TechScape Bill Gates was recently quoted as saying that Google's honeymoon is coming to an end.
I almost never agree with Bill Gates. And though he would dearly love to see Google vanish entirely, I think he may have a point here.
A few days ago, Google's stock plummeted like a shot bird, wiping more than $900m off of each of Brin & Page’s net worth in the blink of an eye. Don't worry though, both are still worth $11bn each.
This is an ominous sign for Google and the entire tech sector.
The point has been occasionally made, though not strongly enough in my opinion, that Google has accomplished very little in terms of going into new business such as video sales, email, instant messaging, etc. These two young entrepreneurs display all the earmarks of the type of "nouveau riche" attitude toward money and glass-palace building profligacy that led to the Dot-Gone, Telecom and Tech Wrecks.
But back to Gates. While I defend his right to say it, I also demand the right to examine his motivation. His obvious motivation here is competitive. However, he is also vulnerable on the innovation, having new ideas and executing them front. Microsoft, some people say, has never invented a single thing. It's only bought, co-opted or "borrowed" key assets such as its flagship OS, word-processing and spreadsheet applications, programming languages, browsers, media players, instant messaging, internet TV, cable news, online publishing, and the list goes amazingly on. The remarkable Microsoft ability to elbow or spend their way into virtually any business is perhaps the real threat.
When Gates says the Google craze is fleeting, however, he is undoubtedly on target.
Sadly perhaps, Google doesn't have what it takes to establish an enduring tech beachhead. If it did, we would've witnessed strong and immediate revenue growth from G-Mail, its video business and its peripheral Google brands. We haven't.
What's more, we've seen incredible Google-brand proliferation through a kind of weird passing excitement and fascination with all things Google. Childish spending seems to be a hallmark of how Sergey Brin and Larry Page want to compete and think they will establish themselves and their brand phenomenon for the long-term.
The economic insanity of the stock market isn't helping Google either. Because all the pent-up investor money has to go somewhere, they're all praying for Google. But prayer doesn't work when it come to stocks. Google stock has fluctuated wildly - from $172 to $475. This is not the hallmark of an everlasting brand.
Google's two top institutional stockholders are Fidelity and Capital Research, which between them own more than $15bn of Google stock. What would happen if these two currently fat and happy investors should panic-sell? It's happened before: recently, too.
Google's revenues and profits are excellent. At the same time, the vast majority of its sales come from the possibly temporary windfall from Google AdWords. Here's but one quote from the veritable army of business people who are suspicious of Google's service: "Google's Adwords looks like a great tool...but the best keywords are too expensive, my ads keep getting disabled, and this is a whole lot harder than it should be."
There is no existing entry barrier for a competitor - Microsoft, most imminently, or any established media concern - to seize this advertising revenue business almost overnight.
Brin and Page are both convicted computer geeks. Though they tried hiring an experienced CEO in Eric Schmidt, they didn't really succeed, as Schmidt is a well-known fellow geek - in spite of his running Novell for sometime with a spectacular lack of success.
Computer geeks simply cannot run organisations of any size. It's the reality. They're great at inventing the technology products which create and propel companies, but they are very bad medicine for any kind of longevity enterprise.
Did we not learn this from the smoldering craters of Silicon Valley and elsewhere?
So, I like Bill Gates' prognostication in this case.
These Googlers are riding the crest of a wave which is sinking fast. There is no way Brin and Page, Schmidt or other top executives, have the marketing resourcefulness to compete in long run. This is especially important if Google wants to survive being crushed under the big Microsoft threat-boot. No company has survived this scenario yet, and I don't like Google's chances of being the first. ®
Bill Robinson may be reached at: firstname.lastname@example.org