In January 2011, when Google announced that Larry Page would replace Eric Schmidt as CEO, the tech world was stunned but not exactly surprised.
At the time, Google was besieged. A rising, IPO-bound Facebook was stealing the search company’s employees and users, and would soon be poaching its advertising dollars. Google’s Android operating system was growing, but Apple stubbornly maintained its lead in mobile profits and market share. The company’s biggest problem wasn’t so much with any single initiative but with its lack of focus. Under Schmidt, Google did too many things, few of them really well. It risked becoming the company it hated most: Microsoft.
Today, it’s difficult to remember Google on the ropes. Putting it mildly, Google is back. If you picture the tech economy as a digital Game of Thrones waged by four giants–Amazon, Apple, Facebook, and Google–then any way you score it, Google would be installed at King’s Landing. The search company may not prevail by all measures; Amazon has more shoppers, Apple greater hardware profits, and Facebook a larger social network. But under Page, Google has the one thing its rivals lack–a coherent, long-term strategy to fight the tech war on every front. In particular, Google has a clear plan to win on three time horizons: today, next year, and the far-off future. Even if it doesn’t take every battle, the strategy puts Google in the lead.
Let’s start with today. Google’s dominance begins with Android, which has shaken off its early sluggishness and is now tearing up the world, accounting for nearly 70% of global smartphone shipments in 2012, according to research firm IDC. A skeptic might point out that Google gives the OS to phone makers for free, and most Android phones sell for bargain-basement prices, so Google hasn’t translated Android’s dominance into earnings. The iPhone still sucks up three-quarters of the world’s mobile phone profits, and the small share made by Android devices flows to Samsung, not Google.
But those bare facts miss Google’s strategic interest in mobile devices: As the only viable competitor to iOS, Android has kept Apple in check. Low-cost competition from Android tablets such as Google’s Nexus 7 and Amazon’s Kindle Fire forced Apple to release the iPad Mini–a device that Steve Jobs once suggested we’d never see, and that has cut into Apple’s margins. If, as rumored, Apple puts out a cheaper iPhone–which again would lower profitability–Android will have sparked another defensive move by Apple. At the same time, Android has helped Google weather what might have been a rocky transition to mobile ads. As Facebook, smarting from its ill-fated IPO, struggles to convince investors that it understands mobile, Google is managing the shift with aplomb. In each quarter since the end of 2011, Google’s aggregate “paid clicks”–the total number of times its users click on ads–has grown by at least 20% from the previous year, thanks mainly to the company’s ability to display lots of ads on mobile devices. In January, Page told investors that Google would soon be able to charge advertisers more for these mobile ads than it does for desktop ads. In other words, existential threat averted.
Next, look at the medium-term, when competitors will start to feel the effects of Google’s data-driven cloud ecosystem. After years of playing catch-up to iOS on design, Google now has a chance to best Apple’s phones with a series of new features supported by mountains of algorithmically mined personal data. Consider Voice Search, Google Maps, and Google Now, the predictive personal assistant that feeds you pertinent information throughout your day (such as your boarding pass when you get to the airport). Sure, competitors could ape these things, but they’d face a hard slog: Despite the beleaguered Google+, the search company’s much-mocked social network, Google’s many properties collect data on more users than Facebook, and its data-mining expertise is a decade in the making. Rivals who slap together data-dependent apps risk embarrassment. Hey, Siri, can you tell us how Apple Maps is doing?
Page has also pushed Google to make up for its historical deficits. The company is now recognized as a force for thoughtful interface design, and its hardware business looks more promising than in the past. Yes, Google’s gadgets are still oddly positioned in the market–see the too-expensive Chromebook Pixel, a $1,299 machine that only runs Google’s cloud-connected Chrome OS–but they signal that exciting products may one day flow from its Motorola subsidiary. As Apple-friendly blogger John Gruber wrote recently, “Google is getting better at what Apple does best faster than Apple is getting better at what Google does best.”
Finally, there’s the next half-decade, when Google will push self-driving cars, web-connected glasses, a fiber-optic network, and a search engine that morphs into an all-knowing, ever-present digital helper. Not all of these projects will pan out–maybe none will–but any one of them could be transformative, turning Google into a central player in most of our lives. Google’s recent progress doesn’t immunize it against rivals or upstarts. What’s remarkable about Page’s short reign, though, is how well he’s defended his turf. Other players will attack Google from their areas of strength; note that Amazon has become the web’s preeminent place for shopping searches.
But by combining its many projects into a single user experience–by bridging search, Android, Chrome, data mining, and hardware–Google is betting it can defend against companies that lack its breadth. So far, the bet looks like a great one.
[Illustrations by Bigshot Toyworks; Sources: company figures (Google vs. Amazon, Google vs. Facebook), IDC (Google vs. Apple)]