Of all the dratted... were my first words about the Chrome browser. Ok. They have another great product launched, the point being? I think the way Google is goggling itself; it's bound to end short of its much hyped cash reserves soon. The sooner the better. Let's take a peek into what Google is focusing on.
Firstly, what are they trying to achieve with a new browser in an already established market? We have had more than 50 different browsers so far and the winner is clearly Mozilla with a 20 % market share. Microsoft has a 72 percent market share, however, much of the lead is due to it being a free bundle with the OS. Google's other free offering in direct competition should have offered them a lesson – Star Office. Continued faith reposed by companies in Microsoft Office just proves MS's leadership. End users continue to use pirated MS Office editions, while there are still no takers for Star office. But as a corporation is this the direction Google should be headed?
Browsers are no longer paid software. Netscape winded up as a result of it. There is no way additional revenue can be generated other than the face value offered. Can you establish a market value it would put to Google with the browser?!? Let's imagine Google has over 90 % of the market share with its Chrome. Web experience might be great, but how does it add up revenues to google? It might improve revenues to Google's ad sense, but that can be done using existing browsers too.
Unless Google does get paid for softwares/services other than its ad leasing services, it would always depend on other companies and market conditions for revenue. I have written on this done to death topic earlier, but will do the same again. Google 's mergers have been with companies whose focus has solely been on free versions. Star office is one case in point. Their only two big tickets are Double click and Adsense. Think of any other? (The rest of the websites which they have purchased were previously their biggest revenue crunchers - Orkut, Youtube) I am not saying that MS does support open source. It does, but only after having established different multiple streams of revenues in each. By doing so, it is offering Microsoft a key learning from open source.
Google does not realize that by focusing its resources on the development and improvements of a new browser, it is wasting its time and resources and in no way offering competition to Microsoft. If you have not realized it, Microsoft has a significant contribution to the development of the Mozilla Firefox which shows they are not worried about the competition. Some of the improvements noticed in Mozilla are added to newer versions of IE. Who knows, tomorrow Microsoft might just pull the rug off IE and ask end users to use Mozilla or any third party browser. The reasoning being - As long as browsers are free, why should Microsoft waste its time on IE? Besides, it would also get the anti trust guys off its back. Even if Mozilla were to capture 90 % of the market share, Microsoft would probably pitch in to help Mozilla or purchase it outright to integrate it with Windows. Either way, Microsoft has a win-win situation with Mozilla.
In contrast, Google might be making a pitch for products, but shouldn't they start with enterprise software? HP's Neoview is a recent case in point. (The equivalent of Oracle DB with powerful scalability for enterprise datawarehousing). Getting into the browser market is a long shot and a risky one. If the browser succeeds and does get over 50 % of the market, it earns a name in the browser market, which would still not translate into revenues.
Already, there are a few downtrends for Google. This year Google is expected to cross the 20 Billion mark in revenues, which is way higher than the revenues for last year. But look more closely into the fine print and there you have the devil in print. The increased revenue is partly due to an increase in ad rates for leasing ad spaces. Google did anticipate the market downturn and raised rates in Q1-Q2. So while adspend of companies has significantly decreased, they were actually paying more due to the increased rates. If the current downturn were to continue for the next two years in the tech sector and significantly in the US, then Google would have to watch its revenues tumble. In such a scenario, if Microsoft and Yahoo offered to decrease ad rates by around 25 %, imagine the cascading effect... Google would be forced to reduce rates or loose customers.
Google has increased its headcount significantly this year and its operating expenses also double from next year.
Click Fraud is another concern for companies. There is never an accurate picture on actual customer s thanks to it. Click fraud accounts for atleast 30 % of Google's ad revenues. (Employees tacitly do it too) The rest by click for pay sites
