The world of information retrieval has gone through some drastic changes over the past decade. With an overwhelming amount of information available in cyberspace, and more gigabits being added daily, finding what you're looking for online will become increasingly difficult. As time goes by, search engines will become even more essential for exploring the Internet.
Its popularity may stem partly from the PageRank algorithm Google uses to produce better results. But for those of you bearing anecdotal evidence that Google's search tools are no better than those from Yahoo!
The biggest and most important difference is its simplicity. The main Web page is a logo, one text box, two buttons, and about 10 or so uninvasive links. What other $100 billion (or even $1 billion) company has always had a home page like that? Apple
When you only have a few seconds to make a first impression, you must quickly give your audience a reason to stick around and try your product. Others have copied the design of the main search page, but Google has mastered this art by studying its audience and fine-tuning all of its pages to the user experience. Ironically, the better Google is at providing its main service to customers, the less time they will spend on its website. Of course, since many users' destinations contain Google advertisements, it's often a win-win situation.
Speaking of advertising, Google raked in more than $6 billion last year by selling advertising space -- which is essentially 100% of its revenues. This tends to be one of analysts' biggest gripes with the company: They mark it as a one-trick pony. I find that rather absurd, since I would only reserve that kind of label for niche companies, and Google's anything but. Web advertising may be its only source of revenues right now, but it has positioned itself to benefit from all forms of media advertising. Can you name another company that will most likely command a significant portion of the handheld-device advertising market?
It's perhaps most amazing that Google remains flexible, even as it becomes ubiquitous on the Web. It has stayed focused on its mission to organize the world's information, making it universally accessible and useful. Is it a bit idealistic? Maybe. But so far, it's been a perfect plan, because it can take a large role in the next sweeping change to the Internet, whatever that may be. Video? Covered. Podcasts? Mobile search? VoIP technologies? Yep, yep, and yep.
Its position has become so enviable that many of the giants of Internet commerce, including Microsoft, Yahoo!, and even eBay
So far, I've done my best to avoid what is likely the toughest aspect of Google to defend: its high valuation. As I've previously argued, even without considering the other potential areas for growth, it's possible that advertising alone could support Google's current valuation. If we add in a conservative view of all the other pieces of the Google puzzle and what revenues might be produced, I believe adding Google to a well-diversified portfolio will very likely produce pleasing results over the next 10 years and beyond.
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