Posts about google

Microsoft-Yahoo: The deal of the dinos

(Crossposted from Comment is Free, where there are also comments.)

Yahoo, I’ve long argued, is the last old media company, for it operates on the old-media model: It owns or controls content, markets to bring audience in, then bombards us with ads until we leave. Contrast that with Google, which comes to us with its ads and content and tools, all of which I can distribute on my blog. Yahoo, like media before it, is centralized. Google is distributed.

It’s appropriate, then, that Yahoo is being bought by what one could say is the last old technology company, Microsoft. For Microsoft still operates on a model of control: closed in an open era. They will get along well together.

This is not a deal about content. At an entrepreneurial conference in New York this week, OnMedia, a venture capitalist said that the “perceived value of content is approaching zero.” That’s a kick in the kidneys to us content people.

No, this is a deal about audience and advertising. After the big guys consolidated all the ad networks they could — aQuantive to Microsoft, Tacoda to AOL, Doubleclick to Google (the EU willing) — next they’re buying up audience in bulk. That’s what Yahoo is, really. They call it a firehose: people in bulk, us as masses.

The reason this is happening is that advertisers and their agencies are still stupidly treating and buying us as masses — they want everything to operate like the one medium they understand: TV. (This is why, in the U.S., even as television’s audience shrinks, the rates paid for advertising continue to increase — because, oddly, the decrease in audience is creating a market scarcity in commercials’ reach).

This is just as well for Yahoo, which had no strategy, really. They’d gone as far as they could with the old-media model, as exploited by the last CEO, former movie-studio head Terry Semel. Yahoo cofounder Jerry Yang started saying the right things about turning Yahoo into a platform, but it probably would have taken years to turn his culture around. They were too used to operating like a movie studio or publishing house.

Will this be big enough to beat Google? No, because big won’t win in the end. Open will.

Davos08: The Google environment

The other day, I live-blogged the Google Foundation conversation about its work in energy and other areas. What fascinated me was seeing a world as run by engineers. YouTube put up the full video:

Davos08: Google’s environment

I’m at a surprise session with Larry Page, Sergey Brin, and the Google Foundation’s Larry Brilliant, moderated by Tom Friedman. Liveblogging:

The key difference between this and the Gore-Bono panel prior to this is that Gore concentrated on the things we must stop doing — as the movement does — while the Google team concentrates on what we can start doing, thanks to technology.

Brilliant says after the Bono and Gore session earlier: “It’s true that climate change takes the oxygen out of the room.” In other words, it takes attention and effort away from poverty and development. He says we have to get over our cultural ADD and handle more than one crisis at a time.

He outlines the Google Foundation’s priorities. They believe that people don’t know what services their governments offer and so they help inform them and help governments get that message out. Another priority is job creation. Less than 15 percent of jobs in the developing world are from small and medium enterprises and they are targeting growth there. In health, they are concentrating on diseases that jump from animal to human, such as AIDS, and become pandemics. They are funding early-warning systems. They concentrate on climate change: making ecological power cheaper than coal-fired power. And they believe electric cars plugged into a green grid will take care of much of our problems.

Larry Page talks about the renewable-power-cheaper-than-coal initiative. Buying a lot of electricity, Google knows that the cheapest came from coal. The cost of electricity as a percentage is going up, he says, and is approaching the cost of the computers themselves. So they want to get it cheaply and get it green. Startups can work selling green energy at 10 cents per kilowatt hour because there is a demand for renewable energy, he says, but that does not bring real change. “Our primary goal is not to fix the world,” he says, but they do have the power to drive things forward, to get to three cents.

Sergey Brin says the are concentrating on three energy sources: solar-thermal, deep geothermal, and high-altitude wind; if he had to add one, it would be photovoltaic. He says that windmills are on a par with coal but are intermittent and they think it can be even cheaper by using high-altitude wind, through kites, which are cheaper to make that metal windmills. They’ve invested in this and solar-thermal. Deep geothermal is a bit farther off because it requires more fundamental research to get to scale.

What’s the reaction of the energy companies? “They’re pretty good at pushing things into the future and you guys want to claim the future now,” Friedman says. Brin says some of these companies such as BP are invested but Google has an advantage because it does not have a legacy business to cannibalize. Indeed, Google can benefit its core business. “There’s a big bet at some point that you need to make that’s going to take capital.” And Google, he says, in a good position to take that risk.

Asked about the reaction of shareholders, Page says the investment is moderate and there is potential for payoff.

