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Farhad Manjoo writes at the New York Timesthat at first glance Google looks plenty healthy, but growth in Google’s primary business, search advertising, has flattened out at about 20 percent a year for the last few years and although Google has spent considerable resources inventing technologies for the future, it has failed to turn many of its innovations into new moneymakers.
According to Manjoo, as smartphones eclipse laptop and desktop computers to become the planet’s most important computing devices, the digital ad business is rapidly changing and Facebook, Google’s arch rival for advertising dollars, has been quick to profit from the shift. Here’s why: The advertising business is split, roughly, into two. On one side are direct-response ads meant to induce an immediate purchase: Think classifieds, the Yellow Pages, catalogs or Google's own text-based ads running alongside its search results. But the bulk of the ad industry is devoted to something called brand ads, the ads you see on television and print magazines that work on your emotions in the belief that, in time, your dollars will follow.
“Google doesn’t create immersive experiences that you get lost in,” says Ben Thompson. “Google creates transactional services. You go to Google to search, or for maps, or with something else in mind. And those are the types of ads they have. But brand advertising isn’t about that kind of destination. It’s about an experience.” According to Thompson the future of online advertising looks increasingly like the business of television and is likely to be dominated by services like Facebook, Snapchat or Pinterest that keep people engaged for long periods of time and whose ads are proving to be massively more effective and engaging than banner advertisements.
In less than five years, Facebook has also built an enviable ad-technology infrastructure, a huge sales team that aims to persuade marketers of the benefits of Facebook ads over TV ads, and new ways for brands to measure how well their ads are doing. These efforts have paid off quickly: In 2014 Facebook sold $11.5 billion in ads, up 65 percent over 2013.
Google will still make a lot of money if it doesn’t dominate online ads the way it does now. But it will need to find other businesses to keep growing. This is why Google is spending on projects like a self-driving car, Google Glass, fiber-optic lines in American cities, space exploration, and other audacious innovations that have a slim chance of succeeding but might revolutionize the world if they do. But the far-out projects remind Thompson of Microsoft, which has also invested heavily in research and development, and has seen little return on its investments. “To me the Microsoft comparison can’t be more clear. This is the price of being so successful — what you’re seeing is that when a company becomes dominant, its dominance precludes it from dominating the next thing. It’s almost like a natural law of business.”
(Score: 5, Insightful) by MrGuy on Friday February 13 2015, @12:57PM
For example, when a company becomes dominant in simple console-driven pure text OS's, they'll be out of work when the world moves to graphical OS's and someone else will come in and dominate those. Or, when a company is a specialist in operating systems in a market where most players do one thing well, they'll be caught flatfooted when the real money shifts towards integrated suites of productivity apps all provided by a single vendor.
If you're going to prattle on about the history of Microsoft, you should, maybe, I don't know, read it first? And maybe understand if they actually follow your "natural law?" They TWICE re-invented their company to be something other than they were, and twice expanded a dominant position in one market into a dominant position in what the "next big thing" would be. They were less successful the third time (going from a dominant desktop OS and productivity app company into a dominant internet company), though even there it's a bit of a mixed bag (IE was a fairly dominant browser for some time, C# and .Net are still fairly widely used).
But using the fact that they failed the third time they tried to reinvent the company, while ignoring the other two times they did this with great success, as the crux of your argument is being an idiot. The quote above is a great rhetoric. What it's not is a compelling argument.
Your argument is bad. And you should feel bad.
(Score: 2) by TheRaven on Sunday February 15 2015, @10:37AM
Microsoft had a few successes, but it's worth paying a bit more attention to exactly how they had those. Their first killer app was a BASIC interpreter. This eventually got them the sale for an OS, which they managed to get as a (non-exclusive) licensing deal rather than a sale because IBM didn't think that the OS was an important part of a microcomputer. The shift to graphical operating systems could easily have gone a different way - first GEM and then OS/2 had significant features that Microsoft's offerings lacked, but they managed to use their market presence to undercut their competitors.
The office suite thing is a red herring. The first Windows version of MS Word was a port of the Mac version, which was where their market share in that area started. Excel was created because people were buying PCs to run Lotus 123 and Microsoft wanted something competitive with 123 that they could guarantee wouldn't run on competitors' operating systems.
A good example of the OP's point is IBM. They're still a big company, but for a long time they completely dominated business computing. If you bought a computer, it was probably from IBM. Most of the companies that were competing against them at this point no longer exist. They'd successfully managed to go from tabulating engines to large batch-processing computers to mainframes to minicomputers. But then they botched the transition from minicomputers to microcomputers and the company has still not recovered.
sudo mod me up