This super bullish prediction has nothing to do with what the company is doing today, rather its potential in having an odds on shot at taking control of the majority of the world's computers via what everyone now refers to as Cloud Computing.
What Is Cloud Computing
Cloud computing is where your computer programs and data shift off your physical machine on to giant global servers (a server is a collection of computers all interlinked).
With all your data and programs located on central servers it will mean that you have access to all your information on whichever computer you are presently using. Cloud computing will therefore eliminate the dreadful information deficiencies that have plagued personal computer users since the very beginning.
For example, many people have 2 computers and information, such as emails, letters, pictures, music etc, which is on one machine is often not on the other.
Yes, you can setup syncing tools but believe me like so much in the technology and software world they promise far more than they actually deliver. Plus only those with good computer skills can actually get these tools or software to work properly. And that's possibly the key phrase - 'people with good computer skills' - because I'd estimate that 90% of all computer users have very limited skills. This is not a criticism, merely an observation.
Cloud computing will eliminate most of these problems in an instant. What's starting to become really interesting is how Google will probably force us to use its services more and more.
In effect Cloud Computing is going to bring everyone far closer to Google than just typing in a search term like 'buy cheap jeans' which is what most people use the company for right now.
How Google Is Going To Force Us To Use Their Products
How does any single company force someone to buy or use their products? Simple, produce goods and services that people want to use.
In the 1980s the telephone industry in America started to get super competitive but the different companies were smart and looked long term so they didn't focus their efforts on trying to poach customers from each other.
Instead, they concentrated on both investing in the underlying infrastructure and promoted anything and everything connected with it that would lead to increased usage of the phone line. Perhaps they were some of the pioneers of 'lifestyle marketing', selling the phone as a lifestyle tool which virtually nobody could do without.
Google today is in exactly the same position. It's strategy and ultimate goal is to produce and promote tools that mean both a wider internet adoption, combined with more use. Consider these two points in relation to Cloud Computing.
Point 1 - The Introduction of Google Docs
What do 95% of us use our computers for? The big 4, email, internet, word processing and music/video.
Google is already very strong with email via GMail.com, and of course pretty much owns the search market, but it is the recent introduction of Google Docs which looks highly significant.
At present most readers will be using Microsoft Word (and Excel to a lesser extent) for word processing but this costs £200+ and it also suffers from the problem where all of your files are stored on your present machine. However Google Docs is run 100% online, both the program and the data, plus it's free.
Yes, Google Docs right now is a little bit clunky but give it a few years and I can easily see it poaching at least 25% of Microsoft's market share, Not because it's superior (it's not) but because it will be far easier to use and will start to talk and communicate with all our other online programs and personal data.
We're currently experimenting with Google Docs and for sharing files and collaborating it's hard to beat right now. I think that within 18 months there's a good chance that we'll be using it almost 100% exclusively in our office, to Microsoft's detriment.
Expect Google to introduce similar type programs, especially music/video orientated, so our media files will be able to be stored online. This will mean they are accessed wherever we are via WiFi networks (which unsurprisingly Google is also investing billions in).
So if you're in the car, on the train, at home or in the office, you'll have one central place for all your data/media files. At the moment this is generally impossible for the man in the street.
Point 2 - Taking Control Of Your Mobile Phone & Combining It With Your PC
Computers and mobile phones, right now they're pretty separate products aren't they? But this is likely to change when Google introduces its Android mobile phone operating system.
Android is possibly going to be the dynamite that sets off the real Cloud Computing explosion.
The master stroke with Android is that it's going to be (semi) open source software which means the code is somewhat open enabling independent programmers and technology companies to develop various programs and applications. This is in contrast to XP/Vista and the more recent Apple iPhone where the source code is 100% controlled by their respective companies and in turn starves innovation to some degree.
Google's strategy is similar to a drug dealer who gives out free samples to get people hooked on his product. If the company can crack the mobile software market and make phone software which is not only really simple to use but works seamlessly with desktop and laptop computers, the majority of us might be happy to rely almost exclusively on Google's technology and infrastructure because it would make our lives easier.
Basically every bit of information you keep will always be accessible to every bit of technology you use. Yes, there are potential privacy worries to all of this but I think they're overblown.
