Google gave all employees moving into the Zurich office apples with the Google logo engraved. Source: Webilus.fr
It is hard to escape the buzz flying around Google+, the search monster’s latest social thing. It raised red flags at Facebook where Mark Zuckerberg summoned a hastily organized news conference that fell on def ears with general public. The presser was a classic case of over-promising and under-delivering as Zuckerberg’s “awesome announcement” turned out a yet another dull unveiling of way overdue features, such as group chat and Skype integration. But who would have though just a month ago that Google would put the fear of God into Facebook with what many consider an unusual take on social networking?
Nobody saw it coming when co-founder Larry Page took the reigns April 4 from Eric Schmidt. What a difference a few weeks make. An invite-only service closed for public in two weeks since launch signed up more than ten million users. And when it opens for everyone later this year, the hundred million milestone will be well within reach. Page, who once famously called Steve Jobs a liar, put the pedal to the metal from his first day as CEO by tying executive bonuses to their contributions to the company’s social strides. The move quickly earned him notoriety among tech watchers and his own employees.
But unlike Mark Zuckerberg – who may try to be, but is certainly no Steve Jobs on stage (see why in the below YouTube clip) – Page has notably been keeping low profile while cunningly taking clues from Apple’s iconic leader. We were told about “moon shots”, to the dismay of many watchers (this author included). Page was stiffing innovation and focusing too much on corporate bureaucracy, many cried…
Himself an engineer, Page also seemed like a really bad fit for the Internet company he co-founded. He is no product person of Jobs’ caliber and Google’s been heavily criticized left and right for the lack of sophistication and style present in Apple’s thoroughly designed products. But Larry Page is incredibly intelligent and he immediately re-energized Google by saying ‘no’ to a lot more things – per Steve Jobs’ mantra.
Google+ is but the first fruit of the new leadership and a sign of what’s coming. Google’s social service will put tremendous pressure on Facebook when it goes public, no question about it. The million dollar question is, will Facebook be able to respond accordingly? Facebook does not have a mobile operating system of its own and lacks the myriad of services Google uses to monetize users. The killer feature of Google+? Right there below, that black bar with unobtrusive notifications appearing subtly while using Google-owned sites logged in with your Google Account.
That little thing is a huge advantage over Facebook’s approach which calls for logging in to check out the latest from your friends. But it’s not just notifications – all those services lined up on Google’s bar – Gmail, Calendar, Documents, Photos and more – each of them is a hammer waiting to drop on Facebook. Google+ also marks a 180-degree turn for the search company, towards Apple-ified design. The Circles interface of Google+ (see the screenshot below) may look like an Apple-quality product because it was conceived by Andy Hertzfeld, a legendary designer who was on the original Macintosh team. Google’s recent corporate communication and advertising is also enriched with Apple’s polish and shine as of late.
The Google+ Circles editor is lively and refreshing, thanks to former Macintosh team member Andy Hertzfeld whom Google hired to design the interface, indicating that powers to be at Google are finally approaching product design seriously.
Heck, even the structure of Google’s most recent earnings shares a lot in common with Apple’s business metrics. The company pocketed $2.51 billion in profits on sales of more than nine billion dollars and Wall Street is jumping with joy. Apple will report its earnings next Tuesday, but in their March quarter they posted a net profit of $5.99 billion on $24.67 billion revenue. Google’s revenue and net profit was up 32 percent and 67 percent year-over-year, respectively – versus 82 percent and 95 percent for Apple, respectively.
Quarterly revenues chart courtesy of TechCrunch
The search monster as of June 30 had $39.1 billion in cash, cash equivalents and marketable securities in bank, while Apple had $65 billion in the March quarter. Neither firms spares any expense on infrastructure: Apple invested over a billion dollar in the North Carolina data center rumored to be one of the many to crop up around the world, while Google’s capital expenditures for the June quarter hit $917 million, the majority of which was related to land and building purchases, and IT infrastructure investments, including data centers, servers and networking equipment. “We expect to continue to make significant capital expenditures”, reads Google’s earnings report.
So while Google still has plenty of catching-up to do in order to become half the money-making machine that is Apple, the similarities between the two are evident. For example, both companies earn more than half their revenues from overseas markets and enjoy margins in the 30+ percent range which are the envy of the industry. However, it is important to remember that Google runs an online-only business, while Apple takes big risks building expensive retail stores, prepaying billions for components and painstakingly aligning Asian suppliers and manufacturers to build gadgets, on time and in volume.
And because those sexy products come at a price, Apple spends big bucks on advertising. And when tough times ensue and people cut down their spending on gadgets, Apple suffers. Google bleeds too when the economy folds because advertising budgets shrink, causing a substantial decline in online advertising which makes u the vast majority of Google’s fortunes. So, each company has its Achille’s heel. Android, which Google gives away to device vendors, is the key to Google’s efficiency as a publicly traded company.
Google-owned sites such as Gmail, search and others for the first time exceeded the growth rate of partner sites. In the June quarter Google’s own sites grew 39 percent to $6.23 billion while partner sites (monetized through the AdSense program) grew just 20 percent to $2.48 billion. Why? Because Android is making Google search better, explains Eric Bleeker for the AOL Daily Finance:
By giving away Android, Google promotes more people buying smartphones. Suddenly, instead of just searching while on your desk at work or home, you’re also searching on the go. That creates more searches. Also, Google now knows your location, so it can better incorporate a local restaurant when you search for where to eat that night. That creates better results. That’s part of the reason Google increased the amount of money it collects per advertising click by six percent last quarter; it’s getting smarter about how to offer advertising when people search.
It is increasingly becoming apparent that Google is, just like Apple, benefiting from being able to put more wood behind fewer arrows, so to say. That is, Google – just like Apple – is focusing their resources in fewer brands and products. That’s the power of focus. Plus, Googlers dig Macs.
Hey Apple, Android is eating your lunch, Google’s social head Vic Gundotra not-s0-subtly alluded at a developer conference in May