Fellow Fool Rick Munarriz penned a compelling case against my argument that Google (NASDAQ:GOOG) should not become a portal. I think our dueling positions are beginning to converge, but I want to answer two of Rick's questions in order to drive my case home.
What business is Google in?
If that's not the $64,000 question, I don't know what is. And you have to define the context of the business before you can comment on how it should compete. So here is my shot at defining Google's business.
A portal is defined as "a website considered as an entry point to other websites, often by being or providing access to a search engine." Using this definition, you could define Google as a portal. But a portal also conjures up images of stepping into the vast unknown that is the Internet. Who knows what you're going to find?
There is so much information out there that using it wisely is a daunting challenge. Google, Yahoo! (NASDAQ:YHOO), Time Warner's (NYSE:TWX) AOL, and Microsoft's (NASDAQ:MSFT) MSN help us navigate through the network and sell ads to make money along the way. But Google focuses solely on searching to generate revenues. You search for information, and you get context-specific ads from AdWords. You go to a site, and you could see more context-specific ads from AdSense. With Froogle, you search for products and bargains. With Google News, you get automated search results containing both sides of the story.
I think Google is in the demand-generating business. It is essentially a sales channel to the Internet. Google's purpose is not to get you to a website. It wants to get you to your solution. And along the way, it generates demand directly, using AdWords and Froogle, or indirectly, using AdSense. These very specialized actions prevent Google from being a portal, as defined above.
Should Google roll out other online services?
I say, no way! The search engine technology enables demand to be generated. Here's a plausible scenario:
You're looking for a Trek 5200 bicycle (yes, I might be looking for one). You can go to your local bike shop and pay retail. You can go to eBay (NASDAQ:EBAY) to hook up with sellers and purchase it through an auction. Or, you could use Froogle to search for the best deals throughout the entire Internet.
If Froogle could consistently find the best deals and bring customers with pent-up demand to suppliers, doesn't everyone win? Could eBay get disintermediated by search technology because suppliers would only have to pay for clicks that get through to their sites? I think it's possible. In fact, I think it's exactly what Google wants. Talk about the demand side increasing returns?
Using search technology to generate demand is Google's unique position. There's no way Google should settle for being a portal.
Could Froogle be a disruptive technology to eBay? Could Google reinvent the online job search? Is Google the endgame for portals? There's no better place to discuss these questions and more than in the Google discussion board on Fool.com.
Fool contributor David Meier wonders whether he shouldn't be using Google more. He does not own shares in any of the companies mentioned.
