On Holiday in Snowy Sheffield

I have a confession to make: I didn’t check my e-mail once between going on holiday on the 23rd December and returning on the 4th of January. Despite the fact that I generally feel naked without my iPhone, I stepped away from my virtual desk and spent the whole holiday with my family. Clearly I should do this more often, as in my absence analysts from TraderHuddle.com, NJ.com and MSN Money added their endorsements to those that we had already received during 2009 from Merrill Lynch, Key Banc and Soleil Equity Research, amongst others, highlighting the performance of Teradata stock during the year and identifying ours as a stock to watch in 2010…

At any rate, I hope that all of you had a similarly relaxing time and, like me, you are returning to work relaxed and recharged. Happy new decade!

Whilst spending some quality time in my home town – Sheffield, in the UK – I couldn’t help but notice that the whole city appeared to be covered with billboard advertisements for Google’s new-ish Chrome web browser. I can’t ever remember seeing billboard advertisements for a web browser before, even at the zenith of the Microsoft versus Netscape clash, yet Google is paying hard cash to advertise a product that it is giving away for free. And is doing so in South Yorkshire; much loved by those of us fortunate enough to live here, but not generally acknowledged as the centre of the digital universe.

I have always understood that Google’s value to advertisers is based on the quality of its search engine and its ubiquity; Google can be accessed from any Internet-enabled device, hundreds of millions of us do so daily – and the search terms that we enter give clues to our intentions that enable Google to bring relevant advertisements to our attention.

The moment that this ubiquity is threatened, Google becomes much less interesting to all of us – and by extension, much less interesting to the advertisers that provide the vast majority of its revenues. Despite this, Google is investing substantial sums of R&D money in developing its own web browser, PC operating system, smart phone operating system and now, as of last week, it’s own Smart Phone – two of which it gives away for free – and further large sums of money in promoting them, even in relative digital backwaters like Sheffield.

Why is Google doing this? A recent article in the Economist (“Phoney Wars”) says that this behaviour is intended “to protect [Google’s] lead in the online-advertising arena”. But if that lead is indeed based on Google’s ubiquity, it doesn’t need own-label operating systems, browsers and hardware to protect it, because Google can already be reached from every Internet-enabled device – and any new device that attempted to prevent or restrict access to Google would surely be rejected by the market. In fact, you could argue that the reverse is the case; that, for example, if those of us packing iPhones came to understand that Google would in future only be prepared to offer us a “tier 2” service unless we “upgraded” to a Google smart phone, then we might defect to other search and SaaS providers, actually reducing Google’s reach – and hence those vital advertising revenues.

Incidentally, research undertaken by ZenithOptimedia suggested that worldwide advertising waste – defined as money spent on messages that reached the wrong audience or none at all – reached more than $200 billion in 2007. If you are not entirely convinced that buying billboard advertising space in Sheffield is the most efficient way to target micro-segments of customers with relevant offers, based on precise insights into their buying patterns, behaviors and preferences across all channels, then make a New Year’s resolution to talk to us about Teradata Relationship Manager (TRM).

But I digress. Whatever Google’s real motivation is in all of this, it is set to be another fascinating year for technology watchers. In a future post, I’ll lay out our own exciting plans that will help us to continue to grow throughout 2010 – and beyond.

Martin Willcox
Director of Product & Solutions Marketing (EMEA)
Teradata Corporation