Google Gears Down for Tougher Times

http://online.wsj.com/article/SB122826503489174369.html

by nradov • 18 years ago

33 22 18 years ago

online.wsj.com

jwstaddo2• 18 years ago

Google is making a big mistake to associate budget with revenue. That will align people (the most important resource) with old, established products--i.e. the past instead of the future. By starving the future Google will become reactionary rather than trend setting. Just like Microsoft and Oracle did.

jmtulloss• 18 years ago

And look what happened to those guys...

jmah• 18 years ago

What a poorly-chosen title. It took me a while to realize that "gears" is the verb; it's not about Google Gears. Non-title capitalization could have avoided the ambiguity.

tlrobinson• 18 years ago

You beat me to it. Though technically they dropped the "Google" from the name, and now it's just "Gears".

mynameishere• 18 years ago

It's a pun. Editors do it all the time.

...

Anyway, I've never had any luck with google. Yahoo charges me 0.10 dollars for certain keywords, while google wants 0.50. Sorry. Not worth it. It's probably just a quirk, but as far as I'm concerned, google doesn't exist in the ad sphere.

someperson• 18 years ago

Remember when the users of news.ycombinator rewrote editorialized headlines?

Retric• 18 years ago

You might want to get over sticker shock and do some A / B testing. Google has a reputation for taking your add dollars further but it's not always the case.

crsmith2• 18 years ago

Google's chief economist has been quoted as saying Google has a "GDP beta" of one. So this shouldn't really be a surprise.

byrneseyeview2• 18 years ago

Beta, and not r-squared? A beta of one would imply that Google's revenue (or profit?) increase exactly as much as the GDP. An r-squared of one would imply that Google's revenue changes in proportion to GDP changes.

But he probably knows this better than I do, so presumably I'm missing something.

mhb• 18 years ago

Really? I thought a beta of one means that if GDP goes up 10%, then Google's revenue goes up 10%.

From http://en.wikipedia.org/wiki/Beta_coefficient:

More specifically, a stock that has a beta of 2 follows the market in an overall decline or growth, but does so by a factor of 2; meaning when the market has an overall decline of 3% a stock with a beta of 2 will fall 6%.

sd• 18 years ago

In a linear regression model, r-squared represents how correlated the model is with the data, while beta indicates the relationship between an outcome (e.g., revenue) to an input (e.g., GDP). Thus, a r-squared of one in a model where profit is the dependent variable and GDP is the single independent variable suggests that profit is 100% correlated with GDP. A beta of 1 indicates that profit moves in the same direction and to the same degree as GDP.

crsmith2• 18 years ago

Here's the link fwiw http://money.cnn.com/2008/05/09/technology/where_does_google...

mattmaroon• 18 years ago

"Products such as Google Checkout, a Web payment service, and Google TV Ads, which sells television advertising time, haven't generated significant revenue".

If Google dropped every product that doesn't return them significant revenue, they'd be back to just good old-fashioned Google.com.

patio11• 18 years ago

As a (~$10,000+ in sales) Checkout user, it isn't surprising to me that it isn't generating significant revenue: you're giving me a 100% discount on it to encourage me to increase my (drumroll please) AdWords spend.

Which makes business sense, granted, since AdWords remains a license for Google to print money. But if it is the only product your company can bring itself to charge for, of course it is going to be the only thing that generates revenues!

sh1mmer• 18 years ago

In some ways this article highlights how fragile Google is. If you think about how quickly Google cleaned up in the search market and yet 97% of their revenues are web Ad based (according to the article).

While not all of those are going to be Ad Words a lot will be and if someone replaced them in search (not Cuil, obviously) then they would be in trouble, fast.

bandris• 18 years ago

"Google recently hired a new chief financial officer, Patrick Pichette. Trained in "Six Sigma" management practices -- a rigid quality-control system designed to eliminate waste -- Mr. Pichette is looking to reduce inefficiencies and delay spending when possible."

That is a sign that something goes bad at a company. When they implement "scientific" methods.

minsight• 18 years ago

Google has been so successful exactly because they use "scientific" methods. They have a mountain of data and they put it to good use. This data includes information about hardware, operating systems, networking, what people are searching for, what people are watching on youtube, etc, etc, etc.

coliveira• 18 years ago

The title for the article is horrible. I thought it was about Google gears.

tyohn• 18 years ago

humm, I wonder if this is where companies slip into bureaucratic methods and practices. I'm all for streamlining business but "rigid quality-control system designed to eliminate waste" could be a slippery slope to start down...

Google Gears Down for Tougher Times

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