Tuesday, July 27, 2004

Google and substance over style

The Google IPO continues to make headlines. At the anticipated top price of $135 per share (to be determined by an auction), Google will be the most expensive IPO ever, possibly opening at a value of $36 billion. That will make it about the same value as Yahoo and nearly twice as big as Amazon. But when you look at “traditional” corporations, you realize the scale of this event: Google’s market value may be nearly 50% more than General Motors’.

At more than a hundred times its earnings per share, Google’s not a bargain stock. And it’s hard to see how it can be sustained long-term. Yes, they have a great search engine that lots of others are trying to beat, but other search engines are not Google’s only competitor. After all, Google is not really in the search-engine business. It’s mainly in the business of delivering audiences to advertisers. There are a lot of innovators out there trying to grab that traffic.

Most of them are trying to use media-rich content to build audiences for their advertisers, like the magazines and television channels have done before them. Google’s Spartan interface is interesting – it doesn’t need rich media because its “content” (search results) is compelling, customized, timely, relevant, and uncluttered. The same could be said for most RSS feed readers. Those in the e-learning and e-marketing fields for whom style is more important than substance really should take note.

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