Everybody is talking about Google. Most of the speculation is about the stock price, which has passed the US$400 mark and seems headed for US$500. How much higher can it go? That’s a somewhat interesting question, especially if you own Google stock, but a more interesting one is where Google itself is headed.
Google grew from a university research project that developed a better way of searching text on the Web. The idea is to rank Web sites based on how many other Web sites link to them. It’s a kind of online popularity contest, and it may not work perfectly, but it was better than the previously popular method, which was to look at how many times the keyword someone was searching for appeared on the page.
Then Google picked up on context-sensitive advertising — an idea actually pioneered by a company called SubmitIT and first applied to Web search by Overture Inc., later acquired by Yahoo! Without that, Google would have just had a clever search algorithm.
With it, it has a license to print money.
Now Google is building on both ideas. It has expanded into searching images, scholarly journals and maps. It is working on a deal to make the content of books searchable on the Web — if it doesn’t get bogged down in copyright disputes. Businesses and consumers can submit content to be searched through a new service called Google Base.
And of course there’s Google’s desktop search.
Meanwhile ads on Google’s own site now generate only about half the company’s revenue. It places context-sensitive ads on Web sites from The Weather Network all the way down to Joe’s Blog — charging advertisers when someone clicks through to their Web sites, paying the site that carried the ad a carefully guarded percentage and pocketing substantial proceeds. It has tried non-contextual advertising as well, and has even experimented with buying up and reselling space in print publications to its online advertisers.
The company has struck a deal to buy five per cent of America Online Inc.
It recently signed a partnership with Sun Microsystems, under which the companies will promote each other’s products. Having considered buying Skype — which went to eBay instead — Google has now started its own VOIP and instant messaging service.
How does all this fit together?
One possible answer is that it doesn’t.
Google’s research and development strategy includes urging research people to spend 10 per cent of their time on whatever they find interesting. The company seems to do the same on a larger scale.
Clearly though, Google wants to extend its core technology – search – and its core revenue generator – advertising — in every direction it can.
That could take it into offering almost any product or service to which advertising can be tied. Online applications, along the same lines as Microsoft Office Live, with attached ads? An auction service to compete with eBay? Targeted advertising on cellphones? Phone calls for free if you look at or listen to targeted ads? They’re all possibilities.
Google isn’t going to tell us what it’s up to. The press can’t get Google executives to talk, and it seems investment analysts don’t fare much better.
We can only speculate at this time. The answers they will be significant for the computer and communications industries, because Google is this business’s newest 500-pound gorilla.