of Netscape).

Re:Room for improvement in Google

[turg]

I didn't say there was no room for improvement. Just that it would be unreasonable to count on maintaining their current market share regardless of the quality of the product. They'll have to find new markets.

Re:Be careful for what you wish for

[corebreech]

I personally have trust in Google for right now.

I have next to none. I have firsthand experience with how they treat objectionable content... they simply refuse to index it.

I have a site that I haven't even bothered working on anymore because of this: holocaustnow.org. Shortly after it was first created, I was both indexed on Google and archived in the WayBackMachine.

Then, about three months later, I was dropped from both sites. Queries to both organizations went unanswered. Subsequent attempts to have the site re-indexed proved futile.

It can't be an issue with the virtual hosting my service provider uses since Google had indexed it in the past.

And why the WayBackMachine would ever deign to remove something it has already archived makes no sense to me whatsoever.

So I am eagerly awaiting the day when Google falls. I see now that altavista is willing to index the site; this is giving me the incentive to come out with the badly needed version 2. The more diversity there is, the less likely the new Google's will try pulling shit like this.

Article makes it own facts!

[Anonymous Coward]

Whoever wrote this article for the economist was very "creative" with the truth. For example, they say that Schmidt (google ceo) brought in the text ads, but of course google had text ads long before they had Schmidt.

That's the great thing about the media; they start with a story and then make up facts or speculation to go with it.

My personal opionion is that google and netscape are very different if for no reason other than the fact that netscape consistently put out defective products. It wasn't until the very end (4.71?) that netscape finally got rid of most of the crashes and memory leaks.

Do you really think Amazon is comparable to eBay?

[unassimilatible]

is it going to be the next eBay or Amazon

eBay has been a resounding financial success from day one, just incredible. You can't say that about Amazon, whose foray into profitability is somewhat recent, and nowhere near eBay's margins.

Rather off-topic, but had to be said

[Knights who say 'INT]

I'm glad Slashdot is starting to pay a bit of attention to the economics of this whole twenty-first century schizoid trip. I was pretty sad that they had chose to post about pretty much any Nobel prize, except the one for economics.

And, well, I'm an economist too, and I particularly like 'The Economist' as a medium who doesn't deny the juicy details in the interaction between theory and empirical evidence to the non-economist layman.

Political bias is pretty hard to avoid, but where the left-of-center media will appeal to emotion and to misleading common sense, 'The Economist' shows as much actual content as you'll find outside the academic publications.

Really - it's not Fox News.

Newsgroup archives are worth a subscription fee

[xeo_at_thermopylae]

Even before Deja was acquired by Google I was willing to pay a subscription fee for access. Deja's (now Google's) technical USENET/newsgroup archives alone are invaluable and will only grow in value as time goes on. So part of their new business model can be a subscription system.

Re:Wh

[s00p41337h4x0r]

For Google to stay permanently ahead of other search-engine technologies is almost impossible, since it takes so little--only a bright idea by another set of geeks--to lose the lead.

Unconvincing. Search engines these days tailor their search results based on user input. The fact that Google is the market leader by such a large margin means that it has much more click-through data. It can use this advantage to return better tuned or more timely results. People's queries tell google what is currently interesting and important. NeoSearchEngine X doesn't have that same advantage.

They bought Blogger for the same reason. People hand Google information daily for which Your Friendly Marketting Division would kill.

Article positive for MS price negotiations...

[Anonymous Coward]

... ultimately it are the Google shareholders who are choosing between a quick MS-buck or an even bigger longer term bet with the IPO. From a shareholders pressure point of view, this could have been a Microsoft-pushed idea,... or not. I, for one, must only conclude that Microsoft tried unsuccessfully to take Google's market share in the past, which was an entirely different story with Netscape. Microsoft says it will launch their own new search engine in the near future, it wouldn't have been their first abandoned technology... Further more, google advertising works very good, and they seem to have a very solid business model. Having sold and bought technology companies myself, everything depends on the amount and (sometimes even more importantly) the conditions of the Microsoft offer. It's always better to ask for an even higher price instead of saying 'no' directly :) But from a technology point of view, it would be sad to see google disappear as an innovative and independent company. Microsoft's OS monopoly position will most propably weaken over the next 5 to 10 years, history might look upon a MS aquisition (not merger) as a big mistake...

