After taking on Yahoo! and Microsoft in their own backyards, Google, fresh off its high as the most valued media company in the world, might take its next fight to eBay, the online auction giant.
The Internet has been abuzz since The Wall Street Journal reported that Google might launch its own online payment system as an alternative to eBay’s PayPal.
eBay bought PayPal after the start-up emerged a few years ago as the most popular means of paying for small online transactions such as its auctions. Now PayPal is a significant part of eBay’s empire, and contributed $233,1-million, or 23%, of eBay’s revenue in the first quarter, according to The Wall Street Journal.
Google has a reputation for fearlessly venturing into the untouchable reserves of other big-name technology companies, eclipsing Yahoo! as the number one search engine and creating a desktop search tool for Windows hard drives, right under Microsoft’s nose.
The search site, whose share price has tripled a mere 10 months after listing to hover just below $300, also took the lead last year with its Gmail Web-based e-mail service — offering a lot more than what was being offered by Yahoo! and Microsoft’s Hotmail at the time.
Google is presumably trying to shore up its advertising sales, which accounted for 99% of its $3,2-billion revenue last year, with other forms of revenue, such as its rumoured “Google Wallet”.
Google can expect its rampant share price to keep rising, says Henry Blodget, the former Wall Street analyst who more than anyone else created the dotcom bubble of the late 1990s, by publicly touting Internet stocks especially Amazon.com.
“In Google-land it feels like the late 1990s again,” Blodget wrote in Fortune magazine, quoting analyst speculation that Google’s shares may hit $350, after going public at $85 last August.
Google is certainly smiling all the way to the bank, and while its mere $3,2-billion income hardly seems to merit its roughly $80-billion valuation, it does provide numerous money- making and industry-leading services.
But Blodget warned, “Bubbles by their very nature have a way of distorting perspective.” Summing up the bubble mentality, he said of one high-profile fund manager’s sacking: “The biggest career risk was not losing money, but missing gains.”
The technology industry, savvy Internet users and even Joe Schmoe users are genuinely enamoured of Google’s uncluttered and speedy search engine, as well as numerous other services for filtering news, doing local searches, scanning print publications and academic texts, and viewing high-resolution satellite images.
“The most amazing aspect is the company’s performance,” said Blodget. “Only seven years old, Google is generating about a third as much cash as media behemoth Time Warner, and its single online property is sucking advertising dollars away from almost every traditional media company.”
Google is using its Gmail accounts like Microsoft, which uses a Hotmail or MSN e-mail address as a “passport” to multiple sites and services, as a means of unifying what it offers its users.
The new so-called “Google Wallet” would be the ideal companion, and the many millions of people who trust Google with everything else will surely trust them with their payments too.