Monday, July 13, 2009

Google Chrome OS: Not a Conspiracy

In a New York Times Op-Ed piece yesterday, Robert Cringley posited that Google's Chrome Operating System announcement was a ploy to "keep Microsoft on its toes" and discourage it from a "deliberate sabotage on Microsoft’s part" that would render Google inaccessible on Windows computers.

Now, I'm a huge fan of conspiracy theories -- I even suggested that MSFT lobbying against Google was an effective way for Bing to catch up -- but this one seems a bit far-fetched.

I think Google's motives here are a little less sadistic -- yes, I still believe the company intends to "do no evil" -- and even honorable in the pursuit of maximizing profits for shareholders.

Cringley notes, "Google makes most of its money from selling Internet ads next to search results. Nearly everything else it does loses money, too. Neither company really cares because both make so much from their core products that it simply doesn’t matter. But companies, like people, strive and dream and in this case both dream, at least sometimes, of destroying the other."

That's like saying McDonald's makes all its money from selling hamburgers -- I'm on a big McD analogy kick lately -- so, when it decided to sell premium coffee, it was an effort to destroy Starbucks. Hardly. McD merely wants to sell more hamburgers and offering a more diverse product line will keep people coming back for its core product.

Sure McD may not lose money on every coffee sold the way Google technically loses money supporting products like YouTube, Chrome, and Gmail but you can't look at those products individually. Google does not break down its reported search advertising revenue by product. It's possible -- not likely, but possible -- Gmail is profitable if you take the hosting and support costs and add in the direct revenue from those little ads that appear next to people's emails.

It's much less likely that the same can be said for YouTube but what about all the searches people do via proper to find web video content? Surely, a good percentage of clicks on the resulting SERPs are on paid ads. If Google shut down YouTube, worldwide search queries would surely fall as there's be less video content out there for people to find.

Bottom line, in Google's case, "everything else it does" drives search queries, which, in turn, directly generates revenue thru its core product. So when it comes to deciding what new products to launch, the main lens Google brass looks through is whether or not it will lead to more searches, not what competitor it will damage. As I said last week, it's all about the queries, baby!

Update 9/8: Google just struck a deal with Sony for Chrome to be the default browser on all Vaios in the US. More queries more problems! More analysis on the Connectual blog.


Anonymous said...

Not exactly. Google, a one trick pony, would also like another trick.

By building phones and netbooks, Google hopes to take out MSFT and become the owner of 85% marketshare of all the worlds data.

Ads will be helped by this. But even better, they would gain a beautiful business moat because you would not be able to migrate away from them.

Then they will charge you as required to increase the bottom line. They will read all your mail, track your surfing and searching habits. Perhaps they will sell this data, access to this data, or derivatives from this data. Your data.

They need to build a new operating system because they are currently using open source software as a service which allows them to build on top of it without revealing source code, a loop hole in the open source licensing scheme. Operating systems would not fall into this loop hole so they need a new one with a new license.

Furthermore they want control. They will claim "open source" for now to get Google-loving dorks into the idea, but in the end they will control it.

The beauty of a seduction is that even if the one being seduced notices, they just dont care.

By the way most of McDonalds money comes from real-estate not hamburgers.

Aaron Goldman said...

Interesting theory. There's certainly something to be said for all the data collected by Google thru its various consumer touchpoints. Surely, though, the gov't will step in and regulate if they accumulate "85% marketshare of all the worlds data."

Intrigued by your assertion that McD makes its money off real estate. Can you elaborate?

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