Wednesday, February 06, 2008

So why should Google care?

OK... I know what you're saying... you're saying "I read your post on Google's competitive advantage and there is no way Microhoo! can break Google's lock on the customer, so they have nothing to worry about, right?"

Nope, they've got plenty to worry about. In a 1:1 match-up Microhoo! can now directly challenge many, if not all of Google's revenue sources. Because Microhoo! has multiple lines of business (crappy OS immediately comes to mind), it has the resources to enter into a long and protracted price war with Google.

Say goodbye to those profit margins Google! If Microhoo is successful it is going to drive prices straight down. This is probably in retribution for Google thinking it can get into the office productivity space (word processing, spreadsheets and whatever.)

A price war would rendering Google's main sources of revenues (ads, monetizing search) relatively worthless, leaving Google unable to fund further expansions into Microsoft's software space.

Hat tip again Greenwald

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