Earlier this month, Google celebrated its 10 year anniversary of offering email through Gmail. One of the crazy parts for me is that Google at first was unsure about launching such a product. Why? Because Google was a search engine. With competitors such as Altvista and Lycos trying to build portals to serve users every need, Google was able to offer a clean and easy alternative. It would do one thing only but would do it incredibly well. That thing was search. Over time, Google changed its mission to organizing the world’s information which has taken it on a journey that keeps getting bigger. Let’s just look at how a Google world looks like:
Google has wind plants that makes it possible to generate cheap energy that it uses for its server farms. Thanks to those server farms, Google has been able to not only offer web services but also get into offering actual high speed internet access in an increasing number of cities. It has also ventured to offer free wireless internet access to some parks (Central Park), cities, Starbucks locations. It also is working on expanding its internet offering through Google venture initiatives such as loon (balloons), drones, etc.
Of course, once Google has you connected on the internet, it will nicely invite you to connect to its services. If you are a Google Fiber subscriber, can you get tv and phone. But in any case, Google will offer those services through an upcoming Android tv-set box, its Google Hangouts, etc. If ever you’re using a mobile device, Google would appreciate if you used one of its nexus phones or tablets to do it. But even if you’re not, you’re most likely connecting through an Android-powered device. And in the case where you’re not, Google still offers its different apps such as Gmail, Search, Maps, Youtube, Google music, etc to other ecosystem users. Oh and just in case you’re thinking about going online, you are most likely using the top used browser, Google Chrome, seeing ads through Google Adsense.
In a cloud based-world, Google is also more than happy to help you back up your content with Google Drive, use cloud-based software through its free to-use Google docs. It also has cloud-based computing to offer to startups, developers, etc.
What about if you’re not on one of your devices? That’s also assuming you’re not using a device like a Google watch or Google glasses which are never really “off”. Then you will soon get the opportunity to have a connected home that will feature Google’s (Nest) thermostats and fire detectors or perhaps a through the next generation of cars that will be connected to Android. You might prefer not owning a car and instead use services such as Uber which Google is a part owner of. If you wait a few years, you will perhaps even get a self-driving Google car.
When you end up buying either online or offline, you might end up paying using a Google wallet. Google’s new shipping service will soon be able to ship that stuff directly to your home.
No matter how you’re travelling, chances are that you’re using the world-leading Google maps to get there which are adding all kinds of different content and will likely have access to a lot more when those robots powered by artificial intelligence start travelling the world on behalf of Google. It can also help you book flights and hotels, etc.
Basically, Google is trying to fight off these companies:
-Apple (mobile devices & software)
-Amazon (shipping, digital goods, software services, etc)
-Microsoft (software, devices, search, living room, etc)
-Comcast, Time Warner, etc (broadband access, etc)
-Samsung, Sony, Toshiba, etc (devices)
-eBay (mobile payments, etc)
-TripAdvisor, Priceline, etc (travel reviews)
-Lyft (car ownership & rentals)
-Expedia, Kayak, etc (trip booking)
The list goes on and on and on, especially when you start including smaller, more nimble startups, etc. You could certainly make the case that it is impossible for Google to build a superior product for all of these categories. You could also argue that apart from search, very few of these divisions are actually generating profits or even revenues.
Is Google Spreading itself Too Large?
One of my favorite tech analysts Horace Dediu has argued that Google does not have an actual business plan and it’s becoming harder and harder to believe that Google knows what it’s doing here. That is certainly a big reason why I’ve so far resisted in buying Google stock. It’s growing more and more and the idea that you could get an accurate picture of how much the business is worth is quickly disappearing. That being said, I’m a big believer in the ecosystem play and there is no doubt that Google has been the top player in terms of expanding its horizon. Google has more data than any other player and is likely better at using it as well. In a future world driven by software, Google will be a major force to be reckoned with.
What is Google’s products are (mostly) not the best on the market technically but the integration between them makes it nearly impossible to not use them? How much would that be worth?
Where will Google eventually stop its ecosystem expansion? Will it start producing its own content? Start producing clean energy on a large scale? Start its own bank? Where does all of this end?
I know this brings more questions and few answers but I continue to believe that the ecosystem is incredibly important and as the top way to play it, Google is certainly a worthwhile stock to consider buying. But what its actual value is in a whole other question!