Battelle Calls BS on Google's "We're a Tech Co" Claim

Others are focusing on Google's ongoing and strange insistence that it is "a technology company, not a media company."  Mr. Battelle offers a good rebuttal, while poking fun at Eric Schmidt's recent comments to this effect in the LA Times.

Although Google has self-serving reasons for maintaining the "technology company" label (such as old-media placation), the staying power of this claim suggests that Google itself may be confused about what it is.  If so, this bodes poorly for the intermediate-term future, in which Google will almost surely go through a gut-wrenching realization that it can't be both fish and fowl. 

Put differently, it is clear that Google WANTS to be a technology company.  The company was founded by computer scientists who brilliantly solved a computer-science problem (better search), and the AdWords pay-per-click model was an afterthought.  Unfortunately, no matter how the company's core computer scientists see themselves--and no matter what (who) they hope to become--the afterthought has now come to dominate the company's identity.  Yes, like other companies, Google uses technology.  The company does not, however, sell technology. As far as type-of-company goes, you are what you sell, and, for now, Google sells advertising.  Perhaps, someday, Google's advertising customers will also buy Google spreadsheets and word-processing tools, lending some credence to the idea that the company sells technology.  If so, however, this day is far in the future.

Whether Google ever looks in the mirror and sees what it really is, of course, is only relevant if its misconception of itself ever gets in its way.  As described, I think Google's obsession with Microsoft (word-processors, spreadsheets, etc.) suggests that the "we're a technology company" thinking is affecting its strategy--and probably not positively.  Of course, until the company truly stumbles, it can call itself whatever it wants. 

UPDATE

Some good comments suggesting that Google will soon sell technology, that you are not necessarily what you sell, and that the distinction is irrelevant.  Where it becomes relevant, I think, is if/when Google starts selling to corporate technology buyers instead of corporate marketers.  These are two different groups of people, with different priorities, relationships, criteria, service requirements, etc., and I know of no company that has been able to build a dominant business serving both at the same time.  (Microsoft is a good example of a company that has tried hard and is still failing). 

Comments

[KING TROLL]

FIRST BITCHES!!!

[roy]

So by the same token, Dell, Apple and HP are all manufacturing companies?

[billy]

damn i trained all weekend on my typing skills to beat King Troll.
and i still lost by 4 hrs.
Damn, you really are great king troll.

[Kevin Vaughan]

If you are truly what you sell, can you not view Google AdWords as technology that is sold? After all, who else, before Google, was selling contexual advertisement services in such a successful manner? It's not like Google is selling the X10 banner ads of old, with no useful innovation and no systemic approach to ROI. Google sells their advertisement service as well as it does only because of the technology that goes along with each purchase via click.

"Perhaps, someday, Google's advertising customers will also buy Google spreadsheets and word-processing tools, lending some credence to the idea that the company sells technology. If so, however, this day is far in the future."

Is it that hard to believe that this day may be closer than you think? You can already export spreadsheet-capable data from AdWords, how hard would it really be to consider offering a paid software-as-a-service solution utilizing the success of Google Spreadsheet to present information from the AdWords account in a more meaningful and minable way? If this would satisfy your criteria for selling technology, then it seems pretty plausible that it could be right around the corner.

And is that hard to see Google Spreadsheet and a word processor continue to grow, and then be packaged with other existing tools from the Google set such as Google Talk and Google Calendar, and then look at their recent forays into enterprise servers, and see that a competitive mid-range groupware solution is only 6 months away, and high end solutions not more than a year?

With these opportunities and others being driven by Google's innovative development and creative redevelopment of technology, its hard to consider them as a "media" company. They certainly don't fill the traditional side of either of these fields, however. It is the leveraged strength of each side working together that has really made them as strong as they are today.

[parv]

as someone mentioned above, it's wrong to think that ur only a tech company if u sell technology. i think it's more important to see how u use technology in relation to what u to. so, for example, if you create software that leads u to dominate your market & ur continuously updating the software then ru or ru not a tech company? Is amazon a tech or retail company or both?

in reality this distinction is just a good talking discussion & nothing else!!

[Henry Blodget]

Where the distinction becomes important, I think, is if/when Google begins trying to sell solutions to corporate technology buyers instead of corporate marketers. These are different groups of people, with different priorities, loyalties, budgets, options, relationships, and service requirements.

I still have a really hard time believing that any one company can build a dominant business serving both of these constituencies at the same time. Microsoft hasn't been able to do it, Yahoo and AOL were never able to do it, etc. This doesn't mean it's impossible, but I do think it suggests it is really hard.

So, yes, in one sense it is a meaningless distinction--who cares what Google is. In another sense, however--"Who is the customer and what does he/she really care about"--it is an important one.

[joe]

"Who is the customer and what does he/she really care about"

different devision focus on different customers.

they have an enterprise division, which focuses on tech and the enterprise client... not advertisers and consumer's clicks.

so long as the divisions stay true to the mission statement, and purpose of the larger company... then i say, google knows exactly what it is and where it wants to go.

