Strike gold with Google

Google is no spring chicken. It is 11 years old, commands more than two-thirds of the web’s search traffic, and has left powerhouses like Microsoft struggling to find a competitive response. The company is difficult to describe because its dominance of web search and advertising is so ubiquitous. Excepting China and South Korea, Google’s search and advertising services capture the attention of users and advertisers everywhere.

Most of the media attention focuses on its steady stream of new products, its competitive thrusts against Microsoft, its high-profile management methods and its legal battles. What the media tends not to cover is the opportunity Google presents other businesses to generate revenue from its continued growth.

The company has a varied product and service line. But as financial analysts delight in pointing out, 98% of its income derives from advertising revenue. With a potential $25bn slated for the 2010 calendar year, the 2% from other services seems insignificant.

Good opportunities

However, Google offers opportunities similar to those Microsoft generated when it rolled out its first operating system for PCs in the 1980s.

First, Google’s advertising system is do-it-yourself, but most potential advertisers to its hundreds of millions of users need some assistance in determining how much to spend, how to craft their online advertisements, and how to manage and assess a Google AdWords campaign. Google’s reluctance to hold the hand of the average prospective advertiser is a potential pot of gold for the technically savvy marketer.

Secondly, Google’s expanding enterprise products and services can confuse even experienced system administrators. Consulting engagements await those who can explain what the firm offers and what its services can deliver to an organisation. An even greater opportunity awaits the person who can use a Google application programming interface (API) to connect a Google service with an organisation’s own data. For example, Google Maps could be used to help a business track its delivery trucks, or get a low-cost way to mash up sales data with geographic data such as customer locations.

Finally, Google’s Android mobile phone technology continues to make inroads in telecoms. Its handsets create a demand for mobile applications for business and recreation. Even more important may be the inclusion of Google voice technology in Gmail and Google Calendar. These building blocks can be assembled into software solutions that have the potential to generate both consulting and software licensing revenue.

In the present economic climate, my research suggests that Google is well placed for the next three to five years. Betting on the company makes good sense for four reasons.

First, Google is a next-generation technology company that operates on a global scale. The word “scale” pinpoints its competitive advantage in 2010. It can operate on huge datasets without plunging into red ink, while competitors need time and money to catch up. So far that has not worked for Microsoft, although Facebook has had some success and could become a thorn in Google’s side.

Second, Google’s advertising-based business model is misunderstood. It generates revenues from ads, but the method is that a third party pays Google for access to its web traffic. What is overlooked is that Google uses other business models now. These range from subscription fees for upgrades of its Apps to fees from developers and partners. When it comes to making money, Google has more options than a Barcelona midfielder.

Third, Google has a global impact similar to global warming. Its Android mobile technology, products and services are poised to challenge Research in Motion’s BlackBerry and Apple’s iPhone. Firms like Nokia may not survive the Android. Motorola is betting the company on Google and its Android technology. Google’s mobile services continue to expand, changing the business climate in the telecoms sector.

Finally, Google continues to push the technical boundaries. What is interesting is that in 2009, Google was more productive in generating patent applications and patents than at any previous time in its history. The company continues to invest in applied and blue-sky research. Its technical leadership is likely to continue working for the foreseeable future.

Implications

What this means is that Google is disrupting business – big time. Whether it’s the push into educational services or its introduction of new advertising methods for YouTube videos, the firm’s shaking up established business sectors. Incumbents may not be aware of the Google tsunami that is racing toward their customers.

We know what Google has done to telephony in the US and to handset manufacturers in Finland and Taiwan. The company is now making an impact in film and video, online payment, enterprise applications, government systems and publishing.

But while disruption may be bad for incumbents, it creates opportunities too. Google responds to user behaviour. An entrepreneur or a firm looking for a new revenue stream can look at it as a creator of opportunity. Possibilities range from coding products to run on the Google platform to becoming an expert in a particular phase of Google to using the Google platform as a digital Gutenberg.

Since 2003 my motto has been “surf on Google”. Don’t just search using Google – earn money using Google. We’ll get started in the next instalment.

Stephen Arnold is an IT consultant

Next month investigates the money-making potential of creating products and services running on Google infrastructure, including the Android platform. The final article will consider the major business sectors in which Google’s products and services are forcing incumbents into a “ground and pound” face-off.

More information about how to profit from Google is in Stephen Arnold’s free video series,

How to Make Money on Google, on YouTube via the link at www.arnoldit.com/video.

How to find out more

Android development:

http://developer.android.com/index.html

Developer information:

http://code.google.com

Enterprise partner programme:

www.google.com/enterprise/gep

Google Apps:

www.google.com/apps/intl/en/business/resellers/index.html

Google jobs: