Making sense of Google's seemingly kooky concepts

[Resurrection]

Making sense of Google's seemingly kooky concepts | MNN - Mother Nature Network

In its self-proclaimed drive to make the world a better place, Google has immersed itself in far more than Internet search and online ads. But driverless cars and a wind energy farm in the Atlantic Ocean?

It may not always be immediately apparent to frustrated investors — they wish management would be more frugal and focus more on the stock price — but there's usually some calculated logic underlying Google's unconventional strategy.

Google's brain trust — founders Larry Page and Sergey Brin, along with CEO Eric Schmidt — clearly think differently than most corporate leaders, and may eventually encourage more companies to take risks that might not pay off for years, if ever.

The time is ripe for long-term thinking, with memories still fresh of the financial meltdown — a byproduct of Wall Street's demands for companies to deliver ever-higher profits every three months and meet earnings targets set by analysts.

"Everywhere you look in this country, it seems that we are suffering from the consequences of too much short-term thinking," said longtime Silicon Valley forecaster Paul Saffo, managing director of foresight for Discern Analytics.

"Google doesn't have this disease," he said. "It is one of the few lone bright spots we have in that regard."

Even so, it might be difficult to fathom how Google can justify paying for the development of robotic technology that has driven cars thousands of miles on California roads without a major accident and committing potentially hundreds of millions of dollars to help build a wind farm hundreds of miles from the Eastern Seaboard.

With a little imagination, it's easier to see how Google might benefit. For instance, Saffo surmises that the driverless technology eventually could be implanted into a fleet of vehicles used for car sharing.

Google then could use a camera to take new pictures of streets and highways that appear in its online maps, another example of a service that once seemed like a diversion from its Internet search engine but is now an indispensable tool that helps the company sell advertising.

The company announced Tuesday it would buy a 37.5 percent stake in the Atlantic Ocean wind energy project, investing in a network of deepwater transmission lines to bring power from still-to-be-built offshore wind farms.

That makes more sense when you realize Google already sucks up massive amounts of energy from the power grid and expects to consume even more in the next decade as it opens more data centers filled with row upon row of computers to run its Internet services.

And if the value of renewable energy rises, as many analysts expect, Google eventually could even sell its stake for a tidy profit.

Or it could turn out to be a total bust, something Page and Brin warned potential investors could happen in April 2004 when they laid out their iconoclastic approach to business before Google sold its stock in an initial public offering.

"Our long-term focus may simply be the wrong business strategy," they warned. "Competitors may be rewarded for short-term tactics and grow stronger as a result. As potential investors, you should consider the risks around our long-term focus."

The Google founders also told investors that the company would be willing to finance projects with just a 10 percent chance of yielding a return of at least $1 billion — bets that seem "very speculative or even strange."

Google's transparency about its unorthodox ways may be one reason the company hasn't been stung yet by an outcry from its shareholders, although most analysts agree the stock price probably would be higher if management were to use some of the company's $30 billion in cash to pay a quarterly dividend or buy back shares.

Google stock closed at $541.39 on Tuesday, down 13 percent for the year and far off its all-time high of nearly $750 three years ago.

The company's uninterrupted streak of prosperity since its August 2004 IPO hasn't hurt, either.

Google can afford to gamble more frequently than most companies because it dominates the Internet's most lucrative market, the ads running alongside search results. And Google has seized on that opportunity in a manner that would make Gordon Gekko proud, beating back its competitors to boost its annual revenue from just $86 million in 2001 to nearly $30 billion now.

The company, based in Mountain View, Calif., began branching out beyond search well before it went public.

It set up an online news section that compiles the day's top stories in 2002. Just a few months before its August 2004 IPO, Google unveiled a free e-mail service that boasted an unprecedented — and still expanding — amount of space per inbox.

In 2004, it bought an obscure digital mapping service called Keyhole that eventually turned Google into the place to go for directions. Even rival CEOs, such as Yahoo's Carol Bartz, say it's the best around.

More recently, Google created a free mobile operating system called Android that now powers millions of smart phones. This month, it's rolling out technology with Sony that weds traditional television viewing with Web surfing.

Google's expansion into mobile phones and television never seemed like quantum leaps for the company because they are little more than attempts to transplant its advertising model onto other Internet-connected screens that attract a lot of eyeballs.

The company also has poured money into building more widely available and faster ways for people to connect to the Internet, reasoning that it will make money if more Web surfers have the opportunity to use its ubiquitous services.

Schmidt, Google's CEO, frequently tries to defuse the perception that the company is frivolous. He contends the company's formula is disciplined: 70 percent of its resources go to the main search business, 20 percent to other projects connected to search, and 10 percent to initiatives that have nothing to do with search.