(push comes to shove, no one can really argue that google is not acting on their mission statement... to organize the world's information... whether it be personal or public.)

[Mark McGuire]

Google makes money connecting buyers and sellers through advertising and this subsidizes what most people think Google is, namely, a great way to connect me to any information I want and give me lots of free stuff like gmail in the process.

If you follow the money, doesn't the most interesting question become what the next advancement on the PPC advertising model will be? It is a good start, but it certainly isn't the game winner. If interested, you can read my take on this at the following post: http://www.jellyfish.com/blog/2006/05/17/first-quarter-score-online-advertising-7-technology-28/)

[Tel Aviv Guy]

I would consider Adsense (not adwords) as a technology offered to web site owners to replace the advertising sales reps.

[Victor]

They call themselves a technology company because almost half the employees are engineers! Of course, your counter-argument is that 99% of their revenue comes from advertising, so they're a media company, quod erat demonstrandum. I think that ultimately who wins the battle in this space will be the ones that can innovate the fastest in terms of their technology. Better search, better mapping, better ad targetting etc. So while they may be 99% ads, the battle for the space will be won or lost based on technology innovation.

[Victor]

Btw another reason to say they're a technology company is which self-respecting genius computer scientist wants to work for a media company?! The success of these companies depends on how good their technology is (note yahoo's inability to monetize their ads aswell as google - that boils down directly to their lack of engineering talent). Google and MS are competing in the jobs space for engineers, not MBAs or marketing folks

[Chetan]

To me Google is a supercomputing Lab. No matter how wide and deep the WWW grows, billionaire boys Larry & Sergey have it have it at their fingure tips every 21 days. By doing so they have grown from few dozen servers to few 100 thousands. Google operates the worlds single largest computing system @ the backend powering your so called MEDIA tool, SEARCH. WTF ? Yes, I believe John L Hennessy, don't you ? Maybe John Battelle and his blind outsiders will stop their BS after they read, "The Google Story" by David Vise ;-)

[billy]

well google has also created the spam website (i.e. the made for Adsense website with no content). I agree their search engine is the best mostly because if your looking for a company's site it usually comes up first on goog unlike the others.
But beyond the first result, the goog results are generally crap these days. Not saying the rest of the engines are any better. But maybe search is not going to be the best business model in the future of the internet.

[mr fuckedgoogle]

Ten years ago, a friend of mine used to own a restaurant next door to my old office- his place was very popular with the college crowd. (it was across the street from a major university in north carolina)

He would make 15,000 dollars per night selling booze to sorority and fraternity students. His bar was one of the most popular in time. He would make about 150 dollars during the daytime selling lunch, and about 800 selling dinner. He literally had almost no "eating" customers other than my friends and I who worked next door. He actually LOST money keeping the doors open for lunch and dinner after he paid his employees. So why did he bother with the pretense?

Simple- according to north carolina law, if you serve hard alcohol you have to either be a private club or you have to get 60 percent of your revenue from food sales.

He kept up the charade for a while, calling his establishment a restaurant, even though he made 99% of his revenue from being a bar. Eventually it became impossible to fool the local tax man any longer, and he had to shut it down.

You see- no matter how much he claimed his place was a restaurant, with nice tablecloths and lunch specials advertised in the local newspapers, it simply wasn't true. None of the revenue was coming from food. It was all coming from booze.

This is a perfect analogy for Google. They make all their money as ad-peddlers, but their entire public relations image is COMPLETELY DEDICATED to making the slashdot and wall street investing crowd think they are a technology company. Of course the reason they do this is obvious- the stock market assigns a much higher stock multiple to sexy technology companies than it does to advertising companies.

Ask the average person on the street how Google makes all its money, and I guarantee less than 1 in a thousand will be able to tell you they do entirely by selling ads.

That's exactly how Google wants to keep it- if they intend to keep unloading stock in the 380 per share range. Assign an average media company multiple to Google's revenue and the stock is decimated- in the literal sense of the word.

[Jeremy Johnson]

They should be a media company but they view themselves as a technology company. I had a brief discussion with the PM of Google Finance and there was very little interest in developing the content. From the look of what emerged there was much more interest in developing a new widget (the graph thingy). It's just the way the company is, and as long as the current CEO and management team is in place, that will not change.

[Chetan]

And the so called media company is building a massive data center ;-) http://www.nytimes.com/2006/06/14/technology/14search.html?ex=1307937600&en=c96a72bbc5f90a47&ei=5088&partner=rssnyt&emc=rss

[Paul Elosegui]

Tech or media dilemna reflects the fight between day-to-day operation, the Chief Operations Officer, who is happy with the media/sales/advertising label, and the strategy team concerned with long term competitiveness.

Disruptive edge on the market is provided by technology, day to day earnings are provided by advertising and media.

Long term versus short term. Strategy versus tactic. One can't live without the other.