This tech champion is in trouble

Google's core business will erode as 'intelligent' software delivers answers without its search ads.

By MoneyShow.com Mar 26, 2012 2:25AM

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.

32Comments
Mar 26, 2012 9:44AM
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Siri was fun for hmmmm 2 days. Please Apple fanboys stop writing smear articles. There are enough people in the world for Apple and Google to sell phones. Besides i have this thing called personality, and through my iphone i can only show that through a case?? BORING!!! Sorry i am not ready to be assimilated :)
Mar 26, 2012 10:23AM
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Apple is the triumph of marketing over necessity and technical superiority. In fact Apple's technology is more often than not inferior to its competitors (Apple fan-boys let's talk multi-threading and pre-emptive multi tasking - if y'all even get it). Bottom line - Apple's succeeds in dumbing down technology to the level of the average Joe whose unsophisticated mind is instantly overloaded into becoming a follower. Apple did not do anything new in the recent past (ahem - Google and IBM did as did HP) ... they just dumbed down technology to make it commonplace. The iPhone does not have the best specs, neither does the iPad - but this is a world of Ford and Chevy drivers - so touting Ferraris and Bugattis to them is like swinging pearls before swines. Peace apple fan-boys.
Mar 26, 2012 10:32AM
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I never owed any Apple stuff, because when I tried the phones, pads, etc, they all ran like crap.  But I suppose sheep don't really care, they just want to herd.
Mar 26, 2012 12:19PM
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I think this is unrealistic. You have to tie your entire life into one central storage system to do the things that the author is suggesting. And even if it improves, voice search programming like Siri still don't know what is going through my head. I would be insulted if my phone/tablet/whatever started making travel suggestions. I consider that advertising and frankly, I'm quite happy to leave it in searches tied to what I'm searching for (more passive). Aggressive suggestions like the travel scenario, unless I could permanently disable it, would just irritate me. no thanks.
Mar 26, 2012 9:13AM
Mar 26, 2012 2:20PM
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Garbage. If I had a million dollars to invest long-term, I'd drop it in Google over Apple any day. The minute the kids decide Apple isn't cool anymore, it all comes crumbling down. Samsung makes a superior phone, and Android is a superior OS. Apple is an overblown, overpriced product.
Mar 26, 2012 2:17PM
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"(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.  

Mar 26, 2012 1:52PM
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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.

 

Mar 26, 2012 11:21AM
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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.

Mar 26, 2012 11:23AM
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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.

Mar 26, 2012 10:27AM
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Wasn't it MSNBC that posted a article last week that Google was the next Google? How they had there hands in driveless cars robotics and everything else? So which is it? People blast Google but does anyone remember before google started giving way to free software how much microsoft wanted for there software. Windows OS $150 for update, $400+ for office, picture editing that I can do for free on google+ $50-100, $100 for MS Streets and no turn by turn directions either,. You could easliy spend $2000 on software that really not that good. MS office is a bloated product that slows down any computer, but they had to keep making updates evey few years so you would spring for another $400. You think robotics and driveless tech is not going to be a big thing? Google has had voice control for years used all the time. It is not perfect like Siri. Google will get it there in a few years. Finding things on Maps is easy with the voice search not so for typing but Siri can't do that either. Siri is Apples catch up not Google'. The author obivously never used a Android device in his life. He needs to get a life and look beyond Apple
Mar 26, 2012 12:09PM
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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 ?

Mar 26, 2012 10:19AM
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Waste of time reading this stupid article from one writer point of view.
Mar 26, 2012 3:08PM
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this is why people who know nothing about tech, shouldn't write anything about tech.  Siri is no where near what it advertises itself to be and Google has a huge financial moat.  Google and search are synonymous and Apple and Facebook would be dumb to try and battle them for the title of search leader.  Googles financial moat allows them to take on large projects (even if they fail), because the knowledge they learn from failing will only inspire their next project to be better.  
Mar 26, 2012 12:10PM
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Wow, I have a droid and its had voice search for over two years ago! Google like all companies needs to adapt to times changing and they have a hand in nearly every new technology imaginable. Next time Bing sponsors a ad they should make it less noticeable 
Mar 26, 2012 10:50AM
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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.

Mar 26, 2012 2:46PM
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I own apple stuff. And it's not better for me.  If I just needed to navigate the web, write papers or use it as a media vending machine, Apple would be fine.  But since I like to do a lot more with it, the wife is stuck using the MacBook Pro. I need all the connectors like HDMI and sd card readers. And every now and then I like to play a bluray because picture quality matters to me. I know I can stream but it's usually not the same quality nor can I find the latest titles when I want them. And I know I can buy adapters for the Macbook Pro, but why spend the extra money and inconvenience of having to carry around adapters.  I like to have a true media machine with no limits, JBL sound and even a capture tuner card to record my shows and watch them at my convenience.

In my sincerest opinion.  Apple makes a fine machine. But by far, not the best. Apple models it's products after a big virtual vending machine. They connect directly to your wallet and don't let go.  If it doesn't bother you that all your spare change is going into a fancy vending machine, instead of on doing things you like, then apple is the product for you.
Mar 26, 2012 2:59PM
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Either I don't like Siri's tone of voice or her responsiveness (or lack thereof) or her availability (or lack thereof - she's a very, very fickle female, if you ask me, about whether or not she just happens to be in the mood to function at any particular moment - seems to me, more often than not, she is not in the mood to function) or she doesn't like mine because she definitely has a difficult time understanding my clear and distinct enunciation of words and sentences.  Siri may be the wave of the future or Google's beauty queen contestant that supposedly is "in the works", but my thought is that both Apple/Siri and Google/girl (I just made that up) have a whole lot of improved performance to do before either one of them impress me for their (I want it all, I want right, and I want it now) effective utility to me.  I am definitely impressed with the concept of voice recognition utility and in the phenomenal technology that must, no doubt, be involved.  Siri and google/girl just have a long way to go the be really "with-it" girls.  Until they are, frankly they can be quite boring most of the time.  you're welcome  --- thnx for the feedback op
Mar 26, 2012 3:41PM
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To ashleymalagant:

 

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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