Linked by Eugenia Loli-Queru on Mon 12th Dec 2005 06:37 UTC
Internet search is reaching an important pivot point, where market leaders are rewarded by Wall Street, laggards are punished, and start-ups try to fill niches left empty by the major players. Though the market has seen a few leaders come and go over the last decade - anyone remember AltaVista? - few would doubt that a distinct top tier has emerged, occupied by Google, Yahoo, AOL and MSN.
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Member since:
2005-10-12
To predict the likelihoods, you have to look for similar cases. In credit cards, the presence of Visa/MC, and their strong branding, made it easy for new card brands to be introduced long after you would have thought the game was up. The entry barriers were greatly lowered by being able to ride on the established underlying card brands.
In directories, the Yellow Pages have resisted competition very successfully - the problem is entry costs, and fees paid for listings, and the interaction between having a lot of listings, and having a lot of users.
The difference with Google is, anyone can get a huge collection of sites, just as good or better, and having got it, visitors will come in droves. There are barriers of scale and brand, but as Google itself showed when overthrowing Lycos and Altavista, these are pretty fragile.
If you reaon like this, the answer would be yes, there can easily be another. But the question is then, why have there not been several?
Is the answer perhaps that the Google business model is not as attractive as the huge market valuation suggests? That if you have the kind of money needed to set one up, the risk reward ratio tells you to buy Treasuries instead? Google's p/e ratio might lead to such suspicions. Where exactly is the return to shareholders going to come from?
I suspect this is right, and suspect consequently that Google may sell closer to 50 than to 500 in two or three years time. Without there necessarily being any more Googles then than now. Because there may have turned out to be no real money in it. Lots of EBITDA and proforma earnings however....