I’m not so sure. (see chart below).
$GOOG is being attacked from every angle. When you sit back and ponder it, can you picture a company more under fire from competition from so many huge competitors? Let’s examine…
$AAPL is attacking $GOOG in the land that it does business – the web. The same way $GOOG was instrumental in shaping the web, $AAPL has been instrumental in shaping the mobile web. If you haven’t noticed, on the mobile web we use apps, not web browsers. In fact as $GOOG is finding out with its Chrome Web Store, app stores work on the mobile web, not so much off of it. While I’m not going to go as far as to say The Web is Dead, most certainly the web is different on mobile – its much more $AAPL‘s web than $GOOG‘s.
To illustrate the threat, think about how you find a restaurant on your computer versus how you find it on your phone.
On the web, when I’m hungry, I’m often search for a restaurant, type of food, and/or neighbourhood and given (and frequently click on) Yelp as a search result. While I’m on my way to Yelp, I see many ads for restaurants relevant to my search query. On my phone, however, I have the Yelp app. I don’t need to use $GOOG search. $YELP has become my Google for restaurants. Advertising dollars shift from $GOOG to $YELP. $GOOG clients lost, $YELP clients gained. $GOOG knows this, which is why they tried to buy $YELP in 2009.
With the movie out about it, your Grandmother on it, and a soaring valuation of it, $FBOOK has been all over the news. It’s now emerging as “the Next Google”. If you spent 5 minutes on $FBOOK this may seem laughable, however behind all the vampire requests and baby pictures there is something quite dangerous for $GOOG.
$FBOOK is trying to attack $GOOG as your central point of entry to web. Facebook is essentially “Internet for Dummies”, written in PHP. Your mum, dad, and friends who use Internet Explorer and land on a lame MSN.com default home page are actually entering the internet through Facebook. Back in September, $FBOOK passed $GOOG in time on site. This is important for $GOOG because where you are, is where you will search. If you notice already, when you get to the end of a search result on $FBOOK, it gives you $MSFT bing results:
In addition, Facebook Places appears to be steadily taking off in my Facebook stream. Geolocation is supposedly a major growth area for Google and Facebook, especially with their monopoly on identity, could snatch it.
The Content Farms ($DMD)
If you haven’t already noticed, $GOOG search results have become less useful lately as SEO-juiced content farms such as Demand Media ($DMD) have gone to great lengths to get their content to the top of search results. While having Content Farm spam in search results may be short term profitable, $GOOG recognises that usefulness and a good user experience is vital to it’s long term success. This week, $GOOG drastically changed its algorithm to combat these have hacked $GOOG‘s algorithm (and perhaps revenue optimization model). Since then, search results have improved. Google has won the battle but I’m not too certain $GOOG has won the war.
As a potential investor, this Content Farm situation brings a ton of uncertainty, specifically leaving me with two questions:
1) Can Google combat Content Farms in the long run?
2) If Google beats out Content Farms, how will that affect it’s revenue?
To me it almost seems as a “damned if you do, damned if you don’t” situation for $GOOG. The value investor would say that the price reflects this uncertainity and this is opportunity but I’m not so sure. It’s a pretty tough situation for $GOOG.
While I’m not a contributor on Quora, I am a lurker. Often times during the day, I find myself going to Quora for a search before I go to Google. These searches are for work and often tech-related so Quora, having a deep set of Tech early adopters, is quite useful. If it flourishes beyond its tech roots, scales its community, and effectively fights spam, I can see Quora as a potential Google competitor. I have never consciously by-stepped Google, until Quora.
I’m not as bullish on $GRPN as others are, but I can definitely see how it is hurting $GOOG. Groupon is going after a major growth area for $GOOG – local businesses. They are trying to reach you before you perform a $GOOG search, by sending you daily deals via email and becoming the Point of Sale. They are even arbing $GOOG to get the business, buying up Google Adwords and flipping their “ads” via email. The hilarious part of it all is, I access Groupon in Gmail, when Google should have made it a tab years ago.
Last year, Chris Dixon wrote an awesome post “While Google Fights on the Edges, Amazon Attacks its Core”. He writes:
The key risk for Google is that they are heavily dependent on online purchasing being a two-stage process: the user does a search on Google, and then clicks on an ad to buy something on another site. As long as the e-commerce world is sufficiently fragmented, users will prefer an intermediary like Google to help them find the right product or merchant. But as Amazon increasingly dominates the e-commerce market, this fragmentation could go away along with users’ need for an intermediary.**
While under the surface, Chris might have been touting the potential of Hunch, on the surface he makes a dead-on point. As places like Amazon become the place to go on the internet to shop, why go through Google. Think about the effect a Wal-Mart opening in town has on the local paper.
I’m sure I left off a few potential competitors out there, and feel free to chime in with others.
I’ve never seen a company with so much competition coming from so many angles. These days, it’s tough being Google.