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Wednesday, August 30, 2006

Wow, Blogger works right again.

Ironically, I came to talk about google (which owns Blogger). I predict that their stock will crash within 5 years. Although they had the best technology and design at the right time, and they are one of the few profitable internet companies, and they have the potential to become a world power like Germany and Wal-Mart.. they are reinvesting an awful lot of their profit in a risky bid to become said world power. If they fail the search business may not save them.

Essentially they are betting that they can be a web conglomerate, and use the ludicrous production efficiency curves of IT to dominate the internet via synergy. By being second or third best in everything, they can get dominant positions by leveraging their products together.

The flaw in this plan is that they may not be able to make money off of this, although they have a good shot. They are planning to charge for a lot of B2B services in the future. They are also tapping into the advertising market in a good way. I'm skeptical of advertising-based revenue in general, but Google is essentially using its vast data and clever algorithms to increase the total efficiency of the economy by lowing the cost of information. Theoretically, they can skim a lot of that efficiency boost in the form of click through payments.


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