Joe2

Google Keeps Scoring

SilentGoogle Guy - I agree with your comments! As Larry Ellison said "Google is a one trick pony but it's one helluva trick". That just about sums it up.

However every one trick pony needs a second trick. For Google, Sramana's recommendation appears to be for the company to focus on personalization + vertical search + ad networks. I agree that the vertical angle is interesting because I agree that a travel site (eg Expedia or equivalent), or say Monster are better that just Google for planning travel, finding jobs etc.

However, there are a few distinctions that are important to whether a particular vertical search system succeeds or not. Remember, these vertical search engines are competing with the convenience of just typing in something into Google. I don't think all vertical engines will or should succeed (eg a women's accessories search engine as an example - it fails many of the tests below).

1. Breadth vs depth. What makes each engine good is likely the focus on one niche area. But determining the niche is non trivial. For example, right now I am looking for a high speed Laser Printer. Should there be a vertical search engine for High Speed Laser Printers, High Speed Printers, Printers, computer peripherals, or plate / film / digital printing presses? But how does an average person even know of the multitude of such search engines and what their niche areas are? How would one EVER remember this?

2. "Search to Find" vs. "Search to Act". Effective vertical sites focus on offering more value than just Finding the item desired. There should be some immediate follow on activity that's not as convenient to do as a separate step of going to the vendor's website, logging in etc etc. Travel is an example. You want the cheapest air, hotel, car rental reservations for the same time period. Then you want to buy all of these things but only if ALL are available (you can't get into a situation where all of a sudden hotels aren''t available / too expensive / too far from destination, but you just booked a non refundable air fare). Even Expedia doesn't do this and it should! Next, you want ongoing tracking of your reservations etc etc. If you cancel your reservation, you want to cancel all - air, car, hotel vs doing each one, one by one. This is an example of "Search to Act" vs "Search to Find. The deeper the follow on business process, the greater the perceived value to the customer.

3. Deterministic vs Subjective assessment of value of purchased items. The more defined the product is (eg Flight from A to B on a known airline or buying a specific book vs buying a home without looking at it), the easier it is to do comparison shopping and buy online.

Just my $0.02. Would love to hear yours. Hope all is well.
Nimish

At Google, Shareholders Have No Clout

I am amazed at the comments of readers supporting GOOG's push into areas like Clean Energy, Space, and even spectrum. I personally think it absurd that the company pushes its own agenda, with the attitude of "don't buy my stock if you don't like it". GOOG is a public company and the stock is trading at ~$700 because there is future expectation of growth reflected in the price. It is this incredible valuation that enables GOOG to invest in all these initiatives (eg borrow money for their spectrum bid). So basically the company is using shareholder cash and optimism (as reflected in the stock) to invest in all these pet projects. This is fundamentally wrong.

Now, I am the first to admit that obviously there may well be a grand plan, which I don't get. I also admit that some of the investments (eg OHA and 700 MHz spectrum bid) are closer to the core business and you could possibly draw conclusions like OHA can generate ad revenues on mobile devices etc etc. But I can't, for the life of me, figure out how, for example, Clean Energy improves GOOG's core business in the next 2-3 years. If there is a grand plan here, and somehow these initiatives create better EBITDA margins and revenues, then I owe the company an apology. But until then, I am looking for a point when a) these initiative start to distract the management team from their day job, b) expectations of returns from these other investments start to get factored into the stock. That's the time to exit, and possibly short GOOG.