This tech champion is in trouble
Google's core business will erode as 'intelligent' software delivers answers without its search ads.
By Igor Greenwald
There's a tech behemoth out there with a fast-growing business, a good-looking chart, a huge stockpile of cash and total dominance of one of the most lucrative markets on earth. And it belongs on an endangered-species list.
No, not Apple (AAPL), no matter how hot its iPad gets. Apple's consumer cult and monopoly on products aren't going away anytime soon, while recent revenue growth of 73% suggests it's steamrolling what currently passes for competition.
Hewlett-Packard (HPQ), which is about to merge its computer and printing divisions in the latest bit of deck-chair shuffling aboard the Titanic, needs to sell seven machines to match the profit from a single Mac. (I'm writing this on one of those machines that made HP 50 bucks, and I've lost count of the number of times I've wished I'd dug deeper for a MacBook.)
But HP is not this tale's endangered behemoth -- it's really more of a woolly mammoth. The behemoth, meanwhile, is still doing well. But perhaps not for very much longer.
Google (GOOG) is giving away its Android operating system in an effort to defend its search advertising turf. Yet Apple's phones have recently taken market share on the strength of consumer fascination with Siri, an early version of the intelligent-agent software that represents technology's next frontier and profit driver.
The threat to Google isn't so much that Android and Google+ remain unprofitable cost sinks. It's that the spending won't prevent the eventual erosion of Google's ad revenue as less and less searching gets done via keywords on portals, with their inevitable sponsored links.
One day soon Siri's granddaughter, or perhaps the son of Watson, will recall my fondness for island vacations, briefly mull my schedule and finances, and suggest this great airfare to Puerto Rico that just cropped up. I’ll never see a list of search results.
And should I request follow-up information, I won't care less whose search engine was trawled for the answers, if one was used at all instead of a survey of the most useful known sites.
That’s the near future knocking, and it's got no good news for Google, whose current dominance is based on sheer force of habit, uncounted installed tool bars and, increasingly, the traffic sent its way by Apple and other intermediaries.
So that's the backdrop to the curious recent Wall Street Journal story in which Google’s top search executive talked up imminent technical improvements and a long-term effort to enter the "next generation of search."
Also on the to-do list: to "catch up to Siri's voice-activated mobile search," the writer added. Google is, of course, working on its own pseudo-Siri.
The company’s been doing a lot of catching up of late. A recent high-profile defector has described inunflattering terms last year’s top-down push to launch Google+, which seeks to blunt the inroads Facebook has made in assembling valuable personal information Google sorely lacks as it tries to improve the relevance of its searches.
Google is paying a lot of smart people an awful lot of money not to have grasped its precarious position. Search engines, yesterday’s golden goose, are tomorrow’s low-cost commodity. The profit center of the future, as now, will be at the point where people sort and filter their information, and the rote of prioritized keyword matches is about to be replaced by pinpoint analyses and rankings tailored to known personal preferences.
In this field, Google is already behind Apple and IBM (IBM). And its rearguard attempt to insinuate itself into the hardware via Android is doomed to fail, simply because the hardware will shrink until it’s just an earbud, or implant, connecting the information user to the "cloud."
That future will belong to the designers of the most intelligent and facile agents, ones that interact easily and learn fast. And right now, Apple has mastered the user interface better than anyone.
That doesn’t mean Google can’t catch up, but it does mean that whether it does or not, the gold mine that is Google.com will not mint fortunes indefinitely.
Google’s got brainpower to spare: its driverless cars and data goggles are the stuff of science fiction. And it’s going to need every trick up its sleeve once keyword searches go the way of the dialup modem.
"(I'm writing this on one of those machines that made HP 50 bucks, and I've lost count of the number of times I've wished I'd dug deeper for a Mac Book.)"
Please tell me why you have lost count of the number of times you'd wished you had purchased a Mac Book. Go ahead - write another article and explain yourself.