Re:Less is more

[bluGill]

Better yet, google has added features without adding clutter. I use google groups once in a while. They have a bunch of other things you can search too. All without losing focus adding things like email that have nothing to do with their buisness.

I'm not google locked. I switched to Google long after most people when I could no longer take the lack of results from Alta-vista. I would have swtiched soon, but all my bookmarks were there, and I'm lazy. If google starts doing baddly I'll switch to someone who does a good job. However to switch means I'd have to find some reason to bother to update my bookmarks.

Re:As long as

[Anonymous Coward]

That's incredibly naive. People don't care how good a search engine is as long as it gets them what they want, in the EXACT SAME WAY that people don't care how good a browser is as long as it shows the web pages they want to look at.

95% of the web browsing public don't care if their browser has crap CSS support. They don't care if their browser causes their machine to get viruses and spyware. They don't care about the crap XML support their browser has. They use Internet Explorer because it displays the web pages they want to look at. And web pages are easier to look at in IE because 95% of people don't care how good their browser is.

Same thing for search engines. Do most people care how many millions of pages their search engine indexes? Not if it gets them where they want to go. So a search engine that only indexes 5 pages is a credible threat to Google if 95% of web searchers only want to go to those 5 sites.

Microsoft is great at this strategy. It's about identifying the lowest common denominator, identifying possible marketshare-increasing feedback loops, and then buying or monopoly-leveraging the rest.

You overestimate the appeal of "quality" to the mass market. Wal-Mart doesn't, and neither does Microsoft.

Re:Less is more

[Anonymous Coward]

If I want to search the net, I search google. :D
It's simple, plain, and to the point.

But that is exactly their point when they say it is always a click away from losing users. There is nothing else tying you to use Google. It just happens to be the cleanest way of searching right now and gives good results. But like the article also said, what happens when someone else creates a better way of searching? Everyone using Google will switch to the new service which is clean and simple and now gives even better results. Absolutely no reason to stay with Google. All this means they do not have a long-term lock on web searches, and their IPO valuation is tenuous at best.

Re:Be careful for what you wish for

[corebreech]

Damn.

So the scenario is this... my hosting provider once upon a time returns a 404 on robots.txt, Google says "OK, I can index the site", and so it does. And I see that it's indexed it, and all is right in the world.

Then my piece-of-shit hosting provider decides to redirect everything that doesn't exist to their piece-of-shit "page not found" page, and Google says "fuck this."

But because I'm a dumbass and I don't know what's going on, and because this happens at almost the same time as the WayBackMachine cancels their archive of my site, I instantly go into conspiracy mode, which, as you might be able to tell, I can do really well.

This makes a lot of sense. I could kick myself, I spent so much time investigating the virtual hosting angle, it never occurred to me to check out robots.txt. I didn't want to restrict access, so I didn't think I needed it.

I am putting a robots.txt file up there now, and resubmitting the site.

Thank you.

(and finally NOW I understand why my piece-of-shit hosting provider is offering a package for only $29.95 a year that promises to optimize my site for search engines. What they mean is that for $29.95 a year they will cease doing redirects on robots.txt. And I've just searched their entire site (using Google, HAH!) and they don't say word one about the problem.)

mmmm... Thats a tough call...

[greymond]

Netscape has a long and sad story, a company that once made the worlds number 1 browser and supported a lot of (at the time) cool features, made a mail program, and also a html wysiwyg editor. Then MS decided to improve IE. Then MS include IE in Windows. Then MS decided to make IE part of Windows and at the same time Netscape decided to stop improving Netscape to compete and now IE is really the number one browser for Windows and Apple machines (although Safari is coming along nicely on the Apple side) Now Netscape is just kinda like a lost cause a portal without any of the subscribers companies lie Yahoo have.

