Have you noticed how much we are using Google's services daily? The search, the maps, Gmail, Youtube, Picasa, the books and tens of others. For years now the services have been free, but have you wondered why is that so? Why does a company offer these really expensive services for free? At least for me this sounds strange. I mean Google is a company whose shares are listed on the stockmarket and doing charity is not something a shareholder expects. It is net profit and dividends that are expected by the investors. And Google is no exception.
So what is their strategy? Are they just wasting money or are they just promoting internet services as a charity? Well, this probably is not their plan. They are probably up to something a bit bigger and more serious.
Firstly they still have this really big positive cashflow from the advertising business. Secondly they have an organization of really talented people. These two give an exceptional possibility to build services that do change the world .... and for what the world will later be happy to pay for. To put this more straightforward - Google invests billions of dollars in a service like the maps: they buy the maps, they photograph all the cities in the world, they buy the best satellite photos, they build a huge server farm and a really good interface for the service and they give it away for free. And then a few years later when everybody has become really addicted to their service and there is no way somebody else is able to build a competing offer they start charging a small premium for the service. Something like a dollar or five per month for example. But by then you have hundreds of millions of users and this dollar per users sums up to a hundred million dollars per month.
To gather your opinion I have configured a poll on my (free Blogspot) blog. What do you think, will Google start charging for its services? If yes then when will we start paying the "Youtube, books and search tax"? :-) Please choose the option you think is the right one on the upper right corner of the page.
To give some background here are Google's numbers for the 4th quarter 2009:
- Revenue $6,67 billion
- Net income $1,67 billion
- Number of employees 19 835