Google’s CEO Eric Schmidt just might have the best Poker face around. How come? Read on.
Google sees more partnerships, not major mergers, according to CEO Eric Schmidt. Problem is that Google’s already had its one major partnership, and since then, it’s grown so fast and so quick that no other media or tech company would really want to partner with it voluntarily.
The one partnership I am referring to, of course, is when Yahoo! decided to feature Google back in the day in exchange for warrants in Google. Those warrants definitely paid off in the short term, but in the long term, that “win-win” deal led to Google becoming the $120B market cap company it is today and it slowed down Yahoo! quite a bit (I own Yahoo! shares). Today Yahoo! is trying in vain to narrow the gap between itself and Google, but make no mistake about it: Yahoo! created the Google headache itself. It could have chosen to develop its search a bit more, but instead used Google.
End result: Google accounts for 45% of search volume and over 50% of total online ad revenues. Those are the kind of numbers than can make Google uncatchable.
On one brief day in 2000 (or 2001, you will have to forgive me), Cisco Systems delivered on the promise of the Web and was worth more than Microsoft. That lasted one day. Today, Walmart, GE and Exxon might be worth more than MSFT, but if there is one technology company that can usurp the crown of world’s most valuable company, I hate to say it, it’s not Yahoo! (right, they are a media company) or MSFT, but Google (I own shares of MSFT).
Of course, I am not drunk with Google Kool-Aid just yet and do believe that Google has a lot more to lose in the next 2-10 years than it has to gain. The reason is simple, search - while it will continue to dominate in online ad revenue contribution - will start to lose some steam to branded ads. On that front, Google is not king of the hill, Yahoo! is.
Then again, the one wild card that remains to come into play is video. On the front of online video, Google is basically tied with Yahoo! - tied in the sense that they are both trailing YouTube and to some extent, MySpace. Since MySpace is already a part of News Corp.’s FIM empire, then perhaps it might start to make sense for Yahoo! and Google to begin talks with YouTube.
Merger? Partnership? Hey, who knows. I am not privy to those talks. What I do know is that YouTube’s financial backers are none other than Sequoia, who incidentally invested in both Yahoo! and Google.
All right, enough pontificating, back to work.
Of course, YouTube could prove to become a magnet of liabilities for either company, but the truth is that film and TV studios already love Yahoo! by virtue of advertising on it, and they would have no choice but to welcome a combined Google/YouTube because of its sheer size and distribution opportunity.
On who else could buy YouTube, click here.
Read more on Mr. Schmidt’s comments here.
Subscribe:
June 1st, 2006 at 9:53 am
[…] All righty, yesterday, I stressed the importance for Yahoo! (whose shares I own) to do something bold on the video front if it sought to stay within striking range of Google. Lo and behold, today I see they launch http://video.yahoo.com/. […]
June 4th, 2006 at 2:50 pm
[…] A few days ago I said that Yahoo! was going to aggressively get into video to fend off Google, including but not limited to buying YouTube, and lo and behold, the next day they launched their own video service, essentially a YouTube clone. […]
June 6th, 2006 at 11:27 am
[…] - I called for an aggressive entry into video by Yahoo! (ok, so I’m not exactly Nostradamus there) and lo and behold, the next day, Yahoo! launches a YouTube clone. […]