relentless focus

You can see what investors think of Google by looking at its stock price y/y, it’s essentially flat. We’re in year 2 of Android and AdMob and investors still don’t see serious growth oppurtunities for Google’s plunge into mobile OS’s to drive future ad revenues at multiples greater than what they currently are. 

While advertisers may be shifting where they advertise from paper to the desktop and now seemingly to mobile devices, the actual dollar (yen, pound, shekel, dinar…) spend is not going up in any serious way. Google managed to steal money from print and tv when advertisers shifted advertising to the web and that helped Google become the behemoth that it is today. But Google’s mobile strategy winds up just inventing new ways to maintain the steady flow of advertising $ already spent with Google as it shifts to the new mobile media. Theory says that with all those mobile devices out there, mobile advertising is going to be very lucrative. What theory misses is that there is still only so much money for consumer to spend at the moment and only so much money that advertisers can budget for advertising. It’s not Android handsets that Google has to be cognisant of, its China’s growing middle class is where the action is. And at the moment, Google’s China policy is in disarray. Google’s Chinese competition, particularly Baidu however are going full steam ahead, Baidu’s y/y growth is near 300% (with a P/E of 88! talk about high expectations…).

It’s the old case of continuing to dig the same hole deeper when searching for gold rather than trying a different hole altogether. Google just can’t figure out another way to make money other than advertising and advertisers spend isn’t going up dramatically. And ultracheap Android devices sold to the poor in Asia and Africa is not going to dramatically change this equation regardless of the number of Android based handsets activated.

While the business hippy side of me loves the fact that Google gives its employees 20% time “off” to pursue independent pursuits, the no-nonesense business man in me questions that policy, at least in its execution (buzz, wave, driverless cars) if not also its raison d’être. Not only has the 20% personal project time brought us overly engineered consumer failures, but Google is also on a small company buying binge and all their big time new pursuits (Android, AdMob not to mention Maps and Gmail and Grupon, the “one that got away”) have been developed by others and bought out by Google. 

I now put Eric Schmidt up there with Steve Balmer as misguided CEO of the decade. Both CEOs continue to milk their one cash cow and can not come up with any new product that excites consumers and generates revenue.