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Google's Checkmate Was Three Moves Ago

by: Diane Mermigas September 07, 2008 | about stocks: GOOG    

Diane Mermigas

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Don't bother looking for Google (GOOG) under your bedsheets tonight. It's not there, yet. But it's positioned to be just about everywhere else.

The marketplace dichotomy of an omnipresent Google cannot be underestimated. The decade-old company is on a parallel track to equally incentivize as well as intimidate global competition. The far-reaching implications are easily lost in the constant barrage of big, media-hyped announcements, like its beta Chrome browser. It is Google's latest maneuver in a well-honed strategy and ecosystem for seizing control of the digital world.

Google is computing in the clouds one day and redefining the Web experience by launching its own browser the next. It is reinventing advertising with an algorithmic model that matches target consumers armed with e-commerce tools with relevant goods and services, which Chrome can help deliver across all media platforms. It is wading deeper into the collaborative virtualization game forged by Facebook in the mainstream and Cisco System (CSCO) in the corporate stream–in which Chrome will also play a critical role.

Clearly, Google is leveraging its unique market strength. It has got the collective goods on everyone and everything (including search, Gmail, RSS feed, blogs, and documents), and will innovate ways of using data unlike anyone else. It is also working within corporations, organizations and–yes, even the Democratic and Republican conventions of late–to integrate virtual and physical worlds. No need to obsess over whether Google's trafficking of content with the likes of YouTube, Knol, and Google News makes it a media company. Google is way bigger than that.

In that broader context, Chrome is all about getting Google's free, open-source applications and software on every interactive and offline platform as an alternative to Windows and other operating systems. It will be supported by interactive marketing, e-commerce and a new wave of analytics.

Google's Android is likewise about to challenge the status quo in mobile phones, which CEO Eric Schmidt considers the ultimate targeted platform–personal and constant. All of Google's pending initiatives–from the white-space spectrum to storing the world's most critical information on thousands of cloud servers–supports the mind-boggling notion of an all-encompassing Googlized interactive world.

All of this is evident in Chrome, billed by industry observers as a bold challenge to Microsoft's (MSFT) newest IEB Internet Explorer (which has nearly 75% market share) and a notable attempt to maneuver the Web faster and more efficiently. In the browser war among monopolies, Microsoft is tied to computing devices; Google's got its head in the clouds.

The implications of how Google executes are huge. For instance, the Omnibox, in which users type in their search words and addresses, ultimately results in prescribed destinations that reflect not only Google's most popular sites but the user's own browsing history–much in the way it currently executes searches. The sphere of exposure is that limited. Not yet a Windows-killer, as some suggest, but a massive data cruncher that feeds on itself, from AdSense and Ad Word to Android and some transforming Google TV application. Despite the absence of short-term revenue and earnings gains, Bernstein Research analyst Jeffry Lindsay views Chrome as a "sound strategic push into a key set of upstream technologies."

At the moment, Google appears to have an unmatched handle on globalization, technological transformation, and facilitating the movement of data, transactions and entities across the digital interactive plane. It is a dominant filter, and it can play in nearly every space.

Lehman Brothers analyst Douglas Anmuth points out that Google's strategy "is now more than Web-centric and not just focused on search." It is the logical next step in the Internet's maturation process. Bundled into its imminent Android mobile platform, Chrome could help Google gain traction more quickly in Asia's new frontier and give it an applications development edge by working around Microsoft's Internet Explorer, Apple's (AAPL) Safari and Mozilla Firefox. Chrome has the potential to be a major game-changer.

Google is able to simultaneously do all this because of its nimble structure, processes and leadership. It is what every company wants to become in its ability to create and execute offensive strategies while maintaining the cutting edge for digital interactive consumers and businesses.

Its cunning "do no evil" mantra aside, Google is a multinational conglomerate in the clutches of a global economic downturn and the adverse impact of a depreciating U.S. dollar overseas. It can grow organically and exponentially with its interactive orientation and no legacy speed bumps. Google's biggest threat is the unforeseen disruptive technologies seized by existing rivals or new competitors. Rapid growth eventually slows as a result of the law of large numbers, offset by developing new businesses–like mobile, display advertising and Chrome (two years and more than 43 languages in the making). Analysts Wednesday warned about reticence of consumer, advertiser and publisher acceptance, especially in a challenged economy.

