Press Release

Is Google Insurmountable?


Wed, May 13, 2009 at 2:56 pm

    After Google unveiled new features to its search results yesterday, one
    analyst is saying that the company’s leadership position has become
    virtually unshakable.


    New search features let users narrow their results

    In a research report, Piper Jaffray analyst Gene Munster said that
    while the new products — Google Search Options, Google Squared and Rich
    Snippets — were “more evolutionary than revolutionary,” they
    demonstrated the company’s continued ability to innovate. “The bottom
    line is that we expect Google’s continued product improvement to allow
    the company to maintain its leadership position in search for the
    foreseeable future,” he wrote.

    “Google’s longevity as the leader in search is constantly questioned
    by investors, bloggers, etc.,” he added. “New technologies and
    innovations come with the excitement of potentially dismounting Google.
    However, we think the reality of Google’s position atop search volume
    looks essentially insurmountable. Any startup wishing to challenge
    Google directly not only has to compete with the company’s technology,
    but also the company’s brand (a top 10 brand in Business Week 2008) and
    the company’s immense CAPEX budget (as high as $840 million in Q1 last
    year). We don’t deny that smart startups will develop technologies that
    are an improvement to Google’s offering, but we also believe Google has
    the resources to catch up quickly and the brand to keep users loyal.”

    Google’s name is increasingly coming up in antitrust discussions, and there are signs that regulators are considering whether it is a monopoly. A presentation outlining reasons Google is not monopolistic surfaced on Consumer Watchdog last week.

    This also isn’t Mr. Munster’s first provocative note. In January he penned an open letter
    to then-new Yahoo CEO Carol Bartz, recommending she buy a news company
    such as the New York Times or Gawker. She jokingly expressed interest
    in an NYT deal later that month, during her first Yahoo earnings call.

    Do you agree with his take? Google has stumbled when it attempted initiatives outside the online-advertising sector, such as radio, but is its search business insurmountable?

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