I doubt Google’s market capitalization will surpass that of Microsoft’s (as I outlined as a possibility in 2006), but judging by the growth in cash flow of each company, it’s not impossible over time:
Graph via Business Insider.
Would you feel bad for a man who has $4M? Probably not. But what if he was worth $100M a year ago?
Hard to feel pity, I know… but what if you knew that like you and I he puts on his pants one leg at a time, but unlike you and I, he kills viruses all days.
Jokes aside, that is the story of John McAfee. Yes, that McAfee. Read more. Being rich just isn’t what it used to be, literally:
Despite recent layoffs and the shuttering of unrelated businesses, Google remains as ambitious as ever to replace Microsoft as the most valuable technology company and become the 21st century’s version of Standard Oil.
The Google Drive, or “GDrive”, could kill off the desktop computer, which relies on a powerful hard drive. Instead a user’s personal files and operating system could be stored on Google’s own servers and accessed via the internet.
But while Google has surely helped push the envelope with cloud computing (Lord knows running a startup is easier today than a mere five years ago due to easier online collaborative tools), sometimes I think we’re all drinking too much kool-aid bong water if we think the desktop will die anytime soon… I mean, Google, can you please make sure that our files are always available in Google Docs first and that I can log into to Gmail all the time? Thanks!
After all, Google has proven to have an Achilles Heel, too: a few years ago it was buying companies like Dodgeball and passing it off as pieces of the puzzle of a grand unifying theory… then a short time later, it was something that was not even worth the $50,000 in annual costs to maintain.
There’s a rumor out there that MSFT is looking at shedding some headcount, too. From Fudzilla (via ArsTechnica and via SAI):
Currently Microsoft employs about 90,000 people across the world and from what we’re hearing, some 15,000 of those are expected to be giving marching orders come January 15th. That’s almost 17 percent of Microsoft’s total work force, not exactly a small number.
I would agree with MSFT using this downturn as an opportunity to lay off, say, 1,500 people, for example, but 15,000?
MSFT is already burdened with the image of a mature stock, whose shareholders have endured a “lost decade”.
So while I am all for increased efficiency, layoffs of this magnitude would make MSFT fall in the “stock in decline” category, which will basically ensure a second decade of doom.
In today’s climate, flat is the new growth. I doubt if even 2000’s darlings Google or Apple are growth stocks.
So far, we haven’t managed to confirm what departments or regions will be hit the worst, but we’re hearing that MSN might be carrying the brunt of the layoffs. We’re also hearing rumors about the possibility of somewhat larger staff cuts at Microsoft EMEA (Europe, Middle East and Africa).
But by cutting in growth areas, MSFT is either throwing in the towel or contenting itself to move from the monopoly category to the utility category.
Is is just me or is the supposedly-immune technology sector next to ask for a bailout?
It sounds crazy, but I think that the meltdown we’re saying can easily exasperate the issues that were due to hit technology:
- After all, we all love open source software, for example, but all of it surely bit into sales. Since you came across AVG, when was the last time you paid McAfee for anti-virus? Or better yet, while my old company had to fork over tens/hundreds of thousands for a CMS, my new one managed to get its hands on a wide array of free open source ones.
- Can too much Moore’s Law be a bad thing? As consumers, obviously not… but over time, this hits margins. A powerful Dell laptop now costs about $500. How sustainable a model is that?
- Hardware and servers in general have become quite cheap that maintaining a high-paying workforce seemed unsustainable for some time to come.
Right now, the mere notion that Silicon Valley would ever ask the government for economic assistance seems crazy, but crazier things have happened. Such as what?
Well, despite the fact that US consumers decided to forego paying US car companies as consumers, the government will step in and force them to pay them indirectly as taxpayers. That is definitely crazy.
Apocalypse now, analyst style, from Trip Chowdhry of Global Equities Research, via Eric Savitz. Not all that crazy, frankly. I am not software or hardware expert, but on the VC-backed consumer media web stuff, I agree with most of the boldfaced (emphasis mine):
- Almost every Silicon Valley company is facing deteriorating business conditions and will cut their workforce by 3%-10% by year end.
- Project cancellations are accelerating in almost every vertical, including financial services, retail, transportation and public sector.
- “Many startups are starting to fold.” He contends that “almost every” VC funded open-source company is struggling and will run out of funds within the next 6 months. He also says that “many VC funded Web 2.0 companies are shutting down…the Web 2.0 fad is now coming to an end.” He has a similarly dark view on the prospects for software as a service start-ups.
- He thinks the death of many start-ups will be trouble for Google (GOOG), which he says gets 7% of AdWords related revenue from start-up companies.