It's difficult to argue with the formula so far, said Colin Gillis of the stock market research firm BGC Financial.

"As an analyst, I do hammer them on their (rising) expenses and some of their questionable investments," he said. "But as a user of all their products, I love them. And from a purely personal perspective, I appreciate that Google is trying to use technology to solve the world's problems."

[slikrapid]

In its self-proclaimed drive to make the world a better place,

megalomania (with a supposedly benevolent goal), a common dictatorial trait

but there's usually some calculated logic underlying Google's unconventional strategy.

its a rather simple logic, use the trends to arrive at the top and then steer/create the trends yourself

Everywhere you look in this country, it seems that we are suffering from the consequences of too much short-term thinking,"

it has nothing to do with either short or long term thinking, the real origin of these problems is the biased/rigged/non-transparent system itself
the key is having inside information on what will be pushed in the future, judging by its success google certainly has this kind of information, thus being able to expand so much, furthermore its popularity will be well exploited in the future

That makes more sense when you realize Google already sucks up massive amounts of energy from the power grid and expects to consume even more in the next decade as it opens more data centers filled with row upon row of computers to run its Internet services.

seems they missed the 'green' part of the story (to lower the consumption)

The company also has poured money into building more widely available and faster ways for people to connect to the Internet, reasoning that it will make money

yet not many question the need for amassing of money/power/control on a such insane scale, this is not a 'normal' company behavior that would focus on its primary skill/competence and expand slowly from time to time, as google seems to lengthen its tentacles exponentially, intruding just about everywhere it can - no need to think twice whether a world with such a role model would become a better place or not

[desodorante]

megalomania (with a supposedly benevolent goal), a common dictatorial trait

Google makes money out of Advertising, their 'megalomania' is nothing but market expansion

its a rather simple logic, use the trends to arrive at the top and then steer/create the trends yourself

Trends have high spikes in interest/sales/revenues, Google has created/developed products that will be used for many years to come.

it has nothing to do with either short or long term thinking, the real origin of these problems is the biased/rigged/non-transparent system itself
the key is having inside information on what will be pushed in the future, judging by its success google certainly has this kind of information, thus being able to expand so much, furthermore its popularity will be well exploited in the future

I believe there is some long term thinking, most companies just solve everything on the fly, specially with software. Most apps start as a tiny app followed by a universe of patches. Google has always searched for auto sufficiency, high performance, low cost, exponentially scalable solutions.

seems they missed the 'green' part of the story (to lower the consumption)

I don't think being green means to reduce consumption, but rather to reduce the impact it has on the planet.
If Google can provide itself with massive amounts of renewable energy while researching further improvements to the technology involved instead of going with the usual ways that every other company uses, I think it will be fair to call them 'green'. After all there are too many hipsters that think that buying a designer shirt made out of recycled fabrics is saving the planet.

yet not many question the need for amassing of money/power/control on a such insane scale, this is not a 'normal' company behavior that would focus on its primary skill/competence and expand slowly from time to time, as google seems to lengthen its tentacles exponentially, intruding just about everywhere it can - no need to think twice whether a world with such a role model would become a better place or not

[/QUOTE]

Vertical Integration is something that most businesses hardly consider because of the (financial) risk involved. Google actually takes the risk and in most cases shares some of the results with everyone. Besides, the question of what will Google become if it keeps expanding is more of a question of the social field and not the economic.
I personally do not think Google intents to honor its motto, but it is raising concerns and connecting people to information everywhere around the world. We all have access to an unthinkable amount of information today, and this means that generations to come will be more open minded, and free willed.
I think that there can't be a dystopian future as the one imagined in most movies, as we are getting way too independent, way too open minded and way too informed to be oppressed the way a company like Google could oppress us.
Also, almost all of the scientific research is driven by companies: whatever is not suitable for sale or does not have the necessary ROI won't be investigated. The Technology that should be owned by the humanity itself is now the property of a company, who would make a profit out of it (Think of medicine, how many people will be saved if it was free?)
This doesn't mean that I believe the information we receive is not biased and there are no efforts to systematically turn people into low IQ entities that will do as they are told (or "sold")
I think we should be way more concerned about world leaders and their corporations, as they suppress, destroy, distort and confuse us with their twisted plans of a world conquest. Google in any case, unintentionally, is giving us some of the necessary tools to fight this oppression, and a chance to become more of what we are today as a society.
This doesn't mean either that I belive we live in a fair or almost fair system, but every journey starts with a small step