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Innovation

Why Google is the giving tree

Operations are Google's secret sauce. Google gives away software, tools and services because it is the low-cost provider of all these things. By several orders of magnitude.
Written by Dana Blankenhorn, Inactive on

Google is giving away a new programming language.

GO marries C, a compiled language programmers depend upon for PC applications, with Python, a dynamic offering commonly used to create Web pages.

It's the best of both worlds, the company says, and comes to you from the same great minds who created Unix for Bell Labs "back in the day."

It's another great giveaway from the folks who give away your e-mail, a whole suite of applications, TV with clips of cats and squirrels, plus the best Internet search on the whole gosh darn planet.

What's going on? Why is Google the giving tree?

It's not because Google is planning on becoming a stump. In fact Google is not giving away any of its secret sauce. Not at all.

Google gives away software, tools and services because it is the low-cost provider of all these things. By several orders of magnitude.

Google used its early profits from search to build its own low-cost Internet.

  • Google owns its own fiber, thanks to purchases of dark fiber made at the dot-bomb's bottom.
  • Google built server farms with low-cost PCs, separating the various functions of servers so they can be done more efficiently.
  • Google put solar panels on its buildings to lower its energy costs, a major factor in any Web host's budget.
  • Google decentralized its operations so search results are found as close to the user as possible.
  • Google owns its own ad agency, and Web ad placement service, so it earns big profits on everyone else's Web pages.

What's the difference between paying .0001 cent for each online transaction or .000001 cent? It's 100. When you can provide basic services for 100 times less than the competition, anything that increases demand for service plays to your advantage.

So Google pushed the Web's move to video after its purchase of YouTube. Google offered use of its "cloud" to businesses so more business would move online. Google gives away tools to make it easier to innovate ever-neater resources, all free.

By growing demand for something that's cheap for Google and expensive for rivals, Google does well for itself and does an enormous amount of good for everyone else.

Operations are Google's secret sauce. It's not software, not services, not its intellectual property. As Google grows while maintaining its cost advantage it creates a rising barrier to entry for everyone else who might choose to compete with it, in any area where it chooses to compete.

It's not evil, unless you're a competitor. It's a true win-win between Google and the Internet community. Just remember this smart takeaway. For Google, the secret sauce is not in what you see, but in how it gets to you.

This post was originally published on Smartplanet.com

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