Monday, July 20, 2009

Google (GOOG)

(No Surprise Here)

As I blog on the Google Blogspot service, using a Google Gmail account as my moniker, and search for research material on Google Search and Google Finance, I find it easy to recommend GOOG to investors.

Google hosts my company's email service (Google apps) and I highly recommend it to the organizations that I work with. I've largely abandoned the desktop driven MS Office application suite in favor of the web based and highly interactive Google Docs. We use Google Analytics for web traffic analysis, and spend some cash on Google Ad Words. I'm also looking into Google's cloud features for possible future deployments.

Google's revenue stream is heavily advertising driven, so one would expect their profits to suffer greatly in a recession. However, Google has capitalized on a great new market and is siphoning revenue from traditional media outlets (newspaper, TV, radio, etc) and competitors (Yahoo, Ask, Microsoft, etc) alike.

Google also gets a handsome amount of revenue for their enterprise applications like Google Earth, Google Apps, and Google Enterprise Search.

Google Chrome OS
Google's recent foray into the Operating System marks an important shift in computing. To many glossy eyed pundits, the announcement is dismissed as Google getting involved in what it knows nothing about.

Other pundits (including yours truly) see much more depth to this move than meets the eye. Forget for a moment that Google has essentially maintained its own operating system for years - what highly customized systems do you think run the worldwide Google farm? Forget for a moment that some very powerful open source operating systems have already found modest success on their own (Ubuntu, Red Hat). And do your best to forget that Apple's OS X is merely a pretty face on an open source operating system (BSD).

Google is simply going to apply a clean, user friendly face to the Linux kernel - much like Ubuntu and Apple have done with some success.

But the real secret to releasing an operating system is the recognition that the "Operating System" as we know it is over. The OS is a commodity in Google's world vision. There is no more room for a monopolistic company to keep the masses bound to one platform for all PCs.

For this world view to survive, two critical things must happen. (1) Companies must be willing to change their operating system, and (2) applications must be willing to go from the desktop and on to the web.

I think that since 2006 or so, many companies have been holding off on new IT investments. When hardware has reached a temporary plateau and Vista did not provide enough to convince folks to move, companies held tight to WinXP. Application vendors held off and many new services are at least partially offered online. Most importantly, the next crop of workers were raised in the Internet Age. They expect to do their work on the web.

The trend is moving overwhelming in support of Google's world view. The big question is how well Google is equipped to handle stewardship for the next great technology boom? Since they also have a lock on Silicon Valley brain power, I'd say their chances look good.

Just remember, Google: Don't be Evil.

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