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Google has been in the limelight quite a bit lately. The main reasons are as follows: Google's supposed repudiation of its commitment to "net neutrality" Oracle suing Google over an alleged violation of the terms of the Java license In the most recent quarter, smartphones using the Android operating system actually outsold Apple's iPhone and RIMM's Blackberry For those of you who have not yet come up to speed on these news items, the following links provide some excellent reading: Why Google Became A Carrier-Humping, Net Neutrality Surrender Monkey   Oracle's Java lawsuit undermines its open source credibility   Android Beats iPhone With New Subscribers My two cents on the net neutrality issue is that Google is a public company with shareholders. It should be no surprise that they have chosen to "play along to get along" in the mobile space, an industry on which they are increasingly staking future growth prospects. As for Oracle, the company...

Many observers have noted that Google’s Android operating system is making nice progress in capturing market share in smartphones. A good percentage of those observers say “so what” because Google gives away the software to all comers and makes no profit from it. Perhaps “so what” is the wrong response. Let’s look at a few factors that might show that giving away Android is a pretty smart move. Factor #1 -- On May 21, the Federal Trade Commission signed off on Google's $750 million acquisition of AdMob, a move that originally created antitrust fears because the two are the biggest players in the market of bringing ads to consumers' smartphones. AdMob, one of the largest mobile ad networks, already services billions of personalized ad impressions (views). The company reaches 160 countries and provides a suite of data and analytics services to help marketers track the traffic their ads receive. The AdMob acquisition gives Google "the dominant position in the mobile...

Much of the attention Monday was given to the announcement that Google was acquiring AdMob. This fits neatly and predictably into the search giant's strategy of dominating online advertising. What was not discussed as loudly is Google's relentless push into Microsoft's turf. Google is serious about gaining access to enterprise computing and the company recognizes where improvements need to be made. Google has been pushing a couple of initiatives targeted to the enterprise. One is their search appliance. The other is Google Apps. The Google Apps suite of applications includes Gmail, Google Talk, Google Calendar, Google Docs and Google Sites. These tools are meant to support individual work and communication as well as collaboration. There has been some acceptance of these tools among corporations. At $50 per person per year, the Apps Premier product offering is clearly a cost effective alternative to the Microsoft Office suite of tools. The problem, however, has been s...

I love this chart! Just take a look at this. What a well-defined downward trend we've had for over a month now. And look how clear the upside breakout appears to be. The stock in question here is Local.com (LOCM) and it showed up tonight on our Trend Busters list. The stock opened on Tuesday very strong but was unable to hold onto all its gains; nevertheless, it ended up with a nearly 2% gain on the day. Also notable is the rising 50-day moving average. The stock just touched the 50-DMA and strongly bounced up. This is another positive sign. Background -- The company's claim to fame is embodied in its name. Local.com specializes in local search and provides detailed relevant search results for local business, products and services, and sponsored listings. There are some observers of the Internet who feel that this kind of localization of search and advertising is the next big frontier and that Local.com is a pioneer. Being on the cutting edge, however, often means that profits...

Part of the excitement over Microsoft's new Bing search engine has been the fact that it seems to be getting a pretty fair amount of traffic. So far, it seems that Microsoft (MSFT) has gained search share at the expense of Yahoo! while Google's search share has remained relatively steady. If Bing's popularity grows, however, it's bound to make a dent in Google's dominance of search. So what would be the impact if users began to give up Google (GOOG) in favor of Bing? Here are a few numbers to consider: Google derives 99% of their revenue from advertising. Google derives 69% of ad revenue from "Google web sites". This means Google search and other sites owned by Google such as YouTube. The vast majority of the revenue is derived from search advertising. According to the most recent annual report, advertising revenue from "Google web sites" was $14.4 billion. Google's overall share of search according to ComScore's most recent measure for M...

Microsoft (MSFT) has rolled out Bing, their new search engine, to much fanfare and with a multimillion dollar advertising campaign. But are they fighting last year's battle? Google (GOOG), as everyone knows, dominates search advertising with its AdWords offering. They are also strong in pay per click through AdSense. The company has struggled with print ads and radio ads and ultimately abandoned both efforts. One area where Google has persisted is television. The company offers a service that works much like a combination of AdSense and AdWords except the ads are filmed TV commercials. Like AdWords, an advertiser creates an ad, sets a daily budget and bids on placing the ad on shows or channels that are a good marketing fit. Much like AdSense, the TV networks offer ad inventory at relatively low cost with the expectation that the ads supplied by Google will be relevant to the viewers of the programming. Google hasn't registered the kind of success they have seen in the search a...

Google just released earnings. As usual, search advertising showed strong growth year-over-year as well as sequentially. Things were not nearly so good for AdSense. From the earnings release, Google had this to say: Google’s partner sites generated revenues, through AdSense programs, of $1.69 billion, or 30% of total revenues, in the fourth quarter of 2008. This represents a 4% increase over fourth quarter 2007 network revenues of $1.64 billion and a 1% increase over third quarter 2008 network revenues of $1.68 billion. Only 1% over the previous quarter? That seems pretty light for Google. But look at the chart below (courtesy of HowToNotMakeMoneyOnline.com ). AdSense revenue has not been growing significantly since the end of 2007. Yet it is also clear that AdSense makes up a big chunk of Google revenue: 30% as of the most recent quarter. So what has caused AdSense revenue to stagnate? Certainly there is no lack of opportunity. With the continued proliferation of blogs and web sites t...