- He also sees a coming glut of used hardware arriving on the market early next year, selling at 20%-25% of original prices, and depressing the market for computing and networking gear. He thinks that IBM, Hewlett-Packard, Cisco and Juniper in particular are vulnerable to this phenomenon, and could soon find themselves competing with their own used hardware.
- “Every enterprise software company,” including Microsoft, Oracle, SAP, CA, BMC and Sybase are negotiating lower prices on maintenance contracts.
- Indian outsourcing companies, including Infosys, Satyam, Cognizant and Wipro are seeing project pipelines “drying up.” He contends “there is not enough work to keep employees busy.”
- He says Sohu, Baidu, Netease and Sina are struggling to maintain top-line growth, as multinationals cut back their online marketing campaigns in China.
- Web browsers are growing in importance; he thinks Oracle and IBM will offer their own browsers within 12 months.
- Motorola could get a life line in the form of equity investments from Microsoft and possibly Google, in return for supporting the Windows Mobile and Android mobile phone platforms.
- First-generation SAAS companies - NetSuite, Kenexa, RightNow, Salesforce.com, Rackspace, SuccessFactors, DemandTec - “continue to struggle and probably will not see any recovery in their business, irrespective of the economy.”
- Salesforce.com’s business “continues to deteriorate, the best is over, the worse is still to come.” He writes that one of his contacts describes the company as “a modern day Visi-Calc.”
- Cisco is feeling pressure from Microsoft and Arista Networks; he expects layoffs at Cisco of 5%-10% by year end.
- VMware, he says, is seeing business deteriorate. He expects 10% layoffs by year end.
- Apple, he says, is going to start selling iPhones via Costco at $149 starting in January.
Quick: close the window before your colleague jumps out!
Are they going to burn down the building, too?
Aside from halting its tech spending, here’s how SAP plans to do that, as taken verbatim from the email:
* Headcount and Hiring Freeze: “There is a complete headcount and hiring freeze, and all existing job vacancies will be canceled. This includes any temporary workers, interns, and students. There will be no replacements for employees leaving SAP. No internal transfers may take place. Only those written offers sent to a candidate and/or internal transfers agreed to on or before October 7, 2008, will go forward.”
* Third-Party Expenses: “Since we are not hiring, all engagement with external recruiters must cease immediately. We will discontinue engagement with management consultants and evaluate the impact this has on ongoing projects. Until further notice, all external training is to be canceled. Internal meetings must be held within SAP buildings, and you cannot rent external conference facilities for this purpose.”
* Travel: “Cease ALL internal non-customer-facing travel in October…Any non-customer-facing travel already booked should be canceled immediately, even if this incurs penalties.” SAP sales people will also have to fly coach from now on unless they use miles to upgrade.
Wordpress: when I want to choose a category, I don’t like to have to scroll down dozens, if not hundreds of categories (especially on our TenMojo.com Top 10 list site)… I’d like to be able to start to type in the category and have an auto-speller list all of the pre-existing options.
Gmail: why do I have to scroll all the way down a message before pressing Reply or Forward. I know the commercial reason why: it’s akin to malls making you go around before taking the next escalator… it forces you to walk by the stores and see the sales… Gmail is similar, by having to scroll down you have to see the text link ads. However, when you are emailing someone back and forth frequently, the thread can be very long… and this becomes tedious.
Please, just do these two things.
More suggestions to be filed under “Assuming you care”:
I was having a call with a technology vendor right now, I am pretty sure I said something to this effect:
“That’s a pretty interesting technology, it’s great, but I’m not sure the market is there now. It’s like a better mousetrap… not sure it’s something people can use today or tomorrow, or for that matter, in 2008 or 2009. I mean, if you can’t get this used by the marketplace, you might as well shut down, no? What’s your back up plan? Do you even have one?“.
Can’t believe I said that. I won’t name the company because it actually is a cool product and I could be wrong… incidentally, by the end of the call we found ways we can push them in the marketplace and our ecosystem.
Wouldn’t it be funny if I tagged their name at the end of this post, though?
All right, back to work.
One of the things that strikes me as odd (from a trying to please users perspective, not so much from a technology or business perspective) is Apple CEO’s Steve Jobs’ reluctance to enable flash on the iPhone.
Naturally, with flash being ubiquitous in online video, and the iPhone become a increasingly important piece of the wireless entertainment landscape, it was a matter of time before someone looked at converting flash for the iPhone.
Enter Episodic, who did just that. Thanks to their help, check out WatchMojo.com’s videos here, enjoy and send me feedback. Note the URL http://iphone.episodic.com/watchmojo is available via iPhone only… in a web browser nothing will show up. If getting WatchMojo.com on your wireless device isn’t a reason to swap your current phone for an iPhone, I don’t know what is. Jokes aside, you have to wonder, is Jobs being wise by not enabling flash on the iPhone?
PLAY
