UPDATE:

RIP Google Wave

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I watched the entire 1 hour-20 min not ready for primetime Google Wave Pony and Dance Show.  I must admit, the presentation on the technology was cute!  Success for the the intended audience as the kids are twittering their young fingers on their notebooks and cell phones as I write this post.

Spell checkers all over the world are learning new lingo such as: wavelets, embeded waves, iGoogle gadgets/robots, and blimps.  I was initially distracted because I kept looking at their Google Wave shirts and finally realized they were not sweating and the dark spot in the middle of their chests was a part of the pretty new Google Wave logo?

NoBeef“Where’s the Beef?” as Clara Peller used to say in Wendy’s TV commercials.  As others in the Blogosphere have stated, this looks like it was thrown up against the wall to see if it sticks?  Why present a not-ready-for-prime-time product, or as as Salon.com ask the question no else wants to say: “yet another Googler vanity exercise?”  I also wonder why now?  Is this a 1st shot across Microsoft’s proprietary bow or could there other business reasons?

As a line manager and reviewer of  complex IT proposals, and more importantly, as an investor, I don’t understand why the team had not properly prepared for the demo?  Were they serious that they had not reviewed the demo.  Maybe so, since the mobile devices did not communicate to one another as intended and at times the three team members were not communicating in real-time to one another?  Just plain weird from within a Goggle Data Center?

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I will leave the review of the product’s technology innovations to others more qualified to evaluate such internet technologies.  Google Wave offers real-time email, SMS, chat, wikis creation, and other GUI browser enhancements to social networking internet experience.  With GW’s open source API, developers will be able to offer extensions for possible enterprise applications.  There are obviously Privacy Concerns with the real-time views of anyone else’s typing, character-by-character and the drop-and-drag file sharing within a Google Wave.

To this writer, Google Wave is nothing more than a pretty email program for the kiddies with Web 2.0 enhanced social networking capabilities aimed directly at Microsoft’s Outlook and Sharepoint.  Google Wave might be very successful for the individual desktop however it has a long way to go for the Corporate Enterprise.   Remember that by most recent estimates, Lotus Notes and Microsoft Outlook  own 92% of the Corporate email systems.

Compare yahoo vs msft (i.e. live) vs google web traffic. It is very easy to see why msft wants to dance with yahoo.

What is Google’s business model?  Where does Google Wave fit into their product line? Looking at Google’s most recent 10-K report, we find the following interesting tidbits:

Intellectual Property:

  • Confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control access to proprietary technology.
  • First version of the PageRank technology was created while Larry and Sergey attended Stanford University, which owns a patent to PageRank.  PageRank patent expires in 2017.  Hold perpetual license to this patent.
  • October 2003,  extended exclusivity period to this patent through 2011, at which point license will become non-exclusive.

Government Regulation:

  • In the U.S., laws relating to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims, which include actions for libel, slander, invasion of privacy and other tort claims, unlawful activity, copyright and trademark infringement and other theories based on the nature and content of the materials searched, the ads posted or the content generated by users. Certain foreign jurisdictions are also testing the liability of providers of online services for activities of their users and other third parties. Any court ruling that imposes liability on providers of online services for activities of their users and other third parties could harm our business.
  • In the area of data protection, many states have passed laws requiring notification to users when there is a security breach for personal data, such as California’s Information Practices Act. The costs of compliance with these laws may increase in the future as a result of changes in interpretation. Furthermore, any failure on our part to comply with these laws may subject us to significant liabilities.

Culture and Employees:

  • Encourage engineers to devote as much as 20% of their time to work on independent projects.
  • December 31, 2008, 20,222 employees, consisting of 7,254 in research and development, 8,002 in sales and marketing, 3,109 in general and administrative and 1,857 in operations.

Risk Factors:

  • Currently, primary competitors to be Microsoft Corporation and Yahoo!
  • Microsoft has developed features that make web search a more integrated part of its Windows operating system and other desktop software products. Expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Microsoft has more employees and cash resources than we do.
  • Both Microsoft and Yahoo have longer operating histories and more established relationships with customers and end users. They can use their experience and resources against us in a variety of competitive ways, including by making acquisitions, investing more aggressively in research and development and competing more aggressively for advertisers and web sites.
  • Microsoft and Yahoo also may have a greater ability to attract and retain users than we do because they operate internet portals with a broad range of content products and services.
  • If Microsoft or Yahoo is successful in providing similar or better web search results or more relevant advertisements, or in leveraging their platforms or products to make their web search or advertising services easier to access, we could experience a significant decline in user traffic or the size of the Google Network. Any such decline could negatively affect our revenues.
  • Revenue growth rate will generally decline as a result of a number of factors including increasing competition, the inevitable decline in growth rates as revenues increase to higher levels and the increasing maturity of the online advertising market.
  • Operating margin will experience downward pressure as a result of increasing competition and increased expenditures for many aspects of our business.
  • Operating margin will also experience downward pressure if a greater percentage of of revenues comes from ads placed on Google Network members’ web sites compared to revenues generated through ads placed on [Google’s] own web sites or if [Google] spend a proportionately larger amount to promote the distribution of certain products, including Google Toolbar.
  • Margin on revenue generated from Google Network members is significantly less than the margin on revenue we generate from advertising on our web sites.
  • Generated 99% of revenues in 2007 and 97% of revenues in 2008 from advertisers.
  • Provide advertising, web search and other services to Google Network members, which accounted for 35% of revenues in 2007 and 31% of revenues in 2008.
  • International revenues accounted for approximately 51% of total revenues in 2008, and more than half of user traffic came from outside the U.S.
  • Face risks associated with trademarks. For example, there is a risk that the word “Google” could become so commonly used that it becomes synonymous with the word “search.”  If this happens, could lose protection for this trademark, which could result in other people using the word “Google” to refer to their own products, thus diminishing [Google]brand.
  • Companies have filed trademark infringement and related claims over the display of ads in response to user queries that include trademark terms. The outcomes of these lawsuits have differed from jurisdiction to jurisdiction.  Currently have three cases pending at the European Court of Justice, which will address questions regarding whether advertisers and search engines can be held liable for use of trademarked terms in keyword advertising.
  • Subject to additional claims with respect to Google Book Search in other parts of the world.
    Digital Millennium Copyright Act has provisions that limit, but do not necessarily eliminate, liability for listing or linking to third-party web sites that include materials that infringe copyrights or other rights.
  • Large amount of information on the internet is provided in proprietary document formats such as Microsoft Word. The providers of the software application used to create these documents could engineer the document format to prevent or interfere with ability to access the document contents with search technology.  This would mean that the document contents would not be included in search results even if the contents were directly relevant to a search.
  • Software providers may also seek to require [Google] to pay royalties in exchange for the ability to search documents in their format. If the software provider also competes in the search business, they may give their search technology a preferential ability to search documents in their proprietary format. Any of these results could harm [Google] brand and operating results.
  • Technologies have been developed that can block the display of our ads. Most of our revenues are derived from fees paid to us by advertisers in connection with the display of ads on web pages. As a result, ad-blocking technology could adversely affect our operating results. (i.e. Adblock, CustomizeGoogle, or other similar Firefox extensions?)
  • Payments to certain Google Network members have exceeded the related fees we receive from  advertisers. December 31, 2008, aggregate outstanding non-cancelable guaranteed minimum revenue share commitments totaled $1.03 billion through 2012 compared to $1.75 billion at December 31, 2007.

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Updated: Nielsen Online (pdf) Total Searches (April 2009)

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