So, should we fear Google because it can literally rule the world? Should we be inspired by, capitalize on and emulate Google as a template and provider of tools for new business? It might be too late for those questions. Google's checkmate was three moves ago.

Disclosure: none

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This article has 9 comments:

  •  
    Sep 07 06:09 AM
    Diane has written a good article explaining why Google's checkmate was three moves ago. The price charts shows the 50d and 200d moving average behaving poorly ie Google is trading below both downward sloping averages. Fundamentally, Diane has correctly pointed out multiple threats [see second last para of her article] facing Google despite its apparent invincibility.
    Reply
  •  
    Sep 07 09:50 AM
    google has taken over! while everyone was watching microsoft, google has created better and free applications for everyone but at what price? google is bigbrother. did you see they launched a rocket yesterday for their own satellite?
    I love google but that much power......scary.
    Ceo SEO
    www.trustseo.com
    Reply
  •  
    Sep 07 10:37 AM
    > did you see they launched a rocket yesterday for their own satellite?
    I love google but that much power......scary.

    You are frightened by rocket-borne satellite launches by the private sector?
    Reply
  •  
    Sep 07 11:28 AM
    FYI- Google doesn't actually own this satellite, GeoEye (GEOY) does. Google only contracted with Geoeye to use the satellite for Google Earth and Maps before its launch.

    The US government regulates the use and sale of the images. As of now, the highest resolution images can be used only by the US military.

    So, re "Big Brother," it's the US government we need to watch out for, not Google. All of you who were around in the '60's know what can happen. God help us if we get a new moose-killing "Decider" and a pseudo-maverick "stay the course" guy in office. If they get elected, better stay out of your hot tubs!
    Reply
  •  
    Sep 07 01:08 PM
    Diane is right, Google's checkmate was three moves ago... Google is definitely looking towards the future by investing in cloud computing and software-as-a-service (Sas) for the long haul. They offer resources such as the following whitepapers, Comprehensive Review of Security and Vulnerability Protections for Google Apps and Curbing Costs with Google Apps. Google also offers an online videos, Google Apps: Quick Tour, to introduce key concepts and ease the transition from traditional desktop apps to apps "in the cloud".
    Reply
  •  
    Sep 07 09:50 PM
    Diane Mermigas buys into all of Google's hype.

    I say look at what Google has done with the many in house and acquisitions and see if they have the people on board who can actually execute a business plan.

    Name a Google product or service, other than search, that is generating revenue substantial enough to actually have a material affect to Google's top line!

    In Google's own 10Q report from last quarter, Google Apps and all other products and services are way less than 1% of Google's total revenues.

    This is after Google swallowed up Postini that had 2007 rev of close to $100M. Postini is now Google Message Security (terrible name) and now only brings in $50M of revenue.

    What is up with that?

    I rest my case!


    Reply
  •  
    Sep 08 12:11 AM
    One trick pony still has only one trick that makes any cash

    Youtube is a nice property for bragging rights but unmonetizable, is this a company on ego trip(YHOO anyone?)

    Chrome might look neat but most people couldn't care less what browser they use. Google hype makes it revolutions, facts make it boring.

    All the spagetti in the world and still nothing sticks
    Reply
  •  
    Sep 08 04:32 AM
    The alternatives IMO are M$ and desktop or Goog and Chrome. M$ had their chance, now it is Googs turn. The demise of the desktop has just started. I think it is easy to see what is down the road a bit that will start to make Windows redundant. Power corrupts - true, we have seen it. Let's see if Goog can stick to their mantra. There will always be other big players with vested interests to protect offering alternatives. It is a pleasant change to download something of substance that doesn't take gigabytes. M$ at present appears like a rudderless ship - the M$-Yhoo deal was an absolute fiasco.
    Reply
  •  
    Sep 11 01:20 AM
    This article is a great summary of Google's approach to world domination.

    For better or for worse, I agree, they are simply leading the rest of the world through a series of moves which will ultimately lead to checkmate.

    Microsoft used the revenues from their operating systems to create applications which were lackluster at launch and then improved over time.

    Google seems to be doing the same with their revenues from advertising, while at the same time following agile development processes to release new versions early and often.

    Whether Microsoft reinvents itself to compete with Google or not, the next few years will be very interesting.

    Michael Adams
    chromevoice.com
    Reply
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