9 August 2007

Google keeps growing

By Jim Pinto

At the San Diego Venture Group meeting in San Diego, I met Dr. Vinton G. Cerf, known as the “Father of the Internet” for his co-invention of TCP/IP protocol and his work on Internet architecture. For his contributions, he won the U.S. National Medal of Technology in 1977; in 2005, he received the highest U.S. civilian honor—the Presidential Medal of Freedom.

Cerf joined Google in 2005, as their “Chief Internet Evangelist.” His discussion was entertaining, stimulating, and challenging, and he provided good insights into how Google operates and what the software leader may do next.

Google continues its growth, a new-century phenomenon. First quarter 2007 profit jumped 69%, blowing past predictions. Quarterly revenue reached a new high of $3.66 billion, 63% over last year. Google has now beat analysts’ estimates in all but one of 11 quarters since its IPO August 2004. The company has established itself as the most profitable and most powerful business on the Internet.

Most web sites now have some form of Google advertising, and Google “owns” this business. Every time anyone searches for anything, the search words trigger advertising in the right column of the search page. In addition, most web sites now have some kind of Google AdSense advertising—depending on the content, advertising appears at the designated positions on the web page. All the web content owner needs to do is to copy specific Google-provided html code into appropriate positions.

There is an interesting side-benefit to Google AdSense. Reports are generated real time, indicating the number of page impressions, clicks, and earnings. Slick.

What can Google do next? After the recent acquisition of YouTube, Google acquired display advertising company DoubleClick for $3.1 billion, just a small fraction of Google’s $150 billion market cap. Google’s next move will inevitably be to compete with Microsoft Office with web-based versions. The advantage: no need to upgrade to the latest version of the software—it is upgraded automatically via the web.

With a policy of hiring only the brightest and the best everywhere in the world, what can Google not do? Google Maps are already being used for a variety of things that were unthinkable just a couple of years ago. Just recently, a new real-world addition was introduced—street-side views. This is not just a static image; it also lets you move along the street in a smooth manner, and even more amazing it will let you change your angle and continue moving in that direction. And the detail is often amazing.

The company plays to its own strengths, freely giving away what it does best.

What next? Google will allow sharing of genetic information via the web, leading to new medicines and cures.

Related links:

• Grading The Next Wave Of Search:
  http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=59160
• Next Up: Google Office?
  http://cws.internet.com/article/3040-.htm
• MIT Tech Review - What’s Next for Google
  http://www.technologyreview.com/Infotech/14065/
• Google Streetside Views:
  http://www.jimpinto.com/enews/june8-2007.html#4

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.