Hats Off to Google, Inc.

Why is Google doing so well?  The question is begged, when a small company like Google has profits of $369 million in only one quarter.  That's over $100,000 profit for each employee in only three months and is on track for a Return on Investment of at least 50%.  Google has net profit margins of about 30%, which is much better than the monopolist Microsoft's 22% net profit margins.

The answer to the question is really simple and is two-fold.  First, of the 140 or so hits that I received in the last 24 hours, 92 were new readers referred from Google, or 2/3rds of all of my traffic.  In comparison, Yahoo referred 6 new readers and AOL referred 2 new readers.  In other words, Google has huge amounts of traffic and is crushing its competitors.

Second, it has found a way to turn that traffic into revenue.  While Google doesn't make any money by referring people to Carried Away, it makes a whole lot of money by selling targeted ads that complement referrals to Carried Away.

I see little to stand in the way of jaw-dropping growth for Google for a while.  The worldwide advertising market is gigantic and it would be difficult to accuse Google of being a monopoly, even if Google were to mushroom in size.  Compare to Microsoft as an enterprise resting on sales in the software market, which is a market a whole lot smaller than advertising.  It's clear that even Microsoft is at a rather large disadvantage, if it were to try to compete with Google.

My hat is off to Google for a more than fantastic quarter.  Google is a jewel of American entrepreneurialism.

Comments

[Chris]

I think calling Microsoft is a bit (actually a whole lot) one-sided. I don't blame them for practicing competitively with the aggressive foreign competitors chipping away at American software companies' market share. If it's ok for foreign companies to use every trick in the book to survive, it's ok for ours. I love Microsoft's software. Everyone I know prefers Access, Excel, and Windows and IE. Other companies give two products in one as a special package, it isn't so bad for Microsoft to do the same. Long live Microsoft! The ultimate American success story.