23 Reasons Google Can Become a Penny Stock

An absolutely wubba-producing press release at PRWeb. (A wubba-producing press release is when I read it, my eyes get all big, and I squeak, "Wubba?")

I could be here all night responding to this, but a few points:

"3. Switching costs and brand loyalty of search engine users are low." -- Not in my experience. Google has the power of Internet entropy on its side: millions of links, millions of habitual users.

"5. While Google is free to searchers, a price of zero, profit-lowering price-competition is still possible with a negative price." -- You could argue that iWon tried this with their sweepstakes model. It failed.

"6. In addition to price competition, search engines can compete for users by offering less advertising." -- Four or five years ago this would have been an excellent point. However, I think the culture of the Internet has come to understand that advertising in itself is not bad, and that companies must have some source of revenue or they won't survive.

"8. The search engine industry may be in a temporary disequilibrium, and the long run equilibrium, dominance by Google or highly competitive industry, is unknown." -- I assert that the search engine industry is in a long term disequilibrium. Dominance by Google or anybody else isn't assured. He's right about this one.

"9. Microsoft and Yahoo might actually try and compete with Google." -- Yahoo is, and from a power searcher's point of view I think they're doing a better and better job. Google should watch over their shoulder at some other search engines, like Ask Jeeves. And who knows what those brilliant university folks are cooking up?

"11. Any competitor can outsource software deployment to India, Russia or China, which will reduce the cost of entry for competitors enabling new competitors." -- Google initially gained a tremendous advantage by designing a simple, easy-to-use interface, refusing to portal when everybody and their cat was portaling, and by developing a corporate/culture image that is friendly, hip, and cool. That kind of thing would be very difficult to outsource.

"12. There is open source competition." -- coughcoughcough WINDOWS AND LINUX coughcoughcough. And what happened to gPulp?

"15. Text pay-per-click advertising is only one form of advertising and is subject to competition from other forms of advertising." -- Like banner ads? C'mon, text ads are currently the least offensive advertising offering to the average user.

"19. Being number one, Google is the number one target for search engine spammers and search engine optimizers, which reduces Google?s quality." -- This is absolutely true imhoe and is going to be a bigger and bigger issue. (That's Terry "Wee Free Men" Pratchett's spelling of IMHO, BTW.)

"20. After an IPO, with no prospect of great stock options to employees, Google may be at a comparative disadvantage attracting and retaining top talent." -- eh, maybe. It depends on how well they can maintain their corporate culture. Yahoo's still got plenty of brilliant people.

"21. Google may not discover significant new advances in search if none are there to be easily discovered and all the easy techniques, the low hanging fruit, were already discovered, wasting Google?s research investment." -- This is silly. We've barely scratched the surface of what's possible with search. It is going to continue to change and develop very very quickly for a
good while yet.

"23. Everyone online, including Internet entrepreneurs, uses Google or another search engine, making search a well-known and glamorous business opportunity." -- This gentleman has obviously never seen me sitting under my desk eating peanut butter sandwiches.

I agree absolutely that Google's future is not assured; people were just as sure about the dominance of AltaVista/Hotbot/Webcrawler not too long ago. The only difference is that now there are more voices in the chorus. Yahoo is getting more aggressive, Microsoft is rumbling, and I'm just hearing about too many search engines doing interesting things, experimenting, getting strategically outrageous (at least I hope it's strategic, AskJeeves.) Things are not as calm as they were even a year ago.

But I think Google is in a more solid position than the press release by Dr. Baba would indicate. If you want more of his details, he's got a report explaining his position at http://www.gstockreport.com./. Ten bucks.

DISCLAIMER: Don't own any Google stock, haven't been offered any, don't want any, and won't buy it when it becomes available.

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