I was reading over at Amr Awadallah Blog that Google’s earnings were supposed to grow by 30% and they only grew by 22%. What caught my eye was
“Google also increased and plans to increase its spending significantly. They hired 700 more folks in Q4, they doubled their sales and marketing spend (over 2004-Q4), and they said their expenses are likely to rise significantly as they invest in long term projects.”.
Now that Google has so much money and pressure to do something big, they feel that they need to spend it. They don’t think like they used to. People will one day realize that Google is not going to be a Microsoft, ever. They have a nice little niche and that is search. They are by no means a power house like Microsoft. You can only go so far with search and their current way of generating revenue.
What they are doing now is trying to figure out how to make more money outside of what they know. The chance of Google hitting some new break-out way of making money and growing is no bigger than any other company with lots of money. They only have success in one area and that is search and ppc advertising. Anything else they do is a stab in the dark. Sure maybe Del Monte could come up with there own brand of computer but that is not what they know. They make green beans.
The people investing in Google have no idea what the company really does or is capable of. It is the 90’s all over again. It will be ugly when it all falls down. They are spending tons of money on all kinds of projects and they have no idea if those projects will generate revenue. Everything they make they offer for free. When has that ever been a successful business model? They will always be known for search and will always be the most searched website but that is a company with one product. They give things away for free and put advertising on it. That is all they do.