eWEEK at 30: Google's Wealth Brings Diversification, Public Scrutiny

 
 
By Todd R. Weiss  |  Posted 2014-02-22 Email Print this article Print
 
 
 
 
 
 
 

eWEEK 30: Search and advertising bring Google enormous wealth along with the freedom to pursue diverse ventures. But it's facing greater government scrutiny and some public resentment of its wealth.

When it began operating in 1998 from a garage in Menlo Park, Calif., Google was a pure-play Internet search company with a starkly simple home page and a revolutionary plan to improve Web search using its own special algorithms.

Fifteen years later, search is still the crown jewel of Google's business, but the company used search as the springboard to become a highly diversified global company that dominates the Web with search-driven online advertising, cloud applications as well as myriad other tangential ventures that it can afford to pursue due to its wealth and influence.

So what made Google so successful just 15 years after its founding when other, more established companies had similar chances to achieve market leadership? For its 30th anniversary feature series, eWEEK asked four IT industry analysts for their insights into Google's past, present and future.

Though it began as a search provider like many other companies, even serving as Yahoo's search engine for a time, Google did something early that its competitors didn't think to do—it soon tied search into a well-oiled advertising revenue machine—and it's never looked back, said Rob Enderle, principal analyst for Enderle Group.

"What has made Google so different from other companies over the last 15 years is that Google has a near-monopoly on advertising revenue compared to competitors," he said. "It's an area that none of the other technology companies began to understand" until it was too late. "Microsoft looked at it initially and said there was no money in that. That came back to haunt them."

For Google, that early idea to translate search into ad revenue "gave them the equivalent of the goose that laid the golden egg," said Enderle. "Now that gives them kind of a blank check to expand on virtually anything they want to do. They do so much that is unprofitable. With other companies, that would stop. But they have so much money that they can do it."

And that's been one of the key reasons that Google can do so much of the experimentation and innovation that it does today, from exploring self-driving cars to developing Google Glass, to acquiring some seven robotics companies in recent months to delve into various marketplaces, said Enderle.

"The big thing is, because their revenue is not coupled to their products, they can do things that have hurt others like Chrysler and Sony," said Enderle. "For Google, it doesn't really matter if these other things are profitable or not. That's really what makes them different from everyone else."

Essentially, Google operates with a youthful dot-com mentality by investing in a host of projects without major concern about hurting its profitability. That's how Google can surprise the world with initiatives such as Google Fiber, Android, Chrome Web browsers, Gmail, Google Docs, Google Maps, Chromebooks and much more, according to Enderle. "They're making so much money that they have to work hard to spend it all."

 



 
 
 
 
 
 
 
 
 
 
 
 
 

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