Google <em>Google</em> to see the future of business

By turning the tech-company model upside down with a mix of geekiness and business savvy, Google has made itself indispensable.

When it comes to classifying technology companies, there are hardware businesses and software businesses. Obviously, big companies like Microsoft and Apple do dabble with products on both sides of the divide, but a great many firms are happy just to subsist on a fraction of the spinoff market for a of the customer base for high-resolution mice, fancy keyboards, a bit of virus protection, or some other useful chunk of code.

But even with companies selling software for on-line download in exchange for e-mailed money, we can relate their activities to our shared traditional conception of what a company is and does. Raw materials go in one door as steel beams, grain-fed cattle, or sweet and tasty young brains (mmmm, brains) and are then processed into retail products–Model Ts, Big Macs, World of Warcraft–that are exchanged for money (or one of its representative forms).

But this Google thing is really bending my mind. It's the whole í¼ber-meta-capitalism of it all. "If we buy a bunch of information and give it all away, we'll make big money on the back end with advertising revenues." And it's all worked, it seems. All I know is that I use Google lots of times a day and nobody's ever sent me a bill for it. Sometimes I use Google because I'm just too lazy to type a long domain name–it's just a couple of short keywords and a click instead. Or I'll read that a bunch of new programming tools have been posted (for free) to help humanity add comments to the marvellous (and also free) Google Maps giveaway (over at maps.google.com), and I'll marvel at the business model that lets me use such cool stuff at no cost.

Google is essentially a magic genie for any and all information requests, for good choices and bad ones. And like an obliging genie, Google is always out there and plugged in, looking for new stuff we'd like to wish for. It all seems so counterintuitive. Didn't we just have a tech-sector stock meltdown precisely because the official business plans of a whole bunch of companies consisted of giving stuff away and waiting at the mailbox for the cheques to appear?

Maybe it's just one of those economic-Darwinism outcomes. The very best of the "Wouldn't it be great if we could just go ahead and do it?" late-night Coca-Cola hacker bravado daringly blended with the correct proportion of "Hey, you stupid geeks, the friggin' rent's due on Friday" espresso-fuelled daytime managerial style. Or perhaps Google simply hit the moment more precisely on the nose–in contrast to the competition–with a stronger search-engine infrastructure and/or a more memorable domain name than everybody else. It's hard to know what'll pay off, isn't it?

If timing is a big factor, then Google's low-cost model for on-line advertising was probably the most important element. Search engines already existed, but there was no centralized system for buying advertising placements and having them appear on relevant pages, much less making them affordable to all levels of businesses. Google made it as simple as possible to purchase or offer Web space for ads, then took care of all the details for delivering them. The price of each placement would be determined by an auction-style process, and you could set a low daily limit of US$5 or so, instead of opening yourself up to unanticipated costs from sudden success.

By splitting any advertising revenue with the ordinary folks hosting the ads on their sites and blogs, Google really opened up the monetization of the Internet to small players. There may be more hopeful dreams than actual cash for many people, but the existence of a system for potential financial rewards encourages users to keep on contributing to the content pool on-line. It means that putting up a Web site isn't just an amateur-hour task with no possible return. Stories that you read about people who have done very well when their sites got trendy indicate it's all a vast pop-culture lottery anyway. Outside forces might suddenly turn your fan site devoted to the Alan Parsons Project or Little House on the Prairie into more bucks than writing a book on the same subject would ever get you.

I guess Google is the purest example of a real information-age corporation. Amazon is just a big bookstore, and eBay is the biggest swap meet and collector's show on Earth. Both of those companies couldn't exist without the Internet. Somehow, though, Google has managed to arrange things such that a large portion of the Internet might not exist without it. And now that the company is wealthy enough to buy almost any company it fancies (such as YouTube), I suspect that Google's actions will really define the next few years of the Net's development.