Google Takes on Amazon With Same-Day Shipping Service
by Jeannette Di Louie, Investment U Research
Monday, December 5, 2011
I’ve said for a while now that Google (Nasdaq: GOOG) wants to take over the world.
First, it debuted the search engine, which changed how we use the internet so significantly that English dictionaries everywhere now include “Google” [goo-guh’l] as an official entry (incidentally both as a noun and a verb).
But the company didn’t stop there, adding Google News in 2002, Google Maps in 2004, Google Finance in 2006, Gmail in 2007, and its web browser, Google Chrome, in 2009.
These days, it also offers music, video, image and finance services, not to mention Blogger, a popular site where users can create their own blogs for little or nothing, and Google Docs, which serves as a free, online competitor to Microsoft’s Word, Excel, Power Point and the like.
It also owns YouTube, not to mention the Android smartphone operating system. And now, it looks like it’s taking a very serious crack at the fast-growing world of online shopping.
The Wall Street Journal reported last week that Google is talking with retailers such as Gap (NYSE: GPS), OfficeMax (NYSE: OMX) and Macy’s (NYSE: M) to combine its existing product-search capabilities with a new, fast, cheap delivery service.
Amazon (Nasdaq: AMZN) look out, because Google clearly wants to come through.
What Amazon Can Learn From the Google-Apple Rivalry
Considering Google’s past forays into different fields, it should come as no surprise that Amazon isn’t the first company it’s happily encroached on. Yahoo! (Nasdaq: YHOO), Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL) all have huge competitions with Google over its mail, apps and phones, respectively.
In Apple’s case particularly, that rivalry recently came under close scrutiny thanks to the release of Walter Isaacson’s official Steve Jobs biography.
The book highlights Jobs’ seething hatred of Google’s former CEO, Eric Schmidt, who once served on Apple’s board of advisors. Jobs believed Schmidt “wholesale ripped us off” by stealing classified information he had access to during his time with Apple and using it to build the Android operating system for Google.
He even vowed to “spend every penny of Apple’s $40 billion in the bank” to make him pay for the thievery. If current CEO Tim Cook honors Jobs’ wishes, Google could be in a whole heap of trouble going forward.
But even if that doesn’t happen, Amazon can still take some comfort in that toxic rivalry. As Dan Frommer points out in the Business Insider, Google does have a significantly larger market share of the smartphone industry… but Apple still makes more profit, which isn’t insignificant.
Google Might Be Doing Amazon a Favor
Amazon has another thing going for it as Google prepares to take it on.
Contrary to popular belief, bigger is not always better. Sometimes bigger just means more complicated and therefore more trouble than it’s potentially worth.
White Cap Research Group Chief Investment Strategist Lou Basenese put it plainly in an Investment U article in 2009. “The golden rule of income investing,” he said, is to “go with simple businesses, because simple businesses make money and can pay dividends consistently.” Not to mention that trying to be good at everything usually makes for mediocrity in everything.
That rule hasn’t grown any less golden since then. And the best and brightest know that, Steve Jobs among them, as evidenced by his advice to incoming Google CEO Larry Page back in 2010:
“Figure out what Google wants to be when it grows up. It’s now all over the map. What are the five products you want to focus on? Get rid of the rest because they’re dragging you down.”
That’s wise advice that obviously wasn’t taken completely to heart.
So far, Google appears to relish its increasing role as a Jack-of-all-trades. But its arrogance has gotten it into trouble before, most notably in China, where it debuted its search engine in with a lot of smug assumptions… and soon emerged a dismal failure.
Google might like to project itself as the end-all and be-all of the tech world, but it’s not nearly as invincible as it likes to think. And the more it expands, the greater the chances are that consumers will catch wind of that.
Good investing,
Investment U Research
Article by Investment U
