The Google Revenue Equation, and Why Google’s Building Chrome OS | Hacker News Reader

The Google Revenue Equation, and Why Google’s Building Chrome OS

mashable.com

35 pointsanulman8 comments

For some reason all this google analysis reminds me of priesthoods in old cultures trying to make sense of the weather.

I was thinking of the the Kremlin analysts who used to scrutinize the placement of individuals on the viewing platform for the annual May Day parade.

Googleogists are the new kremlinologists.

I like the analysis that Chrome OS exists to prevent Web choke points and ways to pre-empt the web better than the analysis that it's about increased web time - though both are likely a factor.

Google's been remarkably open about how they make money. When Chrome came out, their chief economist said the key was owning a scarce good that is a complement of a free good, i.e. the sole right to place ads on pages, which is the complement of the web pages themselves. Anything that increases usage of the web increases demand for web advertising, which in Google's auction system jacks up the price.

The revenue equation here isn't quite right though: it's not "Revenue = Amount of Time on Web", it's "Revenue = Amount of pages viewed on web". Each page is an opportunity to run across Google advertising. That's why Google has focused so heavily on making the web faster, Chrome, ChromeOS, guidelines for webmasters, and hard latency constraints on the search engine. If you let people search faster, they'll search more often.

Revenue = Amount of pages viewed on web

So what would have been good for silly old "portals," namely stickyness, was bad for Google. Conversely, ADHD browsing is good for Google! Linking is good for Google. Competition on the web is good for Google!

To put it more generally, the more people want to search in ways that require their attention, the better for Google!

So instead of trying to be the winner and make MS lose, Goggle has started its own game, which it can play better, and tries to convince everyone to do so.

I have made an interesting observation of my own habits recently which reflects on how well they are doing. For the past year or so I have not once needed to listen to music in an mp3 format stored somewhere on my computer and I have entrirely stopped hoarding new mp3. Abundance of streamed music on imeem, pandora, and last.fm mean I can access practically anything I want at any time.

Since MS' game is based on their monopoly control, Google has to make MS lose some in order to increase their revenue. A non-zero-sum game can still be a competitive game.

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