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  (Source: thenextweb)
Eric Schmidt to step down effective April 4

Wow, this totally came out of left field. Eric Schmidt just announced that he is stepping down as Google's CEO -- a position that he has held since August 2001. Google co-founder Larry Page will take over the CEO position effective April 4, 2011.

Here's a clip from Schmidt's blog post announcing his departure from the captain's chair:

For the last 10 years, we have all been equally involved in making decisions. This triumvirate approach has real benefits in terms of shared wisdom, and we will continue to discuss the big decisions among the three of us. But we have also agreed to clarify our individual roles so there’s clear responsibility and accountability at the top of the company…

We are confident that this focus will serve Google and our users well in the future. Larry, Sergey and I have worked exceptionally closely together for over a decade—and we anticipate working together for a long time to come. As friends, co-workers and computer scientists we have a lot in common, most important of all a profound belief in the potential for technology to make the world a better place. We love Google—our people, our products and most of all the opportunity we have to improve the lives of millions of people around the world.

Although Schmidt will no longer be Google’s CEO, he will stay on as Chairman and will serve as an advisor for Larry Page and Sergey Brin.

During Schmidt’s time at the helm, Google has become the dominant search engine on the internet, expanded its reach into about every possible aspect of our online lives (YouTube, Chrome, Gmail, Google Checkout, Google Docs, etc.), launched a smartphone operating system that is gobbling up market share globally, and is in the process of taking on the desktop/notebook OS market with Chrome OS

The news comes on the same day that Google reported a 26 percent increase in Q4 income to $8.44 billion. GAAP operating income came in at $2.98 billion compared to $2.48 billion for 2009.



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The context
By Tony Swash on 1/21/2011 6:43:05 AM , Rating: -1
Forgive the lengthy post but I wanted to sketch out how I see the context of the management changes at Google in order to invite comment.

Google is an advertising company.

The overwhelming bulk of the money Google makes, revenue and profits, comes from advertising.

The overwhelming bulk of the money Google makes is from advertising accessed by a browser from a desktop computer.

Google's strategy is broadly to ensure that wherever and however people browse the web it will be Google advertising that they see and it will be Google who will collect the data on users habits and preferences so that it is Google which can monetize that data by selling it as targeting information to advertisers.

Although it is true that that Google does have strategic goals, given the way the company and management at Google is structured and given the culture of it's founders which continues to survive in the company, it is not clear how tightly focussed that strategy is. It seems, based on Google's track record, that it has a loose focus and encourages a multiple of sometimes conflicting and sometimes overlapping initiatives to operate all at the same time. The best way to describe the company is as being driven by engineers and driven from the base up.

Because the company was set up and hugely values the values of engineers and technologists many of whom had an ideological commitment to the concept of open source software Google generally has a preference for making decisions based on which is the "best technology" according to its its own judgment of what is "good" and what is "open".

Because of this dominance of technology and engineering in the management structure and culture at Google strategic decision are often taken on the basis of deciding what is the the "best" technology rather than what is the best strategy for the company as a whole, although the two may of course coincide. They may however sometimes conflict.

Because of the focus of the company culture on technology there is generally a lesser focus on the concept of strategic partnerships.

There seems to be a shift underway which is changing the whole landscape of information technology and computing. This shift is from the traditional desktop PCs to a range of mobile devices running new operating systems.

This shift which began with devices such as the iPod, accelerated with the emergence of smart phones (particularly the iPhone followed by Android) and then accelerated again with the launch of the iPad, is still at an early stage. So the desktop PC remains the primary way people access the internet. For now.

The trend away from the desktop and towards mobile devices appears secular. There are many reasons to believe that over the course of a short period of time (say the next five years) the mobile device will come to be more important (in terms of amount of usage, accessing media, internet activity, economic importance etc) than the desktop PC.

It is very possible and probably likely that in a short period of time more people will access the internet via a mobile device rather than a desktop computer.

Two clear trends in mobile internet usage have already emerged:

a) People are far less likely to access the internet via a browser and far more likely to access the internet via an app on a mobile device compared to average desktop PC usage.

b) Google's advertising earnings per eyeball on mobiles devices is far lower than it's earnings per eyeball on the desktop.

Taken together these two trends (away from the browser and towards a lower earnings ratio) are a long term threat to Google's revenue stream.

In addition to these threats from the rise of the mobile devices the rise of curated browsing on the established desktop PC, particularly by Facebook, poses a a separate but equally significant threat to Google's existing business model. Facebook recently overtook Google as the most visited web address.

The value of any given strategic initiative taken by Google should be judged by how well it address these threats and how well it protects and supports Google's central advertising revenue stream.

Google has responded to these threats (and indeed opportunities) in a number of ways. The most significant has been Android. The aim of Android is now to disrupt the threatened dominance of Apple in the new mobile markets (initially the Android initiative was probably taken with an eye on the threat from Windows Mobile but when that threat failed to materialise due to Microsoft's incompetency and the iPhone did emerge as a powerful game changing device the emphasis seemed to switch to heading off Apple). By offering Android free Google hopes that it's services (and thus it's advertising business) will be able to achieve a guaranteed place on the new mobile devices. Similarly Google's approach to Android app development has been to support it just enough so that it can be seen to be comparable to iPhone app development whilst quietly nudging people away from paid apps and towards free advertising supported apps (adverts supplied by Google of course).

How successful Google's strategy will be in response to the threat from mobile is not yet clear. The fact remains that the mobile internet will not be browser centric and will not hinge so much on traditional search and that it will be very app centred. And it also remains true that Apple's app market and base is still the largest and strongest and has a very strong non-ad supported (i.e. paid) eco-system.

