Author Topic: GOOGL - Google  (Read 343942 times)

rkbabang

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Re: GOOGL - Google
« Reply #10 on: May 17, 2011, 06:47:14 AM »
Personally, I would love to own a car that drives itself.  I would probably pay a 20-50% premium for a car with that feature.

Me too, but I think this has the potential to be a bigger idea than just selling driverless cars for personal use. I think of all the things Google is doing this has the potential to be the most game changing.  If, of course, they can pull it off.  The A.I. would have to be rock solid and just simply work.  Imagine if you could just send your 10yr old off to grandma's 60 miles away alone in the car?  This may even create other options which make the need for most private car ownership uneconomical in comparison for most people.  Imagine a subscription service for everyday vehicles and maybe even fractional ownership service "netcars" for luxury vehicles.  You would always use exactly the vehicle for the task.  If you are going out to dinner with the wife, push a few buttons on your smartphone and a car comes around the corner in a few minutes to pick you up and take you to the restaurant.  After the restaurant you call again and another car comes zipping by to take you home.  Going to the movies with your 3 kids and 6 of their friends you push a few buttons and a 10 passenger vehicle comes and gets you.  Go to the grocery store in a tiny vehicle, come home in one with a large cargo compartment.  Without the need of drivers order pizza you get a pin number a vehicle shows up in your driveway that is just a big box on wheels with a number of heated compartments.  You punch in your pin and one of the compartments pops open, you take out your order, close the compartment, and the vehicle zips off to either the next stop or back to the pizza place.  You need 15 sheets of plywood, you order it online and within 20 minutes a vehicle pulls up in your driveway or jobsite with the wood for you to unload, almost like ordering pizza. Would grocery delivery be cheaper and offered almost everywhere if there was no need to pay drivers? Almost instant delivery of all kinds of things would be more economical.

Think of the mobility issues the very young, very old, and the disabled have in our current society and how this would change their lives.  If this works and works well, you could see fewer cars on the road and a much more efficient transportation system where everyone gets to where they want to go cheaper and easier than now and everyone gets the things they need delivered to them whenever they want them.

This could change almost everything about how we live our daily lives.

--Eric


VAL9000

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Re: GOOGL - Google
« Reply #11 on: May 17, 2011, 07:05:13 AM »
Not really sure what you mean by 'on the other hand' they have those things. Adsense/Adwords is their core business. A lot of the things you listed there are small things like browser add ons. Yes, they have made some mistakes (Google Wave & Buzz), and I question how freely they spend $ sometimes, but a good majority of things on that list are great products, many of wich they either monetize through Ads or helps direct people to their core business, or at the very least has helped build the Goole brand. Things like Android, GMail, Google Maps, Google Analytics, Google Alerts, Google Talk, Google Voice, Picasa and others are all outstanding products.
I meant that it makes it hard to value Google.  The ad business is clear enough.  But all this other stuff is a net cost and determining what the value is can be tricky.  It's harder even to value Google Voice vs. Skype - there's no visibility and the products are partially integrated.  There's no cohesive product strategy (yet), and so the vision of the company's many, many offerings are cloudy.  I didn't say it was net bad.  I think I was pretty clear about what I think we're seeing (process of innovation).

What I don't like seeing Google continuing to try to get into is commerce. Google Shopping is very good, but when they've tried to handle selling products themselves, they've struggled. Them trying to sell the Nexus One themselves was a mess, as they completely overlooked the fact that people will need tech support and customer service that they were not prepared for. While Android is very good, the Android Marketplace continues to be a bit of a mess. I don't have much confidence in their ability to sell things like books and music. Even their Chrome App & Extensions store is pretty damn confusing.
I see commerce as unavoidable for Google.  They aren't very good at it now, but they will figure it out.  It's necessary to capture the full spectrum of mobile platform capabilities (e.g. app store purchases, media purchases).

Here's a thought, does Google's inability to play well with others hold it back from further commercial success?  Nexus and bidding up spectrum are two fine examples in telecom.  A lack of music and movie deals are two more.  The book search deal still another.

They managed to partner with Sony on TV and Sprint on Google Voice, so there are some valid examples of success in that area..  But I'd like some opinions on that idea.