Google is restricted by law in how it treats and collects its data so it's almost inconceivable that they're going to start playing games with our personal information - there's too much money and power at stake to play anything but 100% straight.
Why Microsoft Isn't Really In The Game
Yes, Microsoft right now controls about 90% of the world's computers via its online operating system XP/Vista but I feel that the whole ethos of the company is not only wrong but contrasts dramatically with Google's when looking at the future potential of both companies.
It's almost as if Google business mantra is this -
- How can we make great products for our customers that encourage them to use our technology and even spread the word for us?
- Once we have achieved this goal, how can we make a return on our investment?
Whereas Microsoft seems to operate like this -
- How can we make money from our customers, and then
- How can we build products that achieve this goal (or perhaps even - how can we copy everyone else's products)
Some classic evidence of the above can be seen when looking at how the two companies operate their free email services (Hotmail and GMail).
- When I login to my Hotmail account I'm first served up a page with loads of really cheap celebrity type stories such as 'the celebs with the worst tattoos'
- Plus there are massive banner ads trying to sell me (American) loans and (American) cruise holidays
- How can a company as sophisticated as Microsoft serve me US adverts when even a 12 year old programmer can work out that I'm using a computer located in the UK
- When I click to get my actual email again I'm served up a load of big, brash banner adds for the usual suspects, ie loans and credit cards
Now let's go to Google's GMail.
- When I login - no stupid 'news' stories aimed at teenagers, no adverts and no banners just straight to the email
- Yes, when I read my email some small text adverts do appear on the left hand side but they are non-obtrusive
- I don't mind these as Google is giving me a good service for free so let them pick up some revenue, it's good business for both sides
The above example to me typifies the foundations of the two separate companies and why Microsoft in my opinion has little chance of increasing its internet and online penetration over the next 5-10 years.
Jooce.com - A Classic example Of Cloud Computing Gaining Momentum
Interestingly, the Cloud Computing revolution looks as if it's already starting in the less developed world where many people cannot afford to own their own computer. But by using borrowed machines or internet cafes access is still available.
As ever though there's a fundamental problem with using a computer that's not yours - how do you safely store your personal data (emails, favourite internet sites, documents, music and other assorted files)?
Enter Jooce.com which is starting to take the less developed world by storm. The service offers a cloud computing platform where a user creates their own private secure online desktop to keep, view, listen to personal files, photos, music and video.
Jooce.com is not just aimed at those in the less developed world, but should be of interest to anyone who is either on the move, doesn't want to lug a computer around with them, doesn't want to own a PC but still needs to use one, or simply can't afford a computer.
Jooce.com is one of the best examples of cloud computing right now but I fear it will have a real battle on its hands in the future when it will no doubt have to take on Google.
Summary
You know how we often laugh when looking back at technology, perhaps a games console of 1990 compared to one of the latest models?
Well, I think we'll all be laughing in 5-10 years when we realise just how inefficient computers and the internet were in relation to how they managed our data combined with the different products (PCs, iPods, mobiles, TVs etc) being unable to properly talk and interact with each other.
Google I strongly believe is the company that's going to change all of this and it's why we've been buyers since the summer of 2007 and will continue to be buyers on every $25 move below $500, the last purchase was just a few days ago at $425.
Sure, there's no guarantee that things will play out as we expect but we believe the chances of Google cracking the Cloud Computing concept is better than odds on which could translate into the shares being worth $5,000 to $10,000 over the next several years.
Downside is most probably $250 or less so overall it looks like a sound investment and one that's built on some bullish developing evidence.
Postscript - Can Google Increase Its Share of the US Search Market To 90% (presently 70%) In 2008?
Apart from the stockmarket not doing that well over the last few months Google's stock has been bashed mainly due to some perceived poor financial figures from the company.
But Jason Calacanis, a veteran internet entrepreneur (see his Wikipedia profile) is arguing that due to many factors, notably Microsoft/Yahoo taking their eye off the ball for the next year due to their potential merger, Google has the real potential to move from a present figure of 70% of all US searches to 90%.
He also makes the case that a US recession will be good for the company's prospects. Read the full article here and it will be great for the bulls if he's right.
