In a prior post we examined Google's strategy to steal a march on Microsoft and take search to the desktop. Google was expected to release a desktop search tool "soon," well before the next version of Windows (which has built-in search) is available (2006 at the earliest, maybe as late as 2009).
If Google can gain a foothold on the desktop, Microsoft's dominiation of the desktop could suddenly become much less relevant.
It looks like Microsoft has launched a full-court press to protect its operating system franchise by rushing a desktop search tool to market. According to Marketwatch, Microsoft will "release an early version of the technology soon, as part of the software giant's push to compete with Internet search leader Google Inc. A final version is expected in the next 12 months."
Is this another case of preannouncing vaporware to hold back a superior competing product? Time will tell.
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| Google's prospects from a Google user and independent investor |
Google vs. Microsoft on the desktop - 5/26/2004 10:05:46 PM
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Big mutual fund thinks Google is a buy - 5/26/2004 09:55:40 PM
Reuters reports that Bill Miller, the "guru" of the Legg Mason Value Trust Fund, has studied the Google IPO and will be a buyer -- possibly at the upper end of current valuations.
Miller's fund, worth about $11B, currently holds $700M in Amazon.com and $500M in InterActive. Miller is a well respected fund manager, as his fund has an incredible record -- beating the S&P 500 for 13 years straight. Miller says he has "a sense of what the business is worth," and said Google was "likely worth between $18 billion and $55 billion, the market capitalizations of Amazon and eBay Inc." Google will list shares in a Dutch auction, which may be subject to the "winner's curse" effect -- whereby the value of an asset declines substantially immediately after the auction is completed. Miller has hired an "auction theorist" to consult on the transaction. Miller did not disclose his likely bid, but said his swat team would "model the free cash flows of the business, growth rates and the strategy against eBay, Amazon, InterActiveCorp and Yahoo and see where it comes out.... We will bid what we think it's worth." |
Is Google really better? - 5/25/2004 06:10:05 AM
Vividence, a consumer research firm, conducted one of the first big studies of search engine effectiveness. According to a Wall Street Journal story (sub req'd), Google "doesn't necessarily provide significantly better, or more useful, search results than do rivals."
The study surveyed 2,000 web users and tested searches in Yahoo, Ask Jeeves, MSN, Lycos and Google -- and found that Google competitors "delivered correct or useful results almost as often as did Google." Users were asked to find local businesses, consumer products or facts (what is the leading cause of death for 25- to 34-year olds). Google used to be a favorite because its technology delivered more relevant results on the first page -- but is its technology still superior? "'The search engines all return roughly the same results,' says Peter Watkins, Vividence's chief executive." Even though the search results were similar, "users still preferred Google, partly because of its spare, clean design." And positive feelings about the Google brand appeared to make users more satisfied with Google regardless of the success of the web search: Nearly 90% of Google users said they had a "strongly positive experience," compared with 68% for Yahoo, 50% for Ask Jeeves, 48% for Lycos and 41% for MSN....The positive feelings about Google held even when the searchers didn't find what they were looking for. So while survey participants using Google didn't discover the correct answer to factual questions significantly more often than those using other search engines, the Google users said they were markedly happier. But Google, which gets 95% of its revenue from advertising, may be sacrificing cash for its simple look: The survey found that users are much more likely to click on ads on the pages of its rivals. Users of Ask Jeeves, for example, are more than twice as likely to click on ads, which are prominently displayed above results. Google presents ads in small boxes above and to the side of results. Notably, MSN received particularly low scores in total user satisfaction, traced to issues with speed and relevance. "About 25% of users asked to perform a general search task said MSN's results "were not ranked well," compared with 13% for Google." Microsoft is expected to roll out a revamped search engine later this year. |
Google and the wisdom of crowds - 5/24/2004 02:10:38 PM
There's an engaging (and brief) video interview with James Surowiecki who wrote The Wisdom of Crowds : How Collective Wisdom Shapes Business, Economies, Societies and Nations.
The book argues that a group as a whole is smarter than the smartest individual people in the group. The book argues against the theme of Extraordinary Popular Delusions & the Madness of Crowds. The author cites the stock market as one example. Even though the market swings between the extremes of despair and mania, over time it's hard to beat the collective wisdom of the market. The author claims that a group estimating the number of jelly beans in a jar is usually within 2% of the correct answer, while it is unlikely that any individual will be that accurate. The over- and under-estimation of individuals cancels out, leaving a relatively accurate group consensus. Google uses a similar approach to discover the most relevant web sites for its search engine by allowing all sites in the index to "vote" on each page's relative value. Surowiecki argues that for a group to be effective, each individual must do their own research and arrive at their own opinions independently. Once people start "following the crowd," the "information cascades" will warp the ability of the group to reach a valid consensus. Surowiecki is a big proponent of the Google Dutch auction to place their IPO, because it relies on thousands of individuals doing their own research to determine the market price. Surowiecki believes this will result in a better price for Google, and a price closer to the actual market price of the stock post-IPO. So if you're an individual investor, Surowiecki advises to invest in index funds (boring), or try to discover areas where the market is just following the crowd and exploit the resulting price distortions. |
Google IPO criticism - 5/23/2004 10:26:41 PM
It's healthy to tell both sides of any story. With the Google IPO, we've balanced the good ($50B valuations, "Don't Be Evil" culture) against some predictable criticism (vicious competition, echos of the bubble economy).
Charles Cooper critiques the Google IPO prospectus with unusual ferocity -- and delivers some criticisms that potential investors should know. Blasts the CEO: "Mr. Science has a Ph.D.? Quite impressive but, for the record, you might also have noted that Schmidt failed to get the job done at Novell and then bailed when a better job offer came down the pike...Right now, Google's living the life of Fat City, but how will he perform when the company inevitably passes through a little turbulence?" On Google's drive to "make the world a better place": "It's a SEARCH ENGINE, for Pete's sake! After you invent the cure to leukaemia, you can ask the Swedish Academy to put you on the shortlist of candidates for the Nobel Prize." |
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