Without question, Google triumvirate Sergey Brin, Larry Page and Eric Schmidt flipped the world upside down in the last 10 years, showing Internet users nearly everywhere that the globe is without boundaries.

The company's success is astonishing: Google dominates a worldwide medium, demonstrates the weaknesses of traditional media on the Web, is a verb, and, with its latest moves into cell phones and operating systems, might be considered so large, intimidating, intelligent and powerful that it cannot fail.

Still...

Given Google's success and the trajectory it appears to be on, there seem to be a growing number of experts who are ready to issue some sharp warnings to Mountain View, Calif.'s favorite sons.

The analysis

"Most media moguls started running focused and efficient operations," write Jonathan A. Knee, Bruce C. Greenwald and Ava Seave in their book, "The Curse of the Mogul. What's Wrong with the World's Leading Media Companies."

In other words, the authors say, as moguls become more successful, they tend to stray into businesses they should avoid, and their companies ultimately begin to suffer as a result.

The best-managed media companies, the authors say, are those that stay put doing what it is they do best. And in n Google's case, that's being the world's best-trafficked search engine.

These three should know. Knee is a New York-based media investment banker; Greenwald is an economist at Columbia University; and Seave, a former executive with Scholastic and free weekly paper Village Voice, is a principal and cofounder of the consulting firm Quantum Media.

So as Google expands its tentacles from its servers into other industries, one might reasonably wonder if Brin, Page and Schmidt have lost their concentration on maintaining Google as the world's premier search engine.

Google today

Google's competitive position isn't likely to shrink soon.

ComScore.com, which tracks digital traffic, reports in its latest statistics that of the 61 billion Internet searches conducted globally in August 2009, more than 60 percent - 37 billion! - were conducted on Google alone.

Its next three competitors - Yahoo, China's Baidu.com and Microsoft - couldn't produce a combined number that came anywhere near Google.

In the United States, of the more than 14 billion monthly Web searches in October, Google snagged more than 65 percent of the market, while Yahoo and Microsoft notched a combined 27.9 percent share, comScore said.

Since 2006, Google expanded its footprint by making about $6 billion in acquisitions, including YouTube and DoubleClick. Most recently, the firm purchased AdMob and Teracent, a Silicon Valley startup that specializes in software that offers users customized Internet ads, placing Google on even footing against Yahoo's behavioral advertising strategy.

As a result of acquisitions like these, Google's revenues have soared, growing from $16 billion to $21 billion in 2008.

But today, the firm's revenues are beginning to stall. The company's stock price, while making significant gains during 2009, has yet to exceed its all time high of $707, reached two years ago.

Knee, Greenwald and Seave say that one of the nation's best-run media companies is one that receives little attention - Discovery Communications. This company might offer a number of lessons to Google.

Among the most important: Stick to what you do best. That's a key reason why Discovery CEO David Zaslav rid the company of its ancillary retail business, enabling it to focus on its original mission - television programming.

The result? Discovery's revenues in 2008 grew 10 percent, with stock valuations topping $30 a share.

Google's Brin and Page have achieved incredible wealth, estimated between $12 billion and $15 billion each.

"Both young men (Brin and Page) are in the office less, jumping on their planes to take photographs in Africa, to explore the wilds of Alaska," writes Ken

Auletta in his recently released book "Googled: The End of the World as We Know It."

"Will their attention wander from Google?"

Auletta asks.

Microsoft moment?

Auletta cites Clayton Christensen, a Harvard Business School innovation expert, as wondering if Google isn't having a Microsoft moment. While the Redmond, Wash., giant has continued to invest in products it thought would grow its revenues, "none of these ideas have grown up to be the next

Windows," Christensen said.

Perhaps, he added, the same thing is occurring with Google. "The company has poured money into YouTube and Android and cloud computing and the Chrome browser, but has yet to figure out the business model for each," Auletta quotes Christensen as saying.

Knee, Greenwald and Seave offer this warning.

"The winners will ... focus on efficient operations and the losers will be those who chase high-priced acquisitions on the theory that the ‘solution' to their problem is to buy growth."

Will Silicon Valley's favorite Young Turks listen? Or will they, like previous moguls, including Ted Turner and Sumner Redstone, stray into businesses they don't understand, thereby damaging their brainchild?

 

Doug Page podcasts and blogs for News & Tech and can be reached at dpage435@hotmail.com.

 

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