Wednesday, November 14, 2007

Google Makes it to the Top Five Companies

When Google was trading at $350 a share people said that it is overpriced. Google’s share price has now crossed $700 and Google is now the fifth most valuable company in America if market capitalization is the basis. The market capitalization of Google (number of all shares multiplied by the market price of a share) is now at an astounding $217 billion. Google is now worth more than Procter & Gamble the famous consumer goods company. Google is only behind Exxon Mobil, General Electric, Microsoft, and AT&T.

With Google at number five it is obvious that it will set its sights to take on Microsoft which is still ahead. Google’s products are not critical to the operations of businesses like Microsoft’s are. At work I can’t think of life without Microsoft’s operating system or its office suite. I like Google search but I can also live without it. Moreover it is important to note that a company’s worth is also a measure of its assets. What are Google’s assets? A brand value and people who love it and use it. Google’s assets are the audience. Their assets unlike an old economy company are not tangible assets.

Fifty years from now P&G will still be selling Gillette, Duracell and Pampers but will Google be still around then? Will the Google bubble burst some time in the future? This is the question that comes to any ones mind. Google is now at the heart of a historic information age. Computers have displaced TV sets, advertising models are changing, and artificial intelligence has assumed amazing power. Google is in the midst of this revolution.

Google has carved a name for itself with its Search, Gmail, Picasa, Google Maps, Google Calendar and their advertising model. But this is not to say that Google can rest on its laurels. In the internet economy people can desert their love of a service or product as fast as they fell in love with it. As an example I used Yahoo search before, then shifted to Google search because it was superior and now Yahoo search has again improved. It is quite likely that I might have a change of heart from Google Search to Yahoo Search.

I have a message for Google “Don’t stop reinventing and innovating if you want to climb the ladder and make it as the top company in America”. Google has unlimited potential if it continues to ‘INNOVATE’. Google can also go down as one of the most infamous falls from grace in American history, if it takes it easy and rests. This risk forever hangs on Google’s shoulders.