Wednesday, 25 November 2009

Old money vs new money

Another key topic in any age, but one ever present in this digital one. Right now you have the battles between apple, microsoft and google. A small version of old money v new money but also Rupert murdoch and print media v Google.

For me it's all about wealthy people and orgnisations, who have a lot to lose, trying to block the new outfits with new ideas in a new age with new approaches, that may threaten the stranglehold of the incumbents.

We've been seeing this for centuries. Often very similar stories. The old money sticks together knowing they have strength in numbers and protect their keys to power and influence. The new guys have to earn every win and constantly prove thenselves worthy of everyones trust. The old powers abnd approaches have become entrenched so they're assumed to work and be the best.

It's a fascinating thing to watch because as far as I can see Google have the best stranglehold of all. They make all their money from advertising. They have a virtual monopoly that grows by the day. They don't have to provide a huge support and distribution network. Sure they own a lot of servers and pay for a lot of bandwidth but the internet itself is free to send traffic on, unlike distributing newspapers or machines.

Google have no helpdesks or on call engineers for consumers yet they run 24 hours a day across the globe. Everything they do is automated reducing costs massively. They have a virtual monopoly on searching and the ads that go with it plus their syndication of ads is so advanced they can be placed on pretty much any part of a web page or application. There are already ads in gmail, how long before they're on gdocs.

I'm open to being wrong but I feel Googles emphasis on web applications, developing and monetising the internet and being the largest and most capable player is a very strong asset to have in this competitive environment. I can't imagine google has the same overheads in support and infrastructure that its main competitors do and that would go a long way to increasing margins and competitiveness long term.

That's my view at the moment. But then analysing companies and markets isn't my forte. I just feel that many things on the web are now offered free. And I've already wondered 'in a world where everything is free. does payment come through advertising?'. If that's true then Google are very well placed.

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