News.com has a commentary by George Colony of Forrester Research in light of its coming IPO:
Google’s a great company, with smart people and fantastic technology. But perspective is the order of the day, not irrational exuberance. Google can’t survive on search alone.
Factor one: Competition. Google has made lots of enemies. It is destroying the pop-up ad business and shifting ad revenue to paid search, of which it is the leader. MSN, AOL, Yahoo and other sites are getting bypassed and deconstructed by Googling users that don’t need the walled gardens of portals to ensure content relevancy. The control freaks of Redmond do not like it when anyone starts bypassing their monopoly or slapping toolbars on top of their operating systems and browsers. Microsoft loves complex software like search. Remember, the company started in the languages business. Taking down Google with better search is in its strike zone–this is a business it understands, unlike game consoles or TV.
Factor two: no barriers to entry. What was the search engine you used before Google? (Mine was AltaVista.) How long did it take you to switch to Google? Seconds. How long will it take to switch out of Google? Seconds. All great businesses are built on a monopoly. The Internet monopoly often hinges on high customer switching costs (online banking, Amazon one-click buyers, eBay). Google has no natural monopoly–there are no walls protecting Google’s market position.
Factor three: The Web is changing. Google is a step in the long march to better search. Yes, Google’s scheme yields fantastic results. But the Web is inexorably dynamic. During the next five years, it will move from containing primarily file-based content (HTML pages) to containing more executable content (e.g., online gaming or new structure imposed by Web services such as XML). When that happens, the usefulness of link-based search will wane. Simply stated, Google is very much of the times, with no advantage in the more structured, executable Internet that lies ahead.
Is Google’s search good? Yes. Is the company worth tens of billions? No.