As 2008 draws to a close, many bloggers are offering a list of predictions for the coming year. This is always a great opportunity for a writer to risk making a fool of himself. Not being one to avoid appearing foolish, I offer my predictions for what developments will occur on the Internet next year. More blogs! As the unemployment rate increases, expect a good number of jobless folks to begin writing blogs to rip on their former employers, to discuss their job search or to try to make money. Google will continue to dominate (no surprise here but it's worth mentioning). Their search share will continue to increase though slowly. Search ads will hold their own but a tight-fisted consumer will be clicking less. AdSense will grow due to the increase in number of blogs (see item #1). Nevertheless, look for Google revenue to stagnate in the first half of 2009 as bids for search terms decrease, marketing budgets decline and unemployed users click on ads more infrequently. Linked-In will...

The Tech Trader Daily site had a post today that nicely laid out the slide in e-commerce sales growth this year on a month-by-month basis. The data comes from Comscore and looks like this: April: +15% May +12% June: +11% July +8% August: +6% September: +5% Clearly, it's not a pretty picture; especially for an industry that is used to growing at double digits. What about the all-important Christmas shopping season? Will e-tailers be able to show enough growth to overcome the weakness in the months leading up to the holidays? Don't count on it. As the evidence increases that consumers in general are reluctant to spend, estimates for the holidays are coming down. Despite the fact that the percentage of shoppers using the Internet continues to increase, it appears we are hitting a speed bump. The following chart is from eMarketer and it shows that growth in holiday online sales will be the weakest in years. The folks at eMarketer are expecting a mere 10% growth...

There were two interesting news items about Yahoo! today and I thought I'd pass them on and provide my opinion. Talks with Time Warner? The Yahoo! board has reportedly approved moving forward with talks with Time Warner (TWX) to buy AOL. This is certainly good for Time Warner. AOL is a premier web property but, much like Yahoo!, its potential seems to remain unfulfilled. It is unlikely Time Warner can unload the Internet access business on Yahoo! so that millstone will remain around CEO Jeff Bewkes neck for the time being. The more interesting question is whether Time Warner would be willing to sell Platform-A, their online advertising network. This is also unlikely as that division is one of the largest ad networks on the web and is profitable as well. My fear is that the new board will drive Yahoo! into a bad deal. AOL is a virtual duplicate of Yahoo! only, in my opinion, not quite as good and not quite as deep in terms of what it offers. What possible benefit would Yahoo! derive...

In discussing Google and its sources of revenue, I have often pointed out that the company does much more than monetize search. Pointing to Google's SEC submissions, I have shown that the AdSense product provides roughly one third of Google's revenue. Given the billions of dollars Google pulls in each quarter, this is no insignificant amount. Today, ValleyWag wrote about the deal Google has made to provide advertising for Yahoo! It was generally believed that the agreement was strictly related to search advertising. Today, the parties published their agreement. Many sections are blanked out as there are aspects of the deal that the companies do not wish to make public yet. What is surprising is that the deal is not limited to search advertising at all. A major component seems to be AdSense. The language of the agreement discusses that AdSense ads can be deployed to Yahoo!-owned properties and such other sites as meet Google requirements. ValleyWag makes the point that Google c...

Jerry Yang has taken a lot of heat for rebuffing Microsoft and and Carl Icahn. He has been repeatedly called on the carpet for not looking out for the interests of shareholders. The attitude of many critics is that it is management's sole responsibility to deliver cash to shareholders and that any buyout offer for a reasonable amount of money is good enough. Yang claimed that Microsoft was undervaluing Yahoo! and held out for a higher price. Thus began the volleys back and forth between the two companies as talks broke down and started up again and alternative deals were proposed. Then Icahn jumped in, fresh from the debacle at Motorola, thinking that all he had to do was show up and Yahoo! would capitulate to Ballmer. Yang was right to fend off these two. Ballmer proposing to buy just the search business of Yahoo! as a variation of the original deal illustrates how clueless he is. Google is the dominant player in search and delivers by far the best search experience. Google is als...

Much has been made about the seeming difficulty of monetizing many of the social networking sites like MySpace and Facebook. I just came across an article that sheds some light on the subject at eMarketer. The article, titled Baby Boomers and Social Networking , describes the results of a study by ExactTarget. The study reveals that the baby boomers are not particularly fond of social networking sites. For example, only 13% of 55 to 64 year-olds used social networking sites. Why is this important? A bank robber was once asked why he robbed banks. He replied "because that's where the money is." Well, it's the baby boomers who are most affluent compared to the younger cohorts of social networking site users. This is especially true with respect to the youngest users in middle school, high school and college. It is only reasonable to assume that monetization will lag if the segment of the online audience with the most money to spend stays away. This gap in the audience f...

