Last week, Google announced better-than-expected earnings for Q3 2009. Predictably, its stock rose 3.76%.
Yet in our worship of the search giant, we overlook that 11 years after its founding, Google remains a one trick pony. As Jonathan Last recently observed,
“Its home-grown products, such as Orkut, Knols, Lively, and Google Checkout (knockoffs of Facebook, Wikipedia, Second Life, and PayPal, respectively), have been failures. Google’s biggest successes have come from acquisitions. For instance, Google bought YouTube after its own attempt at video on the web, Google Video, crashed and burned. And did the same with Blogger after its blog platform, Pyra Labs, failed. Even the ‘successful’ acquisitions Google has made—Google Earth, Google Maps, Google Docs, and Blogger were all purchases, too—have taken up resources without creating significant revenue.”
Indeed, Google’s latest—the much-heralded Google Wave—has been a flop, and the market share of its much-publicized Chrome browser is a rounding error. Despite restless ambitions and an ever-growing footprint, the company remains stunningly, unhealthily dependent on a single revenue source: advertising.
“Yet even here,” Last continues, its results are mixed.
“Those text ads are dynamite, but Google couldn’t master the banner ad business and eventually resorted to simply buying DoubleClick, the industry leader. Eager to extend their tentacles into other ad mediums, Google started selling print ads, TV ads, and radio ads. The print and audio divisions performed so badly that they’ve already been shut down. The TV division is still limping along lamely.”
By contrast, Microsoft owes its success not only to Windows, but also to Office.
“And here’s another reality check,” adds Chris Thompson. “Plenty of tech firms are still head and shoulders above Google, at least in terms of revenue.” Apple’s at #71 on the Fortune 500, Intel’s at #61, and Dell is swaggering around at #33.
We may live in a Google world, but that world fades when we unplug from the Internet.
