Google's Latest Acquisition
Fans of Google (including me), enjoy trying to figure out what Google is up to. In that spirit, I’m sharing some news. Google has purchased a company called Upstartle, which makes web-based word processing software called Writely. Both Google and Writely had little to say in their blogs, other than the deal was done and Google is delighted to have the team on board. I went to look at both blogs this morning and they are absolutely jammed up, so I am unable to see what was written. I linked them for you so you can take a look when the heat is off.
When I read Google news I often grin, chuckle or laugh out loud. This one deserves a laugh out loud. Google bought Upstartle because it wants to enable people to perform office tasks over the Internet. That’s a nice way of saying it wants to kick Microsoft’s butt, which makes me grin. I think kicking Microsoft’s butt is a good part of their strategy.
Money Magazine agrees with me, but thinks there’s more to it. Google has always expressed a desire to move from client (PC) based computing to Network (Internet) based computing. This basically means that only a little piece of the program you’re using resides on your computer (called thin client), and the rest stays on the server. I’ve been hearing that thin client computing is going to take off like a rocket for twenty years now. Sixteen years ago when Larry Ellison of Oracle was pushing stripped down computers that used the network to work I thought it was a dumb idea, and I still do. At the time a powerful computer cost a couple of grand, and USB dongles that hold a gigabyte of data weren’t even invented yet (I don’t even think USB was invented yet). The rationale then was that a cheap network computer that cost a couple hundred bucks could just hook up to the network and use its processing and storage power. Now a powerful computer is a couple hundred bucks, so who needs a stripped down version? Besides, I want to control my own resources and files and software. I don’t want them sitting on Google’s big giant hard drive so they can use them to decide what kind of advertising to serve to me. And that’s what Money thinks is the end game.
But competing with Microsoft is more of an afterthought for Google, which is contending with Wall Street’s high expectations for continued growth. Browser-based applications like Writely could feature Google’s contextual advertisements, a business which is projected to grow to $9.5 billion this year. Listen to this: For Google, which prizes the math Ph.’s it has on staff, the calculation is alarmingly simple. Google makes around $16 per user per year in advertising. There are more than 300 million Microsoft Word users today. If Google persuades some of those users to use its Web-based software instead of Word, and they spend more time using other Google tools as a result, Google could boost its per-user advertising sales. Even a $1 boost per user translates to $400 million in additional revenue.
I’m not sure I want to use a web-based word processor that sticks in ads based on what I type. Wait…I am sure. I don’t. Jeez…with all of those eggheads gathered in one place over at Google, is plastering context ads all over a web-based word processing program the best they can come up with? I’m starting to smell one trick pony. I hope I’m missing something, as I’m still not sure I understand what Google is trying to do, but it’s fun to watch. For more laughs I like to visit the Google Rumors website. You should take a look.