VAL9000

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Re: GOOGL - Google
« Reply #12 on: May 17, 2011, 07:09:20 AM »
rkbabang,

Interesting thoughts.  I came up with another.  I was driving (yes driving!) to work today and got a little irritated with the number of huge 18-wheelers on the highway.  Then I thought, hey, if Google could automate driving, they could own the whole trucking / logistics business.  Result: cheaper, more efficient transit.  There's the power of tech invading yet another industry.

Liberty

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Re: GOOGL - Google
« Reply #13 on: May 17, 2011, 07:41:06 AM »
Google seems to live by "release early, release often", and if something doesn't work, it doesn't matter too much..

Apple does its beta testing in private and only releases when things are polished enough.

These two approaches can be valid. Hardware is more permanent, so it needs to be better from the start. But with software, Google's approach works.

And a lot of what they do is just to widen the moat a bit or help the brand's mindshare.
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rkbabang

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Re: GOOGL - Google
« Reply #14 on: May 17, 2011, 08:15:20 AM »
rkbabang,
Interesting thoughts.  I came up with another.  I was driving (yes driving!) to work today and got a little irritated with the number of huge 18-wheelers on the highway.  Then I thought, hey, if Google could automate driving, they could own the whole trucking / logistics business.  Result: cheaper, more efficient transit.  There's the power of tech invading yet another industry.

Absolutely.  Although I don't envision Google making the vehicles themselves, more them selling/licensing the software and maybe small control modules at most to vehicle manufacturers of all types.  I can't see Google manufacturing an 18 wheeler nor a passenger car. But if they own the market for the automation, they will profit regardless of who makes the vehicles themselves.

--Eric

Liberty

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Re: GOOGL - Google
« Reply #15 on: May 20, 2011, 01:50:14 PM »
I thought this piece was pretty good:

http://abovethecrowd.com/2011/03/24/freight-train-that-is-android/

Quote
So here is the kicker. Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense. They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. Google’s aim is defensive not offensive. They are not trying to make a profit on Android or Chrome. They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it. And best I can tell, they are doing a damn good job of it.
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goldfinger

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Re: GOOGL - Google
« Reply #16 on: May 20, 2011, 03:45:59 PM »
I thought this piece was pretty good:

http://abovethecrowd.com/2011/03/24/freight-train-that-is-android/

Quote
So here is the kicker. Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense. They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. Google’s aim is defensive not offensive. They are not trying to make a profit on Android or Chrome. They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it. And best I can tell, they are doing a damn good job of it.
Exactly. It has a great business but it needs to spend energy in diversion wars exactly like Microsoft.

txlaw

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Re: GOOGL - Google
« Reply #17 on: May 21, 2011, 05:57:24 AM »
I thought this piece was pretty good:

http://abovethecrowd.com/2011/03/24/freight-train-that-is-android/

Quote
So here is the kicker. Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense. They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. Google’s aim is defensive not offensive. They are not trying to make a profit on Android or Chrome. They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it. And best I can tell, they are doing a damn good job of it.
Exactly. It has a great business but it needs to spend energy in diversion wars exactly like Microsoft.

I disagree with this assessment.  Android and Chrome/Chrome OS are both moat enhancing and revenue generating projects.

The more people use the Internet/web, the more money Google makes.  Remember, Google doesn't just provide Google services like search, YouTube, Gmail, and Maps.  Google also powers the display of ads on many third party websites.

If Google can accelerate every person's use of the Internet, they will accelerate the overall interaction with Google (through use of Google services and websites that use Google ads and analytics) and make more money.  Developing Android, Chrome and Chrome OS are ways to accelerate the use of the Internet.  That's why Eric Schmidt has said that Android pays for itself.  Much of the new ad revenue that has come online, so to speak, and that will come online has made Android a phenomenal investment.

Think about it this way.  Before iOS and Android, people didn't really use the Internet on anything but their computers.  Now, people can use the Internet on multiple devices and for a bigger slice of their time. 

I'm in the line at the DMV and bored to death, so I might use my Android phone to read some publication, which displays ads delivered by Google.  Or I might watch a video on YouTube.  Or I might do a search for some product I need to get for the weekend.

