Nostradoofus

None other than Hal Varian, luminary technology strategy guru, argues that Google has no traditional sources of strategic advantage, only a temporary knowledge curve advantage.

This seems overstated. True, Google ads do not enjoy the network effect often ascribed to them, but the company has at least the following traditional strategic advantages.

ECONOMIES OF SCALE
Web searches rely upon giant data centers. Google’s massively parallel data center architecture facilitates the fastest web searches, most frequent index rebuilds, etc. It also facilitates the cheapest hosted services, such as email, photos et al. They have way more computing power than anyone else. As Varian might point out, this architectural advantage is temporary. However, when everyone else inevitably copies this architecture, data centers revert to a pure scale contest. Whoever buys the most boxes wins. Google can currently outspend everyone but Microsoft; by the time Microsoft builds a similar architecture (probably years), Google will be able to outspend them, too.

BRAND
For 10 years, Google has defined web service innovation. They are increasingly trusted outside the narrow field of search (email hosting, for example). As a result, increasingly, when Google releases a new web service, other things equal, they will automatically win.

NETWORK EFFECT
The anti-spam system in Google’s hosted email enjoys network effects, because it relies upon group intelligence to decide what is spam, then rolls out the answer to all users simultaneously. The effectiveness of this system improves dramatically with scale. The largest network has the best spam control. Yes, anyone can copy the architecture, but again, by the time they do, Google will already be the biggest. They are probably #2 or #3 already, and their most logical competitors — Yahoo and Microsoft/Hotmail — are asleep at the wheel. By the time they figure it out, Google will be #1, and able to run away with this network effect.

No suggestions being made here. Just observing.

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After fighting nature for decades, the transition begins with this 20-year-old bicycle, bought in September:

In keeping with my newly overt nerdiness, I will gladly bore you for hours with technical explanations for why this is the fastest non-recumbent bicycle you can buy. But the short answer is rigid wheels, 110psi tires, full suspension, and rigid space frame.

Hard to believe? This exact model holds the world speed record for non-recumbent bicycles, at over 51mph with a full fairing.

This bicycle is a strategic decision, in that it gains a persistent edge by a path that competitors cannot or will not follow. Practically no one will ride this bike, no matter how fast, because it looks weird.

I consistently pass serious athletes in Lycra finery and $4,000 carbon bikes. They stare at the rusty bike, the blue jeans and flip flops, and pump furiously, but can’t catch up. Yet, even after seeing it with their own eyes, they will never make the obvious competitive move, which is to buy this bike. So I keep passing them. That’s strategy.

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