Monday, August 03, 2009

Watch Your Back! or Take Advantage!

If you find yourself in a street fight, it is wise to get someone to guard your back. Two enemies can guard one another's back if faced by an even greater evil. A street fight for bountiful Internet treasures has broken out. Gangs and alliances have been formed. Some of the alliances are stronger than others and every player needs supporters, loyal ones if possible. Consumers should find a good seat an enjoy the fight. Consumers will win as an abundance of new, low priced, delightful services become available. Investors should place serious bets because the winners will enjoy profitable growth for years to come. Investors should remember that Ford, GM and Chrysler investors did very well for many years. The fight is not a fight to the death.

Recent news has been about conflicts between Google and Apple:
Google's Chairman has relinquished his seat on the Apple board of directors.
The FCC is investigating Apple and AT&T for not allowing Google Voice on iPhones.
Google Chrome's market share is biting at the heels of Apple's Safari.
The Google Book settlement is being questioned by anti-trust busters.
Apple is providing reading services for both Amazon and Barnes & Noble.
Google has made a million free book titles available through Sony Readers.
Apple's iTunes service is very profitable but Google's YouTube is rapidly building audience.
Google's YouTube service is offering a new source of revenue to local news stations.

Other recent news has been about the conflicts between Google and Microsoft:
Microsoft is promoting its Bing search engine heavily.
Microsoft is giving Yahoo 88% of search revenues for 10 years in order to boost it's search share.
Microsoft's share of search has risen slightly, in addition to the 20% share that Yahoo will add.
Around the world, Google is gaining market share in the fastest growing part of the market--mobile search.
Google's browser, relatively new with only a small market share, has a steep mountain to climb but the owners are shooting to be King of Mt. Everest.
Google's browser goal is to be "the alternative operating system" on many machines.
Google's share of mobile handsets is growing rapidly; Microsoft continues to struggle in this important market.
Europe antitrust busters are considering a browser checkoff poll to bust Microsoft's Monopoly.

The above is only a snippet of the melee that is in progress. Many a player stands with Google when it comes to fighting the Microsoft OS monopoly only to face off against Google in their prime businesses. There are many complex relationships in play. Google is hiring, but, more importantly, thousands of programers can now write for the very broad OpenCode alliance. Under this alliance, programers can "assemble" the pieces of various other programs to build a great new product quickly. The new product can run on various operating systems.

In the social network area, the melee seems to be dominated by Facebook (Microsoft is a minority owner of Facebook) but "Lost Battalions" (like the 77th in WWI) are attacking from without and within. The OpenSocial alliance includes scores of players, lead by Yahoo, MySpace and Google. While there is considerable overlap, Yahoo and MySpace each bring more than 100 million "friends" to the fight. The combined audience is probably bigger than the combined audience of Facebook and Microsoft products but, again, the important fact is that the "little guys" know their realistic chance of a "win" is through the OpenSocial alliance.

The new MySpace mail system is interesting. It should do well. MySpace even appears to have a relatively easy path to the number two email spot behind Yahoo. So here again, you have Yahoo, MySpace and Google joining forces against Facebook/Microsoft in regard to social networks while battling one another and Facebook and Microsoft for email market share. One of the features that gives MySpace a leg up on Facebook mail is the super rapid search services provided by Google. I would not be surprised if MySpace Mail is not retrofitted to work with Google Waves, which is Google's main replacement model for outdated email systems.

Amazon and EBay are the leading Internet retail businesses but here again Google is making it easier for small players to compete. If you have a website, you can easily add a Google Store. If millions of small players take advantage of Google's free "store front" services, Google will have become a major player in retail.

It continues to be amazing that Google can offer so many neat services free of charge. We all know that there is a current or future revenue stream attached to each of these free services. We know that the demand for free service is much greater than the demand for expensive service. So the combination here is fast growth now and fast revenue growth later.

Putting a high powered computer in your pocket is going to gradually change your life. The Qualcomm processors being put in pockets today are more powerful than the average desk top of 4 years ago! If you computer is more than 4 years old, it is not as powerful as the current pocket computer. Chances are that your 4 year old computer does not have GPS and cell communication capacity built-in.

We are talking about a change that is bigger than all the ramifications of moving from a horse and buggy society to a automobile society. I'm very confident that Google's shares will double and double again over time. Amazon, EBay, Apple and other companies are going to see dramatic growth. As the price of providing service continues to fall, the number of services offered will soar. Most of these will be supported by advertising. Google seems to be the only player that fully appreciates the critical role of advertising in the provision of ultra low priced services.


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