Very smart.

And it's not free, really.  Advertisers help monetize the software.  And consumers allow Google to collect data on their preferences, either on a personalized basis or in the aggregate.  There's value in information.

VAL9000

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Re: GOOGL - Google
« Reply #18 on: May 21, 2011, 08:15:40 AM »
I disagree with this assessment.  Android and Chrome/Chrome OS are both moat enhancing and revenue generating projects.
I agree with the disagree, but I disagree with both assessments.  I see Android/Chome/Chrome OS as mildly moat enhancing and eventually seriously revenue generating.

My thoughts on these products being mildly moat enhancing come from analogies in the search market to date.  Google was able to dominate search with zero interest in the OS and Browser markets.  Google's market share in search hasn't grown since the wide adoption of Android or the introduction of Chrome. 

Inverting the process, Microsoft's browser has steadily lost market share over time, whereas Chrome and Firefox have steadily gained over time.  Switching the default search engine is so much easier than switching the whole browser, and yet while people are abandoning IE, the effect on search choice has been muted.

I don't see how Google enhances its moat all that much by introducing client-side applications and operating systems, when it's been shown that you can win without them, and you can lose with them.

On the revenue enhancement side, if Google doesn't learn how to make Android seriously profitable for themselves, then it's because they've lost.  I come to this conclusion in a few different ways, but the main ones are 1) there's already a profitable and proven business model for Android, 2) monetizing Android only matters if you win, 3) you can't subsidize forever.

1 - iOS exists.  It is hugely popular and hugely profitable.  You can trace iOS's roots back to the iPod and iTunes, which is how I prefer to see the evolution of this business model.  iOS is the king daddy of media delivery, and Apple manages to both make a huge profit on the hardware, and make a huge and passive profit on the software (media).  If Google can't replicate this same system with Android, they will always be playing catch-up to Apple's media machine.  The scary part is the hold on consumers gets stronger every day: as in, why switch to Android? I would have to repurchase all of my apps, music and movies that I own in iTunes.  Scary view of media "ownership", and a very attractive moat for Apple.

2 - The law of the internet seems to be "capture the market, then monetize" (e.g. twitter, facebook, youtube, linkedin).  If Google fails at the second part, it's because they're still trying to capture the market with a superior product.  View this through the YouTube lens.  This purchase had been heavily subsidized for years, ensuring that Google would stomp out all competition.  Only now that practically no serious competitors remain are they figuring out how to end the cash bleed on this beast.  Android is nascent as a business, but there is at least one model and something will be implemented.

3 - Dovetailing nicely from 2, you really can't continue to subsidize forever.  I know that money flows like water In The Plex, so I'll ignore the basic economic arguments here.  Instead I'll focus on what happens with competition.  If Android is winning with a no-money-made business model, and Apple has a money making business model, well, Apple will win eventually.  Apple will be able to pay more to beat Google at development, at marketing, at incentivizing users, and all other things.  Google subsidizing Android against all that forever is just not possible.  In this case, the economic potentials are really, really, really big.  If you can capture 100% of the media delivery platform, then you become effectively the world's global content provider.  It's such a big business that I can't even begin to compute what it would be worth.  Regardless, the honey pot is enormous, and if you can't figure out a way to make it pay, then you will have it taken away by someone who can.

Liberty

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Re: GOOGL - Google
« Reply #19 on: May 21, 2011, 01:29:48 PM »
I don't see how Google enhances its moat all that much by introducing client-side applications and operating systems, when it's been shown that you can win without them, and you can lose with them.

I think it's a defensive move, and might widen the moat even if it doesn't actually increase their market share much. They don't want to lose control over the layer that separates them from their customers. They don't want Apple or Microsoft to somehow say "screw you google, on our hardware/OS, your products will now be hard to use and not the default choice" or "something's not working? you have to go through us to fix it and we'll take our sweet ass time". Unfortunately for them, they haven't found a way in Facebook's walled garden yet...

Right now a lot of people will still switch back to Google, but over time I think such tactics  could erode the moat and brand...
« Last Edit: May 21, 2011, 03:02:47 PM by Liberty »
"Most haystacks don't even have a needle." |  I'm on Twitter  | Watch this, please