Will Google Continue to Be Successful?

google1Since it’s birth in 1998, Google has continued to increase in size and revenues, but has recently faced difficulties maintaining such numbers. Today Google announced it’s first quarter 2009 results, with a 3% decrease in revenues from the fourth quarter of 2008.

“Google had a good quarter given the depth of the recession–while revenues were down quarter over quarter, they grew 6% year over year, thanks to continued strong query growth. These results underline both the resilience of our business model and the ongoing potential of the web as users and advertisers shift online. Going forward, our priority remains investing for the long term to drive future growth in our core and emerging businesses.” said Eric Schmidt, CEO of Google.

Lately, there have been questions about whether Google can continue to be successful. We are currently in a time of great change in the social web. Google will face some of the biggest challenges it has ever seen over the next couple years. Let’s look at some of Google’s  resources and some of the challenges they’ll have to overcome.

Google Resources

  • Innovative Culture. Everything from the organizational structure to the hiring process to the office environment at Google is built for innovation and creativity.  Google maintains a “small business” feel to increase personal interaction amongst employees and promote team building.  Google is also known as one of the best companies to work for as they provide a great deal of “perks” to make sure its employees are happy and comfortable.
    • Counter: Google’s “laid back” organizational structure will cause them to decrease in efficiency, and it’s small business structure causes a decrease in productivity as it stimulates competition amongst employee teams.
  • Cash. Googles sitting on a huge pile of cash ($17.8 billion as of March 31, 2009) that it can, and has used to purchase new innovative start-ups that show a lot of potential.  This will ensure that even if they don’t create the “next big thing”, they can buy it from the people that do.
    • Counter: Google may have a lot of cash, but Microsoft has more.
  • Brand Name. Everyone knows the name Google.  I’m pretty sure it’s actually in the dictionary now.  You no longer search for something online…you Google it. Google has a great deal of brand loyalty and sits up high at at the top of the search market.
    • Counter: Being so large and well known is a liability for Google.  Any wrong step will need a great deal of crisis management.  As Google continues to grow, it will find it harder and harder to keep to it’s philosophy of “do no evil”.
  • Range of Applications. Google provides an array of free applications.  You can create a google account and gain access to google docs, calendar, talk, maps, earth and lots more.  While its main competitors, Microsoft and Yahoo!, offer a lot of their own applications, none are quite as extensive as that of Google’s.
    • Counter: Google is losing focus on its main service, its search.  Aside from its search, youtube and a few other apps, most of their services don’t hold very much market share. While the power of Google’s brand name will retain search users for now, if it loses focus it may lose its momentum as well.

Other Challenges

  • Issues with Privacy. There are a number of issues with privacy when looking at Google.  Two major issues have been with the scanning of gmail messages and the street-view on Google Maps.  The question is, are people willing to sacrifice privacy for convenience?  In step with the growth of the web, the answer has been increasingly yes as people are sharing more and more of their personal lives online…but to what extent?
  • Increased Focus on Conversation. Twitter search is quickly becoming a leading tool for searching the web.  Where google ranks pages using the algorithm that they’ve worked so hard to develop, Twitter has been able to provide people with fast information that is user recommended and almost always relevant.  We’ve heard talks of Google wanting to buy Twitter, which may be their best bet.  Either way, Google has to find a way to incorporate such conversation into their search engine, or be left behind with nothing more than a useless Jaiku.

I’ve barely scraped the surface of the great amount of factors that affect Google.  There are so many things to consider when looking at a company of such magnitude, that is involved in so many markets.  I think that Google will continue to grow, but not at the rapid pace that they have enjoyed in the past.  Many of the issues they face today are issues that they have faced for years and have still been successful.  With their focus on innovation, Google should be able to stay ahead of the curve, or at least keep up in this rapidly changing social environment.

What do you think? Will we still be “Googling” for years to come?  Will Google continue to be successful?

Sources: http://investor.google.com/


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4 Responses to Will Google Continue to Be Successful?

  1. Kasey Skala says:

    Talking about Google from a pure business/financial perspective is completely different than talking about it as a product company.

    As a “product” company, it has its fair share of problems. There have been numerous stories from former employees and why they left. Most go back to the culture inside Google. It’s too big, ideas get lost, loses interest quickly, etc. From a product side, I think it still has some room for innovation. Keep in mind, we don’t “search” for something, we “google” it. Like Xerox, even if this fad goes away, Google is far away from becoming extinct.

    From a “financial” side of things, Google is one company others can not touch. The amount of cash they have will allow them to either a) buy companies or b) put resources into place to “one-up” the competition. Although revenue was down, it still beat industry expectations. Google still had plenty of money to make, it just needs to capitalize on those venues (like any company)

    There are few companies that I feel are untouchable and are a safe bet to not only weather the storm, but come out bigger/stronger. Google is one of those companies. There will always be competition, but Google did it better first and will do it better in the end. You can not match Google.

    • David Spinks says:

      Kasey, thanks for your thoughts. You make some very good points. While Google does in fact have a lot of issues, I also have a lot of confidence in their ability to come out bigger/stronger. It’s a good point that one of their major issues is figuring out a method to monetize some its other services as this is an issue that many web applications are currently facing. I have a feeling that Google will figure it out, hopefully it doesn’t take too long.

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