AOL and parent Time Warner (TWX) have been in the news quite a bit lately. Time Warner today reported it is spinning off its cable unit and will receive a $9.25B dividend in return. So the ongoing transformation of the company continues. With the ebb and flow of Microsoft/Yahoo! deal rumors Time Warner's AOL unit has occasionally popped up as a potential player. With AOL, their transformation has been a public and often-criticized drama that seems to go on without end. This might be a good time to see what progress AOL has made. AOL is pursuing a three-pronged strategy. They are working to extend and capitalize on their most popular products, properties and features. They are looking to profit from the long tail. They are committed to creating a formidable ad network. Let's look at each in turn. Product extension -- AOL has recently closed the purchase of Bebo, the British social network. Bebo has more than 40 million members worldwide. In the United States, however, it ranks a...

It is somewhat mystifying to read financial blog posts about Google (GOOG) that imply the company does nothing but search advertising. Analysts obsess over Google's share of search traffic, their search ad click-through-rates, etc. Though the search advertising business has undoubtedly been the largest driver of Google's business, the company has strong revenues from its AdSense product which is, in essence, a very loose ad network. Indeed, fully one third of Google's profits are derived from AdSense. Another source of annoyance to me is the opinion that search advertising is the only valid online advertising model. Those who hold this view generally assume that display advertising is dead and banner ads are obsolete. Google has now closed the deal to acquire DoubleClick. DoubleClick's business is focused on serving display ads on their own ad network. Did Google make a mistake? Hardly. According to eMarketer, expenditures for search advertising are about twice as high ...

It's the data, stupid! Instead of simply measuring numbers of visitors or pageviews, comScore, at the request of the New York Times, developed a different approach to analyzing the ability of the major media web sites to gather data about users. The new method is based on "data collection events" or opportunities for web site operators or marketers to gather a data point about a user. Four of these events are actions that occur on the sites that the online companies run: pages displayed, search queries executed, videos played, and advertising displayed. Each time one of those four things occurs there is an interaction between the user's computer and the server of the company that owns the site or serves the ad. That creates an opportunity for that server to store the bit of information just collected in a database. comScore also looked at ads served on pages anywhere on the Web by advertising networks owned by the media companies. These include text ads provided by Go...

Yahoo, even in its present state as a punching bag for pundits, is able to innovate and is working to deliver on its promise to open its platform to developers and users. Microsoft, on the other hand, seems stuck in the 90's. Witness recent announcements from the two companies. Microsoft -- Microsoft announced their Interoperability Principles . This basically said that they will provide documentation to allow third-party developers to create applications that interact with core Microsoft applications. Microsoft pledges not to sue as long as the applications are non-commercial. How kind of them! They're really getting behind the open source movement, aren't they? Why would any developer try to use Microsoft's horrifically complex and non-standard document and communication formats unless they expect to make a buck from the effort? Microsoft will, of course, be happy to grant a license for a nominal fee... This seems to be a grudging gesture, a minimal effort to comply w...

There are many financial bloggers who think that Yahoo should be happy to have a somewhat generous buyout offer from Microsoft. Certainly it gives Yahoo's suffering shareholders something to be happy about. It was reported this weekend that Yahoo's board has rejected Microsoft's offer, contending that it undervalues the company. Maybe, maybe not. As I have written before, this is an ill-conceived merger. It is marked by duplication and overlap of functions and features. There is no special synergy, just a trust that scale will make a difference, bigger is better and some costs can be wrung out of the overall organization. I have written more on this in a previous post (" Microsoft and Yahoo - bigger may not be better "). If Yahoo were to merge with Amazon or eBay, one could say that something new and powerful was being developed. Dominant e-commerce combined with a dominant portal might be an interesting concept where some synergies may indeed be found. The synerg...

I can't resist putting in my two cents on the Microsoft bid for Yahoo. My take is that it helps neither company. Here's why. Microsoft has assembled a huge Internet presence. They have done it in a very workman-like way. They decided the web was important so they started, and eventually won, the browser wars. The misconception on Microsoft's part was that browsers were important when in actuality it was the Internet itself that was important. The ability to be a player that could take advantage of the Internet's reach, its content, its ability to extend communication and community globally turned out to be much more valuable than controlling the on-ramp to the web. The browser was another piece of desktop software, something Microsoft was very good at developing, but the browser meant little in terms of signaling that Microsoft really understood the web. Content is king, or is it? Since the browser wars Microsoft has determined that they needed to expand their web prese...

Yesterday the FTC released a set of proposed guidelines related to online behavioral advertising and how it impacts consumer privacy. Here are the major points as listed in the FTC release: Concern: greater transparency and consumer control regarding privacy issues Proposal: Every Web site where data is collected for behavioral advertising should provide a clear, consumer-friendly, and prominent statement that data is being collected to provide ads targeted to the consumer and give consumers the ability to choose whether or not to have their information collected for such purpose. Concern: data collected for behavioral advertising may find its way into the hands of criminals or other wrongdoers, and concerns about the length of time companies are retaining consumer data Proposal: Any company that collects or stores consumer data for behavioral advertising should provide reasonable security for that data and should retain data only as long as is necessary to fulfill a legitimate bu...