More from Henry Blodget, this time noting that Google’s U.S. search share is flat:
From a financial perspective, Google is still a one-product company (search). The amount of profit — profit, not revenue — contributed by Google’s non-search products like AdSense, Apps, YouTube, et al, is basically a rounding error.
The assumption for a good long while had been that Google would eventually have an 80%-90% share of the U.S. search market.
Not happening.
I’m old enough to remember when three broadcast networks had a license to print money: they shared virtually ALL television ad revenue between them. They, we, everybody, believed it would never end. Then came cable and satellite and now online and they’re all in deep doo doo.
Not a perfect analogy by any means, but the one that popped to mind.
It’s not like Google’s been sitting on its hands. But the launch of Microsoft’s Office 2010 brings some interesting perspective. Ashlee Vance:
Leading up to Microsoft’s announcement Wednesday of Office 2010, both Google and Microsoft representatives were working the phones hard to make sure that reporters knew their respective sides of the productivity suite story.
The Google camp predictably positioned Office as an expensive desktop relic — more or less some strange, bloated curiosity with features that apply to only a handful of people inside of any sane company. The Microsoft camp countered with cries that Google’s obsession with the Web does users a disservice, since we’re living in a hybrid desktop/online world. Oh, and Google knows nothing about the needs of corporate customers — they’re too busy holding spin classes to field questions from some mega-customer doing a mega e-mail-PowerPoint-Web site merging job.
Google made fun of Microsoft for slapping ads in the midst of its new, free online version of Office. Microsoft chided Google for scanning the text of e-mail messages to feed ads into Gmail.
While they went at it, tit for tat, I kept rolling over one figure in my head: $19 billion. That’s about how much Microsoft made last year from its business software products… For some perspective, Google’s total revenue for 2009 was $23.7 billion.
That’s some serious perspective: Microsoft’s Office makes in profit 80% of Google’s total revenue? Wow. (Check my math.)
Ashlee’s best bit was this:
Is a company like Google that’s so busy with (cue the scroll) search, ads, phones, maps, TVs, operating systems, tablets, online videos, scanning books, giving employees time to explore their dreams, and building its own servers and switches have what’s needed to make a dent in Office? (Keep in mind that free — Google’s typical weapon of choice — has failed in this battle again and again.)
For all that Google has thrown against the wall, nothing has stuck — or reaped a profit — like Office has for Microsoft. And remember, Windows is to Microsoft as search is to Google. Office is a second act.
Google made Internet advertising real and profitable. I’m a Google fan. I think the move to the cloud is inevitable. But I can’t point to anything on the horizon that looks like it will make them the kind of money that old stodgy Microsoft is making.
And while we’re talking old and stodgy, remember IBM. Bloomberg Business Week says buy!
You can find me @jwindish, at my Public Notebook, or email me at joe-AT-joewindish-DOT-com.