Google Worth Far Less Than Speculated, Forrester Says

[Brittany]

Forrester has shot down recent speculations that rumors of Google’s unconfirmed IPO will raise the company’s value to over $15 billion, according to New Zealand’s National Business Review.

George F. Colony has stated that the search engine giant is not worth tens of billions after all. According to industry estimates, the company’s annual revenues are much less, between $500 million and $1 billion. The $15 billion value estimates are based in large part on Google’s undisputed dominance over the search engine industry, but Colony is quick to point out that competitors such as Microsoft are currently making efforts to step up to the bat. He also notes that “the web is changing” and it’s easy for new competitors to enter the search engine world.

Some e-Business professionals here on WebProWorld have speculated that Google has been successful so far due to its highly relevant results and its easily usable interface. As long as that continues, many believe Google will remain on top, regardless of the competition. Do you agree?

[brianzajac]

Technologies have, and will continue to have two main qualifiers:

1. Success of the system: To stay at the top, you must be easy to use, affordable, and offer great support.

2. Marketing: No matter how good the system is, if you market, you can't reach your audience. In the beginning, Google got it through referrals on a great product. Now they're branding it.


Right now, Google has a stronghold on #2, and is doing very well on #1 (despite some recent results). However, now the search engine potential is realized, MSN will be using it's muscle to dominate both factors. It is only a matter of time before the big competition commences between these two juggernauts. But in the end, this competition will ultimately result in better service, support, and affordability (for business advertisement).

[fathom]

According to industry estimates, the company’s annual revenues are much less, between $500 million and $1 billion. The $15 billion value estimates are based in large part on Google’s undisputed dominance over the search engine industry, but Colony is quick to point out that competitors such as Microsoft are currently making efforts to step up to the bat. He also notes that "the web is changing" and it’s easy for new competitors to enter the search engine world.

Perception is however a different mix than factual assets.

I see an unlikely scenerio - MSN surpassing Google's dominance. On the other hand I can see a likely scenerio that Microsoft become the major shareholder of Google.

Some e-Business professionals here on WebProWorld have speculated that Google has been successful so far due to its highly relevant results and its easily usable interface. As long as that continues, many believe Google will remain on top, regardless of the competition. Do you agree?

I would tend to agree - however there are too many variables to commit one way or the other. This is a very strange business model...

Target market gets services for free,

Secondary markets pay to "connect" with Google's primary markets

Tick off the secondary market changes nothing,

Ticking off the primary market means they (primary) and the secondary markets chasing them all go elsewhere, or

Something new comes along that is preceived to be better by the primary market - Google loses.

In the final analysis - Google itself must make a mistake which could be a hostile takeover. :-)

[dak]

Google's good but not unstoppable. They started as a "grass roots" effort, featuring a clean interface, quick results (and a fast loading search page to start from, something many did not have at the time when modems dominated) and results that were better than most at the time. However, many would question their "highly relevant results" (at least in all cases) and, if clean and simple will continue to work now that many more folks have access to broadband. Let me clarify that users don't want to be bombarded with junk but, they can have more options available to them such as graphical search interfaces, text mining, etc. Google succeeded because they had a good product and benefited from the fact that others (altavista, excite, etc.) were bloated and shooting themselves in the foot. Can they survive a real challenge by MSN and Yahoo!? Only time will tell but, in my opinion Google has to regain the lead in technology they once enjoyed (others are as relevant if not more) and expand it's historically narrow view of things to be successful.

[IcePrincess]

I agree with Forrester (rare!), and frankly, I'm hoping.

I've advertised on Google since inception, as I knew some of the major players there from Netscape. However, as the company began to grow, service died.

Every time we renewed our contract, the ad server screwed up. Inventory that was purchased on a RFR basis was doled out to competitors. Global advertising set to resolve to country-specific Web sites never made it (we were forced to advertise globally, else pay for extras). And after our Netscape contact was well out of reach, the concept of "Makegood" was not only foreign to them, but we were scoffed at for asking it.

My successors at that company have since dropped (yes. dropped.) Google over service issues that just made it the last straw. That means they lost about $1MM / year from one company alone -- not much, you may think, but keep in mind they were consistent advertisers.

MSN has always been great with regards to service. No "customer is wrong" attitude, always willing to resolve problems quickly, and always being proactive.

Technologies will always progress. Those Stanford programmers may indeed one day be trumped by Cal programmers with an even better, more relevant product (remember Teoma's potential?).

In the end, they make their money off of ad revenues, and if they don't have the good service to back it up, will end up losing their share of revenues to better technologies _and_ better service.

.....According to industry estimates, the company’s annual revenues are much less, between $500 million and $1 billion. The $15 billion value estimates are based in large part on Google’s undisputed dominance over the search engine industry.....

[timmathews.com]

I think Google's worth is very inflated.
They seem to be going down hill to me.
I used to swear by them, now, well you get the message.

[AVC]

Do a keyword search on Google , use the following keywords:

advertise websites for sale
advertise websites buy sell
advertise websites sale

You will find all of these pages filled with results from a site that runs Google ADSENSE at the top of their page. Click on one of the Zeezo.com results from the search and you will see that it takes you to more Google ads, Google's new ALGO's favor sites that run ADSENSE, and they say they never sell search results as they make fun of Yahoo at the web conferences. What a joke Google is.

[Mel]

Forrester has shot down recent speculations that rumors of Google’s unconfirmed IPO will raise the company’s value to over $15 billion, according to New Zealand’s National Business Review...

Stocks are a funny thing - they are worth whatever you can sell them for despite what the experts may think the prospects or value of a company is.


Expert opinions IMO will have more impact on instutional traders, and less on individual buyers, and therefor Googles proposed sale of thier stocks not through brokers but direct online, may just offer and opportunity to tap the great public support there is for Google.

Whether the IPO comes off at all, or when it comes off is open to speculation, but one thing is for sure, Google will handle it an a way that will result in the best deal possible.

[OneMoreBite]

I think Google's shake up of their algo last fall (remember right before the holidays, tons of sites simply disappeared?) was a big mistake for the upcoming IPO. It created enourmous negative buzz, and with all the negative talk in these forums and throughout the web, investors have to be hearing the unhappiness and general discontent web developers have with Google.com.

I wouldn't buy their stock. Instead I'd wait until a bit after the IPO, watch the charts for three spikes up and then short them for a quick gain on the ride down to their true valuation. (I could be hugely wrong too - that's the fun of speculation).

Google's shot themselves in the foot, IMO, and unless they stop the bleeding, they could end up with a permanent limp.

Kathryn

[minstrel]

It's also worth remembering that, as I think cbp pointed out at least a couple of months ago, pretty much everybody BUT Google is talking about Google's IPO.

In comments from various Google people in recent weeks, Google has said variously, "we are not talking about/thinking about an IPO now", "an IPO is not a priority for us now", "where is all this talk about an IPO coming from? we aren't even discussing it", and similar remarks.

It's like one of those rumor party games where you start a story and see how far it goes...