Google finally declared in its SEC 10-K filing that it was indeed a media company:
"We began as a technology company and have evolved into a software, technology, Internet, advertising and media company all rolled into one."
Google reported that it made just over US$3 billion in revenues last year and warned that it wouldn't have the kind of first quarter that it had in the fourth quarter of 2004.
There's lots and lots of interesting stuff there. Among the items that were interesting to me:
- Google said that 99% of revenues were from advertising. (I expect Google to try and diversify sooner rather than later.)
- 66% of Google revenues were from U.S.-based advertisers, with most of the international revenues coming from (as you might expect) Europe and Japan. (The fact that one-third of Google revenues came from outside the U.S. — and this is where faster growth is happening — makes the litigation in France all the more significant.)
- Google said its "primary competitors" are Microsoft and Yahoo! The company further said, "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." (That sounds like a bit of a suggestion of where Google is going.)
"We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing the 'Google' brand is critical to expanding our base of users, advertisers and Google Network members. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain the 'Google' brand, or if we incur excessive expenses in this effort, our business, operating results and financial condition will be materially and adversely affected."
All of these things taken together suggest that Google expects to lose some share, recognizes by implication that it needs to diversify revenues and perhaps broaden into a portal of sorts (they've said they're not a portal in the past).
Google expects to spend considerably more on technology and headcount in 2005. We may also see marketing dollars finally being spent to maintain brand strength. MSN and Yahoo! have obviously been spending for some time to boost their brands and search market share. (BTW: I was told by MSN that the US$150 million was "way too high".)
Could 2005 wind up being even more frenzied and competitive in the search space than 2004? Short answer: Yes.