Monthly Archives: October 2011

Google and Facebook and Apple, Oh My

Since 1998 no company has came to dominate the World Wide Web to the degree as Google.  The act of seeking information online using Google’s search engine has become so synonymous with the web that the word “Google” was added as a verb to both the Oxford and Webster dictionaries.  Through the use of selling advertising with AdWords, Google was able to successfully monetize its search engine.  This has made Google a wealthy and powerful company that has branched out beyond its humble beginnings as a research project and gained a number of competitors.

As I see it, Google has three main competitors is today’s marketplace: Microsoft, Apple and Facebook.  Each of these companies competes with Google in a different part of its business.  Microsoft competes with Google in applications, Apple competes within the mobile arena, while Facebook competes with Google in the realm of information gathering.

From a Wall Street market cap perspective, Microsoft is the competitor that is the easiest to connect to Google (Market Close – July 1, 2011: MSFT 219B / GOOG 167B).  These are two giant companies, one of which dominates the desktop environment while the other dominates the cloud.  It is in the area of cloud applications where Google has the potential to strike the biggest blow to Microsoft.  Take this blog post for example.  In the past, a student would utilize Microsoft Word to craft a class assignment, yet I am using Google docs to write this analysis.  A standard desktop application forces a student to write the whole paper on one PC, or at best use Dropbox, which synchronizes a document between two machines both of which would need to have a word processing application installed.  Google docs only requirement is an Internet connect.  I can begin my paper at work over my lunch hour, pick up later using my wife’s Powerbook and finish it on a desktop at home.  While it could be argued that it is Microsoft’s operating system Windows that is fundamental to their market strength, it is applications like Google docs that introduce consumer and businesses alike to the benefits of being hardware and OS agnostic.

Just a few years ago, Google and Apple were thought to be allies.  Two small user focused companies competing for market share against Microsoft.  Steve Jobs even proclaimed at MacWorld 2007 that the first iPhone used “the best version of Google Maps on the planet”.  That was before Google began directly competing with Apple with their Android operating system: a touch based, open source, mobile device operating system, which attempts to compete feature for feature with Apple’s iOS.  Google’s open system approach stands in sharp contrast with Apple’s locked down software and hardware strategy. Now Apple and Google routinely try to one up each other for market share in the smart phone market; Apple with its iPhone product line and Google with Android running on multiple devices from Motorola, Samsung, and HTC to name a few.

In addition to the smart phone market, Google is also competing with Apple in the tablet market.  As successful as touch based smart phones have been in the consumer market, tablets have a chance to mimic that success with business applications. Already businesses are adopting tablets for assistance with medical records, instructional aides and sales tools.  Apple is presently dominating the tablet space with 83.9 percent of the market share according a recent Computer World article (Android vs. iPhone and iPad by the numbers, June 9 2011).  However, that same article references Gartner as predicting that by 2015, Google’s Android operating system will close the gap to a less than 10% difference.

Of all Google’s competitors, there is one which looms larger than the rest: Facebook.  Facebook and Google?  Clearly I must be referring to Google +, Google’s latest foray into social networking.  Actually where Facebook possess the biggest threat is in the realm of information gathering.  Prior to the birth of the World Wide Web with search engines and listing services, consumer and business alike had to ask their peer groups for recommendations for products, restaurants, employers and opinions on where to vacation.  Search engines allowed consumers and business to have open discussions through online chat, search for forums and get recommendations on every topic imaginable.  The issue is that search engine results are crafted by strangers.  Individuals without a face, story or shared childhood life experience.  This is where Facebook holds the upper hand.  By leveraging their social graph, users can ask friends for information on the best day cares, local eateries, movies, books and more.  Business colleagues can chat in real time, collaborating on IT projects, sales proposals, and recommendations for a local watering hole.  Of all the competitors, Facebook is Google’s biggest.

Google possess great human capital in terms of engineering talent and multiple consumer products outside of their core search offering, such as Blogger, YouTube, Gmail and Google Docs. This provides Google with the opportunity to offer seamless experiences across product lines, meaning that a user of one of Google’s services can easily create an account on another service and expect those products to work in conjunction with another.  In the future, this could mean digital documents that have YouTube clips embedded within them or being able to write a Google Doc that posts directly to Blogger.

With Google’s focus on multiple products lines its engineering talent will be spread thin.  The very best engineers at Google will rarely be able to all focus on a single product at one time.  It also means billions of lines of code to be cultivated and maintained.  Increasing the amount of staff inevitable brings human resource issues and bureaucracy that slow a company down.  Indeed Google needs only look at the struggles of one of their key competitors, Microsoft, to get a glimpse of how difficult it can be competitive at multiple channels.

Does this mean that Google is doomed to follow in Microsoft’s footsteps, to eventually be chasing the market rather than defining it? Google certainly has a number of challenges ahead as they compete with Microsoft, Apple and Facebook.  One positive is that both Microsoft and Apple are also competing in multiple digital spaces, operating systems, browsers and mobile.  Thus far Facebook has been content to mainly focus on social networking, though it is branching out and already the largest online photo storage site.  Another positive is that better than any of its competitors, Google has been able to successfully incorporate advertising into the user experience, be it search, Gmail, Google maps or YouTube clips.  This will assure Google a steady stream of revenue to continue to grow as a business and to compete in the next decade.