My HP can do everything the Mac Book can do at one fourth the cost. This anonymous writer is another one of those Apple groupies that falls in love with anything that has an Apple logo regardless of the price that he/she has to pay for the Apple name.
This article isn't very good when comparing HP to Apple.
The author is wrong to say HP products are cheap, they aren't cheap, but they aren't overpriced like Apple products.Apple has always had a cult following and can sell their products because people buy into the Apple name, but comparing HP to Apple is like comparing Apples to oranges.
This isn't a paid ad by BING it's a paid ad by Apple. Sure I read it on an MS site but it's not pro MS. The author here is correct about the future of search but wrong when stating Apple does Operating Systems best. What a crock of bull dung. IOS is a terrible OS and the sheep that buy these products don't know squat about what an OS should be. WP 7.5 is a much better smartphone OS, the Metro UI is fast, easy to navigate and gets you to the information you need quickly and more efficiently than IOS or Android. Microsoft knows how to make operating systems! As for mac books their market is about to evaporate while ultra books take off with innovative designs and better performance. Wake up Apple Phanbois and girls and realize that pumping your money into yearly upgrades is a WASTE! And to siri fans stop being a dork and talking to a device. I want my information fast and furiously. If I want to talk to a device its for information not a robotic voice over with a little AI built in. MS Tell Me on Windows phone is a lot more compelling and faster at delivering the information I need.
Apple's revenue is primarily taking a cut of content that is created by other people (music and %30 of apps). The hardware is just the vending machine they install in your pocket to do this.
It is brilliant since they have all these developers that work for free and take the risks and Apple gets paid either way. I wish I would have thought of it.
One big flaw in your theory...GOOG will have a better "siri" in short order.
They actually pay you to write articles when you are this ignorant ?
This is just another paid advertisement by MSN's 'partner' BING. If you look to the right of these comments and scroll down, you will see 'MORE FROM BING.' If you re-read the article as more af a google-bashing advertisement, it makes much more sense: "That’s the near future knocking, and it's got no good news for Google, whose current dominance is based on sheer force of habit." See those are opinions, not facts. MSN bashes GOOGLE and other Microsoft rivals at least twice a month-its really quite sad.
You obviously are not an investor, or if you are, an unsuccessful one at that. What an uninformed response, and one writhing in emotion and stupidity. Funny Apple stock is recommended much higher than Google by all investment houses. Look at Apple's return on equity and their bottom line profit percentage compared to Google. Geeeesh already. Also, Apple has as one of its demographics something like 45% over age 55. Are these kids? What are you talking about? Quite spewing crap as you obviously have no clue what you are talking about. You are in left field.
To many other posters hell bent on chiding Apple: I would be willing to bet that most or all of you do not now or ever owned an Apple product and have NO first hand experience operating one. Perhaps the barrier to entry being cost, but that is no reason to rail on them. I guess its jealousy? Are that many people fooled with the Apple products? I think not. Apple markets to people with few characteristics: Middle/Upper income folks who are willing to pay a bit more for a better user experience. Also, people who like to have fun with technology. No other platform offers as many entry level tools (the whole iLife bunch and more). This includes people who like to shoot a lot of digital photos or video. It's the whole digital hub concept. People have bought into it for good reason. Thirdly, they cater to the professionals in media and design.
I currently have both Apple and Microsoft products. I have had a Droid phone in the past. Microsoft is beyond its prime long ago in my opinion. Boring. Droid too complicated and not intuitive at all. Apple is simple, and head and shoulders above the rest in my humble opinion for the average smart phone user, pc user and tablet user. (I would guess that Apple's products with any bells and whistles they offer with each would meet the average users demands in 90+% of the time.) A little more expensive, but a very good product. And being an audiophile, the Apple Air Play is awesome for streaming music over my home wifi. Their success is well documented, and bagging them out of jealously is immature and ridiculous, folks.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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