Google recenly filed it’s 2005 annual report (Form 10-K). I was particularly drawn to the section on Competition, even though it was short. The first part is a no-brainer:
We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft and Yahoo.
But the second graph is more revealing:
We also face competition from other web search providers, including companies that are not yet known to us. We compete with Internet advertising companies, particularly in the areas of pay-for-performance and keyword-targeted Internet advertising. We may compete with companies that sell products and services online because these companies, like us, are trying to attract users to their web sites to search for information about products and services. In addition to Internet companies, we face competition from companies that offer traditional media advertising opportunities.
Google is a powerhouse with serious momentum, but there are a lot of companies chomping at its heels, especially in niche areas. I am a believer in the rule that no single entity can be all things to all people. But Google’s issue is that it must become more things to more people in order to keep growing – hence the hints and flirtations with e-commerce and traditional media and advertising. But despite its great products, innovation and accessibility, it’s vulnerability is its reliance on AdSense and AdWords for revenues.