Today Google announced that it had generated $54 billion worth of economic activity in the US in 2009. The report, which shows state by state economic contribution, bases Google's total value on three factors: 1) Sales driven through AdSense and AdWords; 2) Ad revenue generated for publishers through AdSense; and 3) Google grants. As a research analyst, I'll admit that you can make numbers tell any story you want to, and my gut here is that this report is principally a PR effort to: 1) Communicate some altruism about the Google brand that has been getting some bad press of late; 2) Simplify the complex transformation Google has brought to advertising into a simple, single number; 3) Shift the focus away from questionable strategic decisions that Google has recently made. I wholeheartedly believe that Google has transformed advertising and is almost singularly responsible for the phenomenon of biddable media buying which I think will ultimately replace relationship-facilitated media buys across channels. But I don't believe that Google stimulated $54 billion worth of business. I think what Google did do is provide a new revenue stream to small businesses and site owners, catalyze some new sales, and take a share of commerce and media expenditures that would have happened anyway.
Today, Google announced Google App Engine for Business, and integration with VMware’s SpringSource offerings. On Monday, we got a preview of the news from David Glazer, Engineering Director at Google, and Jerry Chen, Senior Director Cloud Services at VMware.
For tech industry strategists, this is another step in the development of cloud platform-as-a-service (PaaS). Java Spring developers now have a full platform-as-a-service host offering in Google App Engine for Business, the previously announced VMforce offering from salesforce.com, plus the options of running their own platform and OS stacks on premise or in virtual machines at service providers supporting vCloud Express, such as Terremark.
What’s next? IBM and Oracle have yet to put up full Java PaaS offerings, so I expect that to show up sometime soon – feels late already for them to put up some kind of early developer version. And SAP is also likely to create their own PaaS offering. But it’s not clear if any of them will put the same emphasis on portability and flexible, rich Web-facing apps that Google and VMware are.
So Google aims to expand into enterprise support – but will need more than the planned SQL support, SSL, and SLAs they are adding this year. They'll also need to figure out how to fully integrate into corporate networks, the way that CloudSwitch aims to do.
Following its acquisition of Quattro Wireless for $275,000,000, Apple has just announced the launch of iAd, its mobile advertising platform (see my colleague’s take here). Adding the $750,000,000 that Google is ready to invest in AdMob (the deal is still under FCC scrutiny), the two most disruptive new mobile entrants have invested more than $1 billion — a clear signal that mobile advertising has long-term potential. The main difference between Google and Apple is that Apple is only just entering the advertising business, while Google’s entire business model simply IS advertising. However, that potential has yet to be realized. Does that mean stakeholders can generate significant revenues in the short term and that operators will be bypassed once again? I have read in various places some strange comments suggesting that Google’s mobile ad revenue share with mobile operators would be a way to finance network evolution. Just compare the cost of a base station and the significant investment required to finance 4G with absolute mobile advertising revenues and you’ll quickly figure out for yourself that this is unlikely to happen anytime soon. This is more of an online advertising discussion around the Net neutrality debate (remember France Telecom’s CEO warning that he was not “building freeways for Californian cars”!) but it will crop up later for mobile.
Building off of Tom Grant's post about Google Buzz earlier today, Google Buzz is an interesting case study about how winning market share is not just about having the first or the best product. It is often about having a product (including marketing and sales) that does the best job at getting users to use it and getting developers to create quality content.
Google knows this better than anyone, and which is why they just released a product that they hope will be easier to adopt than Twitter or Facebook. Google Buzz is not fully baked and its privacy settings are badly broken; however its intended audience already uses Gmail and just had this new tool literally dropped into their inboxes. Google is probably hoping to replicate its successful introduction of GChat, an instant messaging client that was substantially worse than any other when it was introduced in late 2005 but today enjoys widespread adoption because it is on by default for anyone logged into Gmail and was gradually improved.
Non-social products can survive with gradually declining market share for a number of years, and then potentially come back if users become convinced that their offering is superior. However a social media product without users is a ghost town, a phenomena that MySpace knows well as their CEO leaves today.
This is not a battle over who has the neatest features; it's a battle over who will be the most successful at capturing user time, an increasingly limited resource.
Therefore: Do you think the technical problems with Google Buzz, both privacy and other, are enough to stop it from gaining broad adoption, at least among existing Gmail users?
We just had another of our regular cloud research meetings at Forrester. In these meetings, we cut across our research organization to examine cloud computing from every angle.
Compared with even just a year ago, it's amazing how important and pervasive cloud computing analysis (as opposed to cloud computing guesswork) has become in our research calendar.
You can see the existing cloud/*aaS research here and our planned research here. As the meeting host, I mostly listen, probe, and take notes, but ocassionally I get to jump in with a thought.
To wit: We are often asked about whether cloud-based collaboration (email, team sites, instant messaging, Web conferencing, social computing, etc.) works best on multi-tenant, dedicated solutions, or both. The answer is both, but trending towards multi-tenant. Our clients are interested in both multi-tenant and single-tenant or dedicated cloud solutions -- as long as the price is right.
The future of cloud-based collaboration is clearly multi-tenant for two economic reasons:
1. Multi-tenant enables the fundamental economic benefits of a shared resource. We can see this in the price war going on in email right now -- a 50% price cut in the last 12 months with multi-tenant cloud email. The floor on email cost keeps dropping, fueled by the better economics of multi-tenant solutions and high capacity utilization.
I was intrigued and excited to see Google announcement of their second operating system effort today, Google Chrome OS. I’ve been thinking about how client operating systems will evolve ever since I began struggling with having data spread across multiple PCs. I finally gathered together my thoughts on the future of client OS in the The Personal Cloud, published just two days ago.
My working title for this report was “Death of the PC OS” because I believe that the industry needs to rethink and expand the role of PC and device operating systems.