Friedman asks whether they can succeed in this space without taking more of a political position. Brilliant says very few of the people fighting against the climate change movement are bad people: “the have children, they have grandchildren.” He says that the movement has not done a good enough job to communicate. “You can’t separate the quest for dignity and fight poverty from climate change…. We have failed to get that degree of awareness in Congress.”

Friedman quotes Al Gore’s complaint that 3,000 questions asked in Sunday morning programs during the campaign included just three on global warming — equal to the three on UFOs. (Anyone have a citation for that?) “What are we doing, what is Google doing, to reframe the debate?” Friedman asks. Brilliant likens this to the second-hand smoking debate in achieving awareness.

Asked what the next president should do to help their cause, Page responds as an engineer and complains that there has been no research on transmission — which adds to costs — and so he wants a priority on that work from government — an interstate highway system for power, Friedman says. Brin’s answer: Renewable energy is not on a level playing field because of the costs of old energy: health and coal, politics and oil, tariffs on commodities for ethanol, regulation on electric-care development. Brin says they are generating 1.6 megawatts of solar power on their campus. “It’s been great. It produced shade. It reduced cost.” But he says that regulation, federal to local, adds cost. “There’s just all these barriers to clean energy that don’t exist for dirty energy.”

Dirty energy. That’s a nice phrase. As good as death tax.

Page says they are spreading the idea of holding business-plan contests: having events, giving out a little bit of money, helping winners get funding. “In Silicon Valley, they do that for breakfast.” To do that in Ghana, he says, would establish a community to keep this going.

Asked from the floor, by Time’s Michael Elliott, about the theme of the day — environment versus poverty, emphasis on versus — Page says that he gets irritated when people do not realize that the way out of these problems is technology.

I think he’s right: the discussion is too much about what we should not do rather than what we can do.

“You can’t succeed just out of conservation because then you won’t have economic development,” Brilliant explains. “Find a way to make electricity — not to cut back on it but to have more of it than you ever dreamed of.”

I say from the floor that I see a cultural difference between the movement and Google on this. Google has the positive message of the potential for change through technology. I ask about how they are going to get this message out to encourage investment from government and the public. Are they using lobbying, PR, education? Friedman adds that Exxon Mobil has “done a number” on the debate with PR. Brilliant says that their role is to get information to people, as much information as they can. Page says that success is the best message — that is, if they had three-cent power, everyone would come.

Gore, from the audience, takes issue with Brilliant, saying that getting information out is no longer sufficient. “That’s the way the world used to work. The world doesn’t work that way anymore. The reason that the tobacco industry was able to continue killing people for 40 years ater the surger General’s report…. they understood the power of strategic persuasion. They went about it in a very careful, organized, and well-funded way.” He says we are “vulnerable to strategic persuasion campaigns if the other side assumes that we should just get the information out there.” He says Exxon Mobil has funded 40 front groups to “in their own words position global warming as theory rather than fact.” He concludes: “We need to take them on, Goddamnit.”

Brilliant responds, saying he agrees with Gore but adds: “Each of us needs to play the role we are uniquely positioned to play.”

The other unspoken divide is about economics: Gore and Friedman favor raising the cost of carbon. Page and Brin see a victory in reducing the price of the clean energy. Tax versus investment.

DLD: Change

The first panel is filled with old titans — Hubert Burda, Joseph Vardi, Martin Sorrell, Richard Wurman, Joe Schoendorf with moderator David Kirkpatrick — and it is good to hear them embrace change and optimism about its impact.

Schoendorf says that soon there will be more video cameras on earth than people. Burda talks about all the ways people have to broadcast that video. At this moment, Jason Calacanis is here trying to do so from his cell phone.
Right now, Jason Ca

Sorrell is worried. He’s not worried about recession; he says we shouldn’t fret about that until at least 2009. He is worried about the fate of Western Europe (though he’s rooting for the conservative leaders Merkel and Sarkozy to succeed); this is why he’s betting WPP’s fate on Asia. If he were 25 and from Western Europe, he says, he’d leave. He’s worried about some clever PhD inventing the next company, the next Google, but he’s worried that won’t be in Palo Alto but will be in Bangalore. Burda adds that media is not just content but is also software — “We still believe that a website with 40 editors is better than a web site with 20 editors” and we don’t pay enough attention to the software, he says. So he worried that European PhDs don’t invent algorithms. (It’s refreshing for me, an American, to hear so much discussion of Europe; American conferences are always so American-centric.)

Asked, though about the U.S. — and whether we’re headed down — Sorrell says it is always a mistake to underestimate Americans. He says that years ago, we thought Japan would dominate but “post-Reagan” America rose. We know what kind of leaders he likes. “Don’t underestimate the resourcefulness of Americans and their entrepreneurial culture,” he says.

Sorrell talks about the N11, the next countries after China, India, and the usual crowd. I agree: I wonder whether we’ll see a China bubble because everybody but everybody is betting futures on it and I doubt — given their amoral economy that poisons their people, American customers and pets, and their environment — whether they are ready for the investment.

Is Google too powerful? Burda responds that he was on a ski lift and asked the trainer how his business is. Great, the long-haired guy says. Why? Google. Right: more optimism about change. Google enables businesses. “Google has discovered millions and millions of new customers.” Amen. “If you sell ad pages two years from now you will make a long face. But you have to sell around the brand and around the brand will be very interesting opportunities for platforming.” Schoendorf says Google does not have a commanding market share of global advertising (a bit of a red herring; you can’t say that about the US and UK and Europe) so it is not a threat.

Exploding TV

I’m at the Guardian Media Group’s offsite. Not planning to blog it. But I can’t help this: David Muir, CEO of WPP’s The Channel, gives the agency’s ad share projections for the UK. Online is now at 25% (far ahead of the U.S., by the way) and they predict it will surpass TV — and all other media — next year. But he cautioned that 79% of that online advertising goes to search. Google is God.

CORRECTION: I missed a step in the math. Muir says that search takes 79 percent of online advertising and that Google, in turn, takes an estimated 75 percent of that, three-quarters of three-quarters.

But then again

Google is God?

googlegod.jpg

(via Point-Oh)

Google is God

For something I’m working on, I compiled a bunch of stats on Google (sorry, I didn’t intend to blog it and so I didn’t capture all the links, but I found the collection so compelling I thought I’d share it):

• Google is the “fastest growing company in the history of the world.” – Times of London, 1/29/06
• Google controls 65.1% of all searches in the U.S. at the end of 2007 and 86% of all searches in the UK, according to measurement company Hitwise.
• Google was searched 4.4 billion times in the U.S. alone in October, 2007 (three times Yahoo), says Nielsen. Average searches per searcher: 40.7.
• Google’s sites had 112 million U.S. visitors in November, 2007, says Nielsen.
• Google’s traffic was up 22.4% in 2007 over 2006, according to Comscore.
• Google earned $15 billion revenue and $6.4 billion profit in 2007, a profit margin of 26.9%. Its revenue was up 57% in the last quarter of 2007 over 2006, says Yahoo Finance. As of late 2007, its stock was up 53% in a year. The company has a market capitalization of $207.6 billion.
• Google controls 79% of the pay-per-click ad market, according to RimmKaufman. It controls 40% of all online advertising, according to web site HipMojo.
• Google employed almost 16,000 people at the end of 2007, a 50% increase over the year before.
• Google became the No. 1 brand in the world in 2007, according to Millward Brown Brandz Top 100.

Not that we didn’t know this already. But the stats still amaze me.

Screwing customers is a business model

Bob Garfield continues his jihad against Comcast with a live podcast (oxymoron?) on December 11 featuring me on the same bill with Ralph Nader and Harry Shearer. Bob’s not letting up.

Yesterday, I sent Bob what I thought was astounding statistics from the oft-quoted University of Michigan’s American Customer Satisfaction Index on Comcast and cable and satellite TV, which reported that the industry suffers “the lowest level of customer satisfaction among all industries covered by ACSI.” Yes, even worse than airlines, hospitals, and Microsoft. Yet, of course, they still make money money because they enjoy monopolies … for now. Says ACSI:

There seems to be an element of monopoly-like pricing in the cable industry: basic cable services rose 5 percent in 2006 and 93 percent over the past decade, nearly four times the rate of overall consumer prices during the period. Such pricing power usually comes with some level of monopoly protection and most cable companies have little competition at the local level. This also means that a cable company can do well financially even though its customers are not particularly satisfied. Comcast is one of the lowest scoring companies in ACSI. As its customer satisfaction eroded by 7% over the past year, revenue increased by 12%. Net income went up by 175% and Comcast’s stock price climbed nearly 50%. In the first quarter this year, Comcast added 75,000 new cable TV subscribers, a 49% increase, and posted an 80% rise in earnings over the previous first quarter.

In short: They can still make money screwing their customers.

But be warned, cable oligarchs: Your monopoly will end, as newspapers’ did. You will fall. But for you, no one will cry.

I wish Google would win wireless spectrum and use it to create an open network that will finally bring cable and phone companies the competition they, and we, so richly deserve. Cable’s business is built on telling its customers what they cannot do. Google is built on letting us do what we want to do. Cable needs an attitudectomy.