Just Google it........

As promised, a post on Google this time. Essentially, our Information Systems professor has asked us to blog on the 3 main issues one would consider if they were going to invest in Google. Google has had quite a journey over the last 11 years, it has gone from being an internet start-up to being possibly the world's most information-rich organisation to being the center of a political row between two of the world's biggest economies. However, in my opinion, the 3 most pertinent business related issues for Google are:

• The data privacy and censorship problems faced by Google. In the past, these problems have directly translated into relationship issues with governments.

• Google's battle with Apple. In the past, titanic battles such as this one have shaped the structure of the technology universe.

• Google's ability to continue with it's creative culture as it matures.

Over the past few years, every so often, Google has run into issues with governments and government bodies regarding it's data privacy and censorship policies. I believe how Google handles these conflicts and how it adapts its products to appease the fears of various governments will be one of the keys of Google's continues success. More fiascos such as the "China-gate" in Jan 2010 will certainly be detrimental to the long term profitability of the company as it will begin to restrict Google's market share in various economies. Over the last week, Google has gotten itself into some hot soup......firstly it admitted that it has snooped information transmitted over unencrypted networks for a period of 3 years and then it refused to return sensitive information it collected using Street View to the German Authorities. It will be interesting to see how Google deals with these problems as it may be a pre-curser for how google is going to handle data privacy and censorship issues in the future....

Over the last year or so, two technology behemoths have been preparing for battle. In August last year, Eric Schmidt, Google's CEO, resigned from the Apple Board. A few months later Google launched the Nexus One Google phone, a product that is in direct competition with Apple's flagship product, the iPhone. In return Apple has made some strategic acquisitions (e.g. Quattro Wireless) aimed at claiming a share of the advertising pie. The two technology sub-sectors with the greatest appeal appear to be the smart-phone and the advertising market. If Google can conquer the Smart-Phone market, or if Apple can conquer the advertising market, Google or Apple could become the undisputed champion of the technology domain. So the stage is set for a gladiatorial fist-fight and I think the technology world is watching in anticipation.

Most technology companies are known to have flamboyant cultures, but I think in this regard, Google really stands out. Unlike the employees at Apple or Microsoft, Googlers have a free reign to pursue their passions in the company. It is this culture that enables Google to continue to attract top talent. Everyone knows about Google's 20% personal project initiative (employees can spend 20% of their time pursuing their own projects / interest). One other organizational trait that I find fascinating is that at Google, employees often interview their prospective manager !! Another fantastic organizational innovation is that at Google, technical employees can move up the ladder and can be compensated as well as (or better than) their business focused counterparts. This is a great structure as this prevents the technically gifted employees from being drawn to the business side. However, I have heard from my friends at google that there are people in the organization that are taking advantage of Google's laxness and the company culture is slowly changing as a result. Continued innovation is key to the continued success of Google and Google has to be able to foster innovation even with the new culture that is emerging in the company.

In summary I find Google a fascinating company but I would very carefully examine and contemplate the 3 issues above before I invest into the organization. (With a long term investment outlook).

Till next time - Caio.

I used the following sources for research:

http://news.bbc.co.uk/2/hi/technology/10172146.stm

http://www.google.com/finance?q=NASDAQ:GOOG&fstype=ii

http://news.bbc.co.uk/2/hi/asia-pacific/8460129.stm

http://seekingalpha.com/article/207339-the-google-apple-race-can-google-buy-apple-competitiveness-can-apple-be-ad-giant?source=nasdaq20100527152556z_207339_sa&title=the-google--apple-race-can-google-buy-apple-competitiveness-can-apple-be-ad-giant