If Search Is Google's Castle, Android Is the Moat

Hugh Pickens writes "Warren Buffet once said that the best businesses were economic castles protected by unbreachable moats. Now, Erick Schonfeld writes that if search is Google's economic castle, Android is a moat, Chrome browser is a moat, and Google Apps is a moat — all free products, subsidized by search profits, intended to protect the economic castle that is search. 'Android, as well as Chrome and Chrome OS for that matter, are not "products" in the classic business sense. They have no plan to become their own "economic castles,"' says Benchmark Capital VC Bill Gurley. 'They are not trying to make a profit on Android or Chrome. They want to take any layer that lives between themselves and the consumer and make it free (or even less than free).' So don't measure the success of Google's new businesses by how much revenue or profit they generate directly but measure it by how much they shore up Google's core search business. 'Google is ... scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it. And best I can tell, they are doing a damn good job of it.'"

Re:So they're being anticompetitive

[lrobert98]

Just because they have most of the search market doesn't mean they're being anticompetitive. They're just the best at what they do, for now. As soon as some other company invents the next great search engine, there's nothing Google will be able to do to keep people from defecting if they so choose. Contrast that with Windows where moving away to something else can be difficult or impossible depending on the software needs of the end user.

Besides, I thought Google's main focus was advertising, and search was just a delivery vehicle, just like Android, Docs, and everything else they give away for free.

Re:So they're being anticompetitive

[_Sprocket_]

Microsoft's strategy has been establishing a lock-in to the Microsoft ecosystem. Google strategy is to disrupt lock-ins that would in turn potentially disrupt access to their core businesses.

We're still talking big business with both Google and Microsoft. But those who point out that Google is such a business and everything is about making money are missing the point. Google's actions might not be entirely altruistic but their strategy is considerably more in line with consumer rights, and many hacker sensibilities, than most in the industry.

Re:Exactly! Why use an analogy in this case?

[dreamchaser]

You missed the point of what khasim was saying. Yes, search is their core product that is presented to the public, but their revenue is driven by their advertising. The more people search, the more targeted ads they see. Their real core product is advertising and has been ever since they went public.