Google on the other hand doens't make a browser. They are a search engine with a minimalistic interface and a tons of great abilities and scalability to their service. MS doesn't really compete YET - i'm sure they do have plans too since they want to rule the world. Still Google makes it's money from 1) companies buying ad space and 2) companies buying it's technology to use for inhouse - Netscape sold a browser, which eventually wasn't worth $20

Will Google's search software continue to be worth whatever their price is? MS, IBM, Oracle, all make DB's and compete, but they aren't going to put eachother out of business because IBM and Oracle continue to make a better product - if Oracle decided not to update after 10g after 4 years they would be gone - a victim to whatever MS and IBM had come out with.

(yes Netscape did update, but they didn't have the stability, features, or function with websites that IE now has...

Money is a weakness (in this context)

[Pflipp]

Funny how Microsoft has the potential of crushing and/ or "embrace, extend and take over" anything that's worth big bucks, but that it has no power over el-cheapo stuff, which is probably also the reason why M$ has to use the "anti-capitalistic behaviour" dogma too often.

"Free as in GNU" is just an extreme example, however, as shareware is just as uncruncheable to Big Mic. The secret is the money required to run the battle. M$ has an awful lot of money to burn, but that's nothing compared to being able to run the battle without any money at all, if needed.

I can't imagine Google not requiring an awful lot of money to run. Think about it: while webhosts still bills at the Mbit and Mbyte, Google seems to have no problem to store a complete, indexed local copy of just about the entire 'net. I mean, for crying out loud, why shouldn't we all just host our website in Google's cache? (Hey, that's not a bad idea at all :-)

Anyway, now maybe if we're able to P2Pize/ SETIze google, so that every search is traded for some caching and calculation power (or something like that), maybe we can reduce the total cost of running the best indexer in the world to a number too low for Microsoft to catch and crunch. Just imagine the costs of maintenance to be reduced to paying a webhost and do some volunteer programming :-)

The new authority in data quantities -

[infernalC]

This is so cool. Try any of the following:

1 nibble in bits
1 byte in nibbles
1 kilobyte in bytes
1 megabyte in kilobytes
1 gigabyte in megabytes
1 terabyte in gigabytes
1 petabyte in terabytes

But, for any of you loking for the 'right' answer to that age old question, you're SOL.

P.S. - tan(pi/2) is finite :-).

Re:Room for improvement in Google

[Anonymous Coward]

I would love to be able to zoom a search in relative to the topics at hand... if I type in java I want the search engine to ask me... Do you mean the programming language, coffee, or the island?

Blogs + Google

[strook]

I asked a coworker of mine who works for Google part time about blogs. He says they regularly get complaints about blogs, and it's not hard for them to adjust things to respond to complaints, but the thing is the complaints about blogs are evenly split. Half of the people think Google rates blogs too highly, half thinks they rate blogs too low. They're thinking about a -noblogs command or something like that. trip

Re:As long as

[fucksl4shd0t]

This simply isn't true. There are other search engines and people do use them. You think Google is the king because you use it and love it. Me too but I know lots of people who don't use Google or who have never heard of it. My Dad uses the MSN search and thinks it's the greatest thing in the world. I've shown him Google but he's the type that wants to do everything his own way (that's why he has WebTV instead of a computer).

MSN and Google are the only players right now worth mentioning. ALltheweb, which is the FAST engine, powers a lot of front-ends (such as Ask Jeeves), but has a very low percentage of the market. MSN is powered by Inktomi, sorta. They pull results from Overture as well as Looksmart, and then do their own magic on it. Inktomi-powered engines fall down in market share after that. Yahoo is powered by Google, of course, and Overture, but all is not well in the bed of Yahoo and Google. Anyway, at this time, the score is something like this:

Google: 80%

MSN: 19%

Everybody else: 1%

Personally, I want MSN to take on Google in a more serious fashion. Microsoft already demonstrated to us what happens in the tech market when one player dominates, and now Google is showing us the same. Yes, I know, Google has all these "innovations" these days. They had image search after Altavista had it. They had news search after, um, altavista? Someone tell me, I know Google didn't do it first. I just forgot who did. What else? The real question is, "What has Google done lately to justify their continuing presence as the market leader?" I say, "nothing." If we really want search to get better, Google needs to get beaten back down to 40% of the market, with no player over 45%.