Incorrect. This is where many analysts have been wrong, and hence have been underestimating goog's longevity. Google has one of the largest barriers to entry of any tech company. Personally, I think larger than Microsoft's. Here is why: they solve ridiculously hard problems and make it seem simple and easy, and monetize it well! Yahoo, Microsoft, and all the 2nd tier search companies cannot hold a candle to Google's ability to search and index. Why? Google has the smartest people in the world working hard and enjoying themselves while working there.
2. Competition from the other big dogs
Incorrect. The other big dogs are falling rapidly behind. Microsoft is not doing well on the web, momentum is basically carrying them. Yahoo is not doing well, again they are doing a decent job at making money being second horse, but they do not do anything innovative on search or advertising, they eat up the scraps. AOL clearly is dying. Google's margins are much higher than any competitors, and this is massively important.
The other arguments could hold, but I don't agree with them entirely.
Generally, I feel the advertising based model allows them to monetize any product they create, from web mail to any of their newer products, including potentially free wifi.
What's so ridiculously hard about indexing and searching? Google does it well, but if I had to use MSN or Yahoo I'd hardly notice.
It's very hard for a startup to beat Google at general search, but by choosing a subset (cheap prices, reviews of consumer electronics, vacations, flights, symptoms of illnesses, mailinglists and forums, blogs, movies, music lyrics, torrents, shareware, etc etc etc) startups will slowly encroach on Google's territory.
Finally, it may be very difficult to build a better Google, but I find it extremely easy to imagine one.
But Google hasn't fixed it. If you're looking for electronic parts, Octopart works much better than Google.
But how to find Octopart? How to even know it exists? I envision a search engine that gets to know you, asks for clarifications, and delegates to a suitable specialized search engine.
I bet a startup is working on something like this right now.
I don't much care either way, but here are the things I see wrong with your assessment.
1) With the stock options vesting, some of the smart people at Google are leaving. Most are being poached by Facebook or they've gone on to start their own companies. In the Valley, it's true that Google has cause a huge brain drain, but that doesn't mean Redmond doesn't have equally smart people. You've been had by Google PR.
As for their solving ridiculously hard problems, that's not the point. It's all about distribution. Google has effectively been able to outgame Microsoft in terms of distribution, for now. Open up Firefox and it's the default search engine. It's now ubiquitous enough to be used as a verb. But that doesn't mean Microsoft is out in the cold, they still rule the desktop and enterprise. In fact, Google search for enterprise isn't on par to other offerings. The Fortune 500 company I work for has recently switched away from Google and many other IT managers I've spoken with have been jumping ship to either Microsoft or InQuira.
2) You point to other companies but offer little. Microsoft may not be doing well with Vista but they're making money hand over fist. Yahoo Search Marketing also has a somewhat different CPC bidding process than AdSense that many are liking more. And as for AOL, they're now transitioning into a full on advertising company and with a lot of cash and Time Warner backing, they're a formidable competitor.
I disagree, the top guys leaving is quite over emphasized from what I heard. For a lot of us geeks, Google is a dream job and atmosphere. Not many people are entrepreneurs.
Microsoft is making money on momentum, not on innovation. They also are not making a lot from online products. Yahoo is doing alright, but again is doing nothing great and is in the dust behind Google. AOL is horrid, their page views are dropping fast, and they are dumping employees faster. They are transitioning to owning a few portals and blogs, and hell they use google ads on their site and google search. They are not a formidable competitor in the least, they are dropping in market share rapidly. They just fired 20% of their workforce for the second year in a row.
Incorrect. This is where many analysts have been wrong, and hence have been underestimating goog's longevity. Google has one of the largest barriers to entry of any tech company. Personally, I think larger than Microsoft's. Here is why: they solve ridiculously hard problems and make it seem simple and easy, and monetize it well! Yahoo, Microsoft, and all the 2nd tier search companies cannot hold a candle to Google's ability to search and index. Why? Google has the smartest people in the world working hard and enjoying themselves while working there.
2. Competition from the other big dogs
Incorrect. The other big dogs are falling rapidly behind. Microsoft is not doing well on the web, momentum is basically carrying them. Yahoo is not doing well, again they are doing a decent job at making money being second horse, but they do not do anything innovative on search or advertising, they eat up the scraps. AOL clearly is dying. Google's margins are much higher than any competitors, and this is massively important.
The other arguments could hold, but I don't agree with them entirely. Generally, I feel the advertising based model allows them to monetize any product they create, from web mail to any of their newer products, including potentially free wifi.
Just my two cents.