The drums have started sounding. The war is coming. NYTimes writes on what to expect in a battle that is likely to rival the Microsoft-Netscape one:
Today, nearly everyone in Silicon Valley, from venture capitalists and chip engineers to real estate agents and restaurateurs, has begun to ask: Will Google become the next Netscape?
[Google’s success] has ignited a three-way battle among Microsoft and its two Silicon Valley rivals: Yahoo, based in Sunnyvale, Calif., and Google, whose headquarters are nearby, in Mountain View. Underscoring the importance of search engines to Internet advertising, Yahoo recently said it planned to end its exclusive reliance on Google for search results and had established its own research lab to try to cut its new rival’s lead.
Google’s financial success is clear. In 2001, the company had virtually no revenue; in the past year, it recorded sales of almost $1 billion and profits of about $350 million, according to several executives familiar with the company’s private financial figures.
Later this year, Microsoft is expected to unveil its own search technology, which Mr. Gates says will help Microsoft catch up with Google. Last week, Microsoft released a test version of a special set of software buttons for its browser designed to direct users to its MSN search and related services. For Google, though, the greater threat is that Microsoft will decide that Internet search, like the Web browser before it, should be an integral part of future versions of the Windows operating system.
For all of Google’s hyperactivity, there is still a lingering sense among many Silicon Valley veterans that they have seen this movie before. The company may not have Netscape’s arrogance, but it is still not clear that all of its clever marketing, technology and brand identification can withstand Microsoft’s onslaught when it arrives.
Google has had plenty of time to learn the lessons. My feeling: it should not do an IPO for the next year. Instead, it should focus on its new technologies and the momentum that is has built. The IPO will shift focus, and that should not happen at such a critical juncture. Google is changing enough cash through its operations – it doesn’t really need the money.
