I have been waiting to write this post for four months. Ever since I wrote a piece with this title in January 2011 friends and colleagues have been asking “And now…?”, and this has intensified since Google’s results announcement in January 2012. 25% revenue growth? Breaking $10 billion revenue in a single quarter? In anyone elses’ results statement this would have been sparkling news in a recession. Google’s shares dropped 10% on the news. And then the analysis. Cost-per-click – Google’s revenue from advertizers – fell 8% in the quarter, and the same amount in the previous quarter. This is a company still totally dependent on advertising. Imagine a newspaper company whose yield from classifieds fell 8% per quarter to see the wonderful way in which “velocity”, as Larry Page describes growth, disguises performance.

When I last wrote on this subject I was trying to describe an advertising-based search company that was trying to kick the habit and migrate elsewhere. Clearly Android, now on 250 million handsets, is the most obvious escape hatch. Analysts forecast that 2012 will see Android account for 12% of gross revenues, which demonstrates that migration is slow and old habits die hard. So if my grandchildren do not grow up thinking of Google as a phone company, as I suggested in the original blog, what will they think of the mature Google, shuffling along in the carpet-slippers of 10% growth? Well, they could imagine it as an operating system – Chrome is still growing strongly and Chrome OS has not been fully exploited. Or they could think of it as a social network environment: Google+ is now up to 90 million members, still a fraction of Facebook, but up from 40 million the previous quarter. Indeed, social networking may be a “must win”, or at least a “must compete strongly” environment for Google if the search-advertising market is to be prolonged long enough for these other options to emerge from under the strategy umbrella. With Google taking the axe to so many of its product development fields directly related to search, this requirement is exacerbated.

However, what really gets me writing this evening is the strong suspicion that Google themselves think that the answer is elsewhere. An interview with Ben Fried, the Google CIO, in the Wall Street Journal yesterday has him saying that the Cloud is reaching a tipping point (http://blogs.wsj.com/cio/2012/05/10/google-cio-ben-fried-says-cloud-tipping-point-is-at-hand/?mod=google_news_blog). Google clearly feel that Cloud computing, in the age of ubiquitous broadband (whenever that happens), will be their route to a business base in individual and small business sectors. As Google has used the Cloud to take costs out of its own core business, which given the comments above it has needed to do, so it can use its global data centre coverage to do the same for others. In this world, where we can fondly imagine two remotely sited workers watching each other’s real time edits on a document in Google Docs, small development teams can access a wide range of tools and pursue the sort of “fail fast”, constantly re-iterating, development strategies beloved of major corporates.

But this is a place where the competition is established, hot and strong, and despite Google’s history as a solutions developer, Apple and Microsoft go back further. iCloud, dependent on a syncing environment rather than the broadband, moves all the files to the Cloud, with users retaining copies and, as Steve Jobs is always quoted as saying, demoting “the PC to be just a device”. There is a different philosophy of Cloud here, but one that seems more based on now than when. And then again there is Amazon, inspired, as was Google, by the long struggle to use the Cloud to solve its own back office issues, now offering AWS as a solution in the very markets that Google thinks should be its own.

So it cannot be just the Cloud that Google see as their exit-from advertising-dependence platform. But the Cloud and Big Data? This article’s timing is much influenced by the announcement of Google BigQuery, which, although semi-publicly trialled since December last year, was formally launched on 1 May (http://www.zdnet.com/blog/big-data/googles-bigquery-goes-public/405). Since it covers databases of up to two terabytes (seems big to me!), this has been described as a business intelligence tool by some commentators who expected larger database environments from the inventor of MapReduce (working in pedabytes), who kicked off this Big Data thing to begin with and are clearly working here as elsewhere from the “solve our own problems, then generalize to solve yours” standpoint indicated above. But here is a real irony: if you are working in a Big Data context much of what you will be looking for is indexed on Google, but not searchable in a Google Cloud context. Again, contrast Amazon, where they have now begun adding public databases to their Cloud offering, searchable in their EC2 (Electric Compute Cloud) context. Here are some of the first offerings:

In all, Google now face a struggle. As they move to a new service environment, we need to remember that they created the original company not by inventing search but improving it. Page ranking was a big step forward in its day and created a meteoric growth company. From this they built an Empire, now maturing. Edward Gibbon, commenting upon the fall of Rome and the rise of its rivals, marked a certain point of no return. “If all the barbarian conquerors had been annihilated in the same hour, their total destruction would not have restored the empire of the West: and if Rome still survived, she survived the loss of freedom, of virtue, and of honour.”

Is this where Google now is, and can its still youthful originators recreate it?




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