It’s amazing what happens when the CFO of a company with an already over-inflated stock price makes a small statement like — “clearly our growth rates are slowing. You can see that each and every quarter”. While he was only stating what should have been plainly obvious by the quarterly financial reports, his statement was taken hard by an already volatile stock market. Google’s stock dropped by nearly 9%this morning and the DOW dropped and the down dropped by an entire percentage point. It’s amazing how much the stock market reacts to small statements like this. Take for instance, Rackable systems. They develop energy efficient, cool-running, equipment that will save companies more money than you can shake a stick at. This stock, by all analyst accounts is a win-win for everyone. Its one flaw today was that it had Google as one of many large customers. Take a look at what happened mid day at the announcement.

Luckily, the bulls saw this as a buying opportunity and drove the price back up. However, it just goes to show you how much a small statement by a powerful person can affect the economy in a single instant.

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There is often a great deal of speculation into why Google dominates the ad revenue market. Today, I developed my own theories on this. For the longest time, I’ve used Google as a home page. Since I’m heading to the mecca of Windows development, I decided to make the switch to Microsoft’s home search page. So there I was trying to find a home page equivilent to google.com. What I found was a bit revealing. Who is competing with Google, you might ask. Two main competitors are Yahoo and Microsoft.

You can call Microsoft a competitor, but you can’t go to www.microsoft.com and find a simplified search page like www.google.com. In fact, Microsoft’s main business is software for their platform, not software for the web-based masses let alone searching. So I went to MSN.com and found myself presented with a portal site. The main business of MSN is portal first. I see a search bar at the top, but the rest of the page is busy with stock quotes, news, advertising and more. If I’m at work, and this is my home page, I’m going to become distracted. This isn’t at all like the simple search page of google.com. In fact, to find something even close to google.com, I have to type in http://search.msn.com . The URL says it all: Searching is a subset of what MSN does and therefor it’s a subdomain of msn.com.

I did a quick check at yahoo.com and found, well, another portal site. I go to yahoo.com on occasion, but never really put two and two together. Yahoo’s main business is also to be a portal first. The page is busy — very busy. Theres links to their other services yahoo offers as well as different types of search links. Below that is some advertising, some suggested searches, traffic/weather, and more. To get a page that is even close to the same as google.com, I have to type in http://search.yahoo.com . Again, we find the telling URL that just screams — we are portal first and “searching” is a subset of what we do.

These two examples tell me exactly why google succeeded and continues to dominate. They don’t have any real competitors. Google has pseudo competition — people who offer similar services. The important factor is where these companies put their emphasis. Sure, google offers maps, email, IM, IE toolbars, RSS readers and more — but you will not find them on the main page of google.com by default. Google has made searching a priority and the structure of their home page tells you that. I can personalize the google.com home page too but by default it is what people think it should be — a simple search page!

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