The year to come will see Google circling its wagons to defend its search business and pressing its advantage through Chrome and Android.
Google rebooted in 2011. Co-founder Larry Page took over as CEO and shook things up. He presided over the termination of dozens of underwhelming and underused Google services; he moved to defend Android against an assault from Apple, Microsoft, and Oracle through the acquisition of Motorola Mobility; and he oversaw the imposition of a unified design across Google services and the integration of social tools arising from the company's new social network, Google+, among other initiatives.
In 2012, the company, which Page pushed through an abbreviated adolescence, will have to move both more cautiously and more decisively. Google must be careful because it's under the regulatory microscope and its challengers are emboldened. Yet it must move with purpose and speed to deal with the walls, both regulatory and competitive, going up across the online world. The company's mission to organize the world's information and make it universally accessible will be increasingly opposed by companies that covet Google's business, and governments determined to control how their citizens see the world.
Here's how I see Google's year shaping up:
1. Google Stars In "Regulatory Theater"
Google will make a few minor concessions in its search business to appease European Union and United States regulators, thereby avoiding a prolonged, painful antitrust probe. I predicted as much last year, but antitrust concerns weren't really resolved. Nonetheless, Google managed to win approval for its acquisitions of ITA Software and AdMeld, and will for Motorola Mobility as well. The bark of regulators thus far has been worse than their bite.
2. Google Loses 5% Market Share To Bing
Bing has slowly been gaining ground and will continue to do so as Microsoft whips Windows 8 into shape. Conspiracy theorists may see a deliberate attempt by Google to light the match and throw antitrust regulators off its scent. But a simpler explanation will be the accretion of Google fatigue, Microsoft's ties with Yahoo and Facebook, and the fact that, after something like $8.5 billion in online division losses over the past nine years, Microsoft actually has a decent product to show for its lavish spending. But given the increasing importance of mobile search and Google's surging success there, Bing's validation on the desktop won't be all that meaningful until search ad revenue from Windows Phone devices catches up.
3. GM Goes Google
Google has reportedly signed a deal with GM to provide over 100,000 of the automaker's employees with email and productivity applications through Google Apps. GM says it hasn't made a decision about whether to deploy Google apps, which isn't the same as saying it's not considering Google Apps. In 2012, Google will have finally satisfied GM with concessions and service level guarantees. This will allow Google to announce a customer of unassailable stature in the business world, thereby (finally) putting an end to concern about cloud computing.
Amit Singh, VP of Google's enterprise group, said in a phone interview that the high-level goals for his team are to make the enterprise cloud more social and mobile, and predicted that larger customers will become more common. Google does have a fair number of large enterprise customers, but such wins look like a trickle compared to the stream of small and midsize businesses embracing Google Apps.
4. Android's Share Of Smartphone Sales Reaches 60%
Android devices accounted for 52.5% of smartphone sales in the third quarter of 2011, according to Gartner, doubling Android OS' market share in the third quarter of 2010. Despite the steady stream of litigation directed at Google and its Android partners, Android is thriving and will become more robust. Apple's continued insistence to go it alone will continue to provide impressive short-term profits throughout 2012, but less market dominance. Google's decision to rely on partners will help assure Android's growing clout, at least up to the point that Amazon releases its own Android phone, cleansed of Google services.
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