I have long felt that Google is in trouble. They don't create value for advertisers, they create value for consumers. But the consumers are Google's product, and the advertisers are their customers. I don't like that model in the long run. This Techcrunch article makes a really compelling case that Google could suffer Yahoo's fate in a semi-distant future.
I've shared my opinion that Google is a dead man walking with some colleagues in the past, and here is an edited point/counterpoint by Ben Roth and myself discussing the idea that Google could become the next Yahoo:
Ben:
I am by no means a huge Google proponent, I never really liked android, always thought Google + was dumb, never click on Google sponsored ads. Below are just some observations and thoughts about the big flaws I see with the overall premise that Google could be the next Yahoo.
The article talks about how focus is shifting from web to mobile & apps, but Google owns some of the best performing apps on iPhone and also owns one of the most popular operating systems running millions of those apps and running on the largest amount of devices; so if this claim holds true into the future, it seems like Google is positioned very strongly in the mobile market.
If private data is power than I don't see Google going anywhere anytime soon either. They have such a huge diversity in the overall market of collecting data (Google docs, maps, YouTube, android, Gmail) just to name a few things that a billion + people use daily.
I think where Google wins out in the long run is that have a very data driven approach to the way they run things and continue to make decisions. One of the only places Google has really struggled is social media which right now is a big player in advertising but like anything a pendulum will swing, people will get tired and wise up to overwhelming ads on social media too and at some point that market will be over saturated. In terms of big tech when you start to look at the biggest players I think the key to avoiding a yahoo type scenario is to diversify and continually evolve and at least as it stands today, Google is so much more diverse than Yahoo ever was.
If it's diversity into the future that will win out, you look at any major future topic and Google is one of the leading players in pretty much all of them. Google has its hands on VR, mobile phones, one of the strongest self driving vehicle inituatives, quantum computing, huge continued efforts in AI, health research, even space travel with things like the Google lunar x prize.
All these things greatly differentiate Google from Yahoo.
Kevin
:You make a lot of good points. The counter argument I have is that most of Google's non advertising initiatives are supported entirely by their cash cow of people clicking on links during a search.Amazon is eating away at that on the ecommerce side with over 55% of all product searches starting on Amazon according to this September 28 article.
Google still has close to a monopoly on searches for services for the foreseeable future. And they probably make up much more revenue given the larger sales that service providers make compared to ecommerce purchases. I've heard of some lawyers bidding in the thousands of dollars per click. So they've got that going for them, but Amazon is going after these searches too.
I agree that Google SHOULD be able to take advantage of it's data. Theoretically they would know as much or more about people as any other company like facebook and apple. The problem is that Google has not been able to offer an advertising product that is as engaging as facebook. I think it comes down to the mindset of users of google properties versus facebook. I'm in leisure mode/open to distraction mode if I choose to scroll on facebook. And yes I see lots of ads. But they don't really slow me down and often I find them interesting. If the ad doesn't capture my attention in 0.5 seconds I just scroll on by. But on youtube I impatiently wait for the "skip the video in x seconds" countdown to be over while I see a poorly targeted or well targeted but repetitive ad.
Facebook has nailed the concept of the ad unit to deliver value to advertisers and facebook users. I don't see any of my friends youtube comments. I don't even know where I'd go to see that. Compare that to facebook where if I comment or share a video it starts a conversation and spreads the video. Plus, I don't have to be a "video mood" to watch a video on facebook. They come to me magically by the feed. I only ever go to youtube to watch videos.
RE: Self driving cars. So far it looks like Uber and some other more nimble companies are beating them to the punch. This is obviously a long game so anything can happen here.
Mentioning the google apps on iphone is another good point, but I don't see them generating much in the way of revenue. What they did do, though, was allow me to switch from buying 3 Android phones in a row to an iphone and I didn't skip a beat. Now I have the best of both worlds where my phone works great and loads quickly (which was never the case with my Android phones 6 months after I got them), and I don't have to join the entire apple ecosystem. You could argue that it's bad news for Apple in the long run since I'm not committed to the ecosystem, but I doubt I generate much actual revenue for Google right now.
Ben:
I too am split between apple and google... I use mostly google apps over apple apps simply because they just have always worked better but on the hardware side nothing beats the performance and upgrade maintainability/consistency of apple.
I agree that Google's main bread and butter Google Ads is on increasingly unsteady grounds but overall I think that Google is so much more of a diverse company than Yahoo that I just don't see the same fate for them because of this... They can most likely find ways to monetize the many different places they have their hands in.