The Google economy, indeed

Google does indeed have its own economy. It’s latest results:

The Web search leader reported third-quarter earnings that far exceeded the expectations of analysts, especially those who thought the company might finally fall victim to the slumping economy. Thanks largely to having contained costs better than in previous quarters, Google reported on Oct. 16 that profit rose 26%, to $1.35 billion, significantly higher than analysts had predicted. Sales jumped 31%, to $5.54 billion.

The analysts are stumped because they are not judging Google as a new kind of company in a new kind of economy. It’s different.

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  • I’m with you in general, but I believe it’s too early to make a statement about a “new kind of company” or a “new kind of economy”: The next two quarters will prove if that’s true or not.

    Smile! Gerrit – We speak Online.

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  • Ken

    Hopefully it will fare better than the last New Economy. It seems more like a better mouse-trap. The mice are fewer and leaner, so trap sales are declining, but the lousy ones are getting cut first. I will say however that I’m impressed Google has an economist, and that they figure prominently in their corporate communications. It reminds me of McDonalds, the restaurant. And old brick-and-mortar institution, but they also leveraged quantitative economic analysis in their selection of restaurant locations, back in the 80’s I believe, to great success. UPS and FedEx likewise have become masters of route optimization. In those cases however, the significant contributions of economists and scientists in what one might otherwise assume is an area of the business run by bland MBAs is largely hidden, whereas Google places them front-and-center.

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  • Jon Kay

    The best-run companies in each field often do best when times are rough, simply by sticking closest to plan, having little trouble controlling costs, and nabbing the customers everybody else tends to lose.

    The same’s been true of discount carriers Ryanair and Southwest for decades, despite the hardships of bein an air carrier today. And it was true of Dell before Dell stepped aside only to find he’d given his chair to somebody not up to the job.

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  • Google dominates because they are better than everybody else. Even if advertising dries up due to a poor economy, Google will be the last to lose advertisers.

  • I’m always a little uneasy when folks starting talking about a “new economy” and how certain people Just Don’t Get It. We’ve heard that before during the previous round of non-sense in the late 90s. It turned out we did get it, and that all those “new economy” companies were, in fact, subject to the same laws of gravity as “old economy” companies.

    Google had a fine quarter. But why? If you look closely, it was in large part because they focused on cost containment. The slowed hiring. They’re looking more closely at expenses. That’s classic, short-term thinking. Costs this quarter to goose their margins to making analysts happy. If Google really had invented a new economy, they would have stuck to their stated principals and kept their eyes on the long term and not worried about whether or not they exceeded someone else’s expectations of what they should deliver this quarter.

  • FC

    “Where’s all this great stuff coming from? It’s not really coming out of IBM. It’s coming out of little two and three man companies, because they’re finding out that forty guys can’t do something that three people can do. It’s just the law of human nature.” Roger Smith

    1. Lots of Startups

    “So my first prediction about the future of web startups is pretty straightforward: there will be a lot of them. When starting a startup was expensive, you had to get the permission of investors to do it. Now the only threshold is courage.”

    9. Lots of Competitors

    “If it gets easier to start a startup, it’s easier for competitors too. That doesn’t erase the advantage of increased cheapness, however. You’re not all playing a zero-sum game. There’s not some fixed number of startups that can succeed, regardless of how many are started.”

    Google is proof positive that startups are economically viable. Once big, a company isn’t interested in competition. Without competition you end up in an economic crisis. With you don’t need Google.

    “”Liable to swamp you with irrelevant results, Google can be a lottery for those looking for a particular nugget of information. A more refined search engine is, which allows you to define groups of trusted sites to search and share them with others, just like the Will and Grace star Debra Messing has with her Style Shops list.””
    The Times

    It’s a two or three man search engine vs. GM search engine.