Google has not yet developed a business model for the new world of mobile devices that can supply a revenue stream to replace the desktop advertising revenues if and when mobile overtakes/eclipses the desktop. Meanwhile Apple's acquisition of Siri and it's massive investment in new data centre's probably signals that Apple intends to make the non-browser search system on iOS very strong in future releases. This would be a direct attack on Google's business model.

In this context the recent furore around the issue of H264 versus WebM is essentially an irrelevant sideshow. No technology can replace strategic decision making and positioning.

Google's has so far failed to build a new mobile revenue stream of the same size as the desktop related revenue stream. But it is early days. Google still could find a way to monetize mobile in some significant way that would match the scale of the old desktop browser related revenues.

However Google has so far not enunciated or demonstrated through its actions and initiative's what it's strategic focus is for building a strong revenue stream in the mobile world.

The original model of Google's internal management philosophy and dynamic was bottom up, let the best emerge from the noise, let people work on lots of initiatives and projects in parallel and let's see which one's work (i.e. throw shit at the wall and see which lumps stick). This seemed to fit philosophically with a commitment to open source and free stuff. However in the world of mobile devices and under pressure to come up with a revenue securing strategy for that new mobile world Google may find that that approach to strategic management may be inadequate.

This is, IMHO, the context to view any changes arising from the top reshuffle and the demotion (via promotion) of Eric Schmidt.




RE: The context
By EasyC on 1/21/2011 9:19:03 AM , Rating: 5
Here are the chain of events that just happened:

1) I notice there is a long post
2) I skim through said post very quickly
3) I notice the terms "iPad" and "iPod"
4) I immediately check the author of said post and notice it's Tony Swash.
5) I immediately disregard reading such post as it's probably filled with pro-Apple propaganda

... and that my friends, is how you save 10 minutes of your life. Now I'm off to go use those 10 minutes doing something useful.


RE: The context
By PsychoPif on 1/21/2011 9:55:33 AM , Rating: 2
I guess Tony did earn a bit of a fanboy rep, but you sir are guilty as much as he is.

Out of curiosity, I did read his wall of text and I must say that while I disagree with some of his point, it's no where near a pro-Apple statement. At best, a very well thought one.

Now about Tony's actual point, I think you're wrong when you say that the web is going away with the browser based experience. That might be the way Apple wants us to go so they can control the content and more easily charge for it, I think the tablet will bring back the browser to the forefront.

There is value in making a custom experience for a 4" screen, but with a tablet that is almost as big as your PC screen, there is no reason for developper to make two versions of their content. I will be really surprised the day the browser, as we know it today, disapear.

Also, I think you're mixing two things when you bring Facebook into the discussion. Social networking and "app stores" are two very different beast, and while they both affect how Google need to do business, they need to be approched in two very differents ways.


RE: The context
By Tony Swash on 1/21/2011 10:49:17 AM , Rating: 1
quote:
Now about Tony's actual point, I think you're wrong when you say that the web is going away with the browser based experience. That might be the way Apple wants us to go so they can control the content and more easily charge for it, I think the tablet will bring back the browser to the forefront.

There is value in making a custom experience for a 4" screen, but with a tablet that is almost as big as your PC screen, there is no reason for developper to make two versions of their content. I will be really surprised the day the browser, as we know it today, disapear.


I think you are right about that - tablets may bring browsing back into the centre of mobile web experience.

Google does have a problem which I didn't touch on but which as a long time user of it's search engine I have noticed and I have seen it widely commented on which is the slow deterioration of it's search results. It used to be that as long as I selected the right search term I was pretty much guaranteed to get some good results high up on page one from Google. Now I often find a lot of the top of page one is spam. Clearly there is an arms race going on here, between Google and those trying to spoof their search algorithms, and that battle waxes and wanes, currently it seems as if the spammers have pulled ahead. Google needs to make sure it pays enough attention to it's premier search engine.

Sometimes I think I can detect an inflection point looming where the benefits of algorithmic search becomes exhausted and new solutions based on social network peer recommendation and/or curated specialist search pulls ahead. Maybe Google's working just such stuff. I hope so as good search seems an irreplaceable tool nowadays. How did we cope before Google?


RE: The context
By PsychoPif on 1/21/2011 3:33:34 PM , Rating: 2
Agreed.

In a perfect world, the site I'm looking for should be the first to come up in the search results. Unfortunatly for the advertisers, this means less exposure.

Since Google is making money out of the ads, not the quality of his search results, I see a litle conflict of interests happening.

We already get the ads before the results, what's preventing Google from giving an advantage to sites that use AdWords over sites that don't?

Maybe I'm a litle paranoid, but we can name a lot of tech companies that have used shaddy tactics to help their business before, we should'nt forget that too fast.

The solution, good competition. I've already replaced half my searches with Bing and I'm sure if someone can come up with a new way to direct me to good sources of information, I could replace even more of my Google time. After all, it happened to Yahoo, it can happen to Google.


RE: The context
By Tony Swash on 1/21/2011 12:14:50 PM , Rating: 2
quote:
Here are the chain of events that just happened:

1) I notice there is a long post
2) I skim through said post very quickly
3) I notice the terms "iPad" and "iPod"
4) I immediately check the author of said post and notice it's Tony Swash.
5) I immediately disregard reading such post as it's probably filled with pro-Apple propaganda

... and that my friends, is how you save 10 minutes of your life. Now I'm off to go use those 10 minutes doing something useful.


It would take you ten minutes to read my post :0


"So if you want to save the planet, feel free to drive your Hummer. Just avoid the drive thru line at McDonalds." -- Michael Asher














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