Google (GOOG) has always been an innovative company, but unfortunately the areas Google has been venturing into doesn't create much revenue. Out of its services -- Gmail, Google Docs, Google Groups, Google Scholar, Google Finance and Google Maps -- Google has really only made money off of Gmail's ad revenue. Google believes that it can monetize these services other than using ad revenue. I disagree. Google might start implementing ad space in Google's other services to generate profit, but that is its maximum potential.
Google Docs, its a nifty tool similar to Microsoft (MSFT) Office. It allows users to create slideshows, documents, and Excel-type sheets. This is something that Microsoft already has a strong moat in. Businesses, both small and big, use Microsoft Excel to do accounting and financial statements. I do not see these companies switching over to a format like Google. Businesses and students use Microsoft Word as their primary writing tool. The issue with Google Docs is that unless you are trying to open a document through Gmail, Docs won't help much. Google spends money on services such as Google Maps, but collects no revenue from them.
I know Google is doing the world a great service by providing these products for free, but keep in mind the company is still a business. I am an avid user of Google's services, but a company like this may not be the best investment. Google needs to find a way to be both innovative and provide great products and services. Google's business model revolves primarily around ad revenue. The recent market conditions have caused a decrease in spending in marketing by many large corporations. Even Google's Android O/S only generated $1 billion in sales. $1 billion may sound like a lot of money, but only accounts for 3% of the company's total revenue.
I think Google is scrambling to find money-making opportunities. Its recent purchase of Motorola Mobility (MMI) for $12 billion is its biggest acquisition to date. I believe Google is trying to compete with Apple (AAPL). Google released the Android tablet to compete with Apple's iPad, but the offering was very gloomy and well under the projected estimates. With Google's inability to monetize assets plus the fact that it is chasing after Apple means it may be time to stay away from one of the largest tech companies in the world.