Even though Google's (NASDAQ: GOOG ) search business continues to crank out
huge amounts of cash flows, the company definitely is concerned. Companies like
Apple (NASDAQ: AAPL ) continue to pose problems with the mobile market. Even
Microsoft (NASDAQ: MSFT ) remains a strong competitor, especially with its
dominant Office franchise. Yet it looks like the biggest threat is Facebook.
With more than 750 million active users, the company continues to grab online
marketing dollars. For example, according to a report from Reuters , the company
doubled its revenues to $1.6 billion during the first half of this year. Of
course, Google's answer is Google+. And as an indication of how serious the
company is about this service, it has pimped out its spartan home page with a
big, blue arrow pointing to a tab for Google+. Yes, it's inevitable that there
will be an explosion of sign-ups. Even as an invitation-only service, Google+
got roughly 25 million users. But the big question is: Will the users stay? The
concept of "engagement" is absolutely critical for social networks. And
history has shown that this can fizzle out pretty quickly. Just look at
operators like Friendster, Bebo, Ringo, Tribe and MySpace. They are either dead
or near dead. Only a few social networking services, such as LinkedIn (NYSE:
LNKD ), have actually survived. Despite all this, Google+ continues to look
promising. Launched just 90 days ago, the service has seen frequent innovation.
The Hangouts service which allows for multi-user video chat is turning into a
great product. It also has new iPhone/iPad apps and integration with the main
search engine. All in all, it looks like Google's engineers are working as if
they were at a lean, mean startup. But having a strong product is not enough.
Facebook has been able to add some new capabilities to deal with Google+. In
fact, on Thursday, the company will conduct its much-anticipated F8 conference,
where even more features and offerings such as a music service will be
announced. Basically, Google needs to get creative. So what to do? Well, perhaps
the most impactful thing is to get celebrities involved. And Google already has
that covered. Grammy Award-winning musician will.i.am will do a performance on
Google+s Hangouts at 9 p.m. That should attract plenty of buzz. But Google
should continue to push aggressively. The company has a huge cash hoard and
could sign social-networking exclusives with top acts like Lady Gaga and Justin
Bieber. By doing this, Google should be able to scale its service substantially,
as well as create more engagement. True, even with all this, Facebook still is
likely to remain the dominant player at least for a couple years. The company
still has many entrenched advantages. But Google+ is looking more like a worthy
adversary and not showing signs of letting up the pressure. Tom Taulli is the
author of "All About Short Selling" and "All About Commodities." You can
also find him at Twitter account @ttaulli. He does not own a position in any of
the stocks named here.
No comments:
Post a Comment