Eric Schmidt : Covering His Tracks With “The New Digital Age”
Eric Schmidt, the Executive Chairman of Google has just released a book trying to cover his tracks on how he took the most dominant company on the Internet and let it start a downward slide with two major miscalculations. In two of the most notable “oops” of this century, Eric Schmidt:
1) Allowed direct e-commerce to slip right through his fingers. His belief that ebay was the dominant selling platform on the internet and that Amazon would never be a danger to the direct search algorithms are blunders on a gigantic scale, but they pale in comparison to…
2) Thinking that China was a lesser market that did not deserve equal treatment with the American market. Eric Schmidt’s decision to treat the governments of China and the United States differently….effectively ignoring the disclosure requests of the Chinese government (The same disclosures he had just given to the United States Government), is the single most damaging decision to Google in its history.
To understand why Mr. Schmidt is acting this way, all you need to do is look at his history. Look at his activities with Novel that took it from the giant of networking to “unimportant” just about the time he jumped ship to Google.
From 1997 to 2001, he was Chief Executive Officer of Novell. From 2001 to 2011, he served as the CEO of Google.
By 1999, Novell had lost its dominant market position, and was continually being out-marketed by Microsoft, which gained access to corporate data centers by bypassing technical staff and selling directly to corporate executives.
He joined Google in 2001 and rode the astronomical rise of the machine that Brin and Page invented. He should go down in history as one of the luckiest people on the planet. From a simple software engineer who Early in his career, co-authored the lex analysis software program for the Unix computer operating system, to ride the wave of Novell, then the wave of Google is just amazing luck. But just as in Novell, he has made critical errors in judgement about market trends. Yes he is seen as a “visionary”, but his vision is limited to the hard data of the near future. He is well advised. He has more insider information that anyone else in any industry. So YES, naturally he is a visionary compared to the rest of us…..but that is where it ends. When business decisions go beyond the hard facts of inside information, Eric Schmidt fails. Such is the case with the complete underestimation of Amazon….and such is the case with the lack of respect for China.
While most readers are familiar with the criticism of Google wikipedia page that describes how Google infringed on Internet user’s rights in China, I am taking the opposite objection. Google cooperated with the American government, but did not give the same respect to the Chinese government.
America has alot of misconceptions about China. But the one thing that is not excusable to miss is the fact that this group of 1.3 billion people represent the single largest marketplace for growth on the planet. That is what Eric Schmidt missed. This is what he is trying to cover in his new book, “The New Digital Age”
The bottom line is that Google has lost the race to win the search dominance in China. http://www.baidu.com has taken this title. They are poised to become the dominant search engine and dominant internet revenue winner in the near future. If you doubt it, just take a look at these facts and realize what Eric Schmidt has fumbled away.
1) China is now the 2nd largest GDP country on the planet and will pass America by 2020.
2) China is the largest market for automobiles on the planet.
3) China consumes twice as much meat at the US.
4) China produces and consumes the most gold in the world
5) China buys and drinks the most beer on the planet.
6) China is the worlds largest consumer of energy.
As far as the Internet sector, no where else in the world is there such vibrant growth.
As CNET reports: China has Asia’s–perhaps even the world’s–liveliest and most comprehensive e-commerce sector, where pretty much anything can be bought online, and specialist online shopping sites exist for things like only food, baby-wear, handbags, etc. Revenue in China’s e-commerce sector amounts to 1.76 trillion RMB (US$278.89 billion) at present, and grew by 25.8 percent from the previous year; the plan set forth by authorities is for that to hit 2.8 trillion RMB ($443.68 billion) by 2015.
So what Should Eric Schmidt have done to win this market? Simple. Just look at how Alibaba did it. They remained nimble. The separated their business segments as soon as they became powerful. This way the Chinese Government could not scorn their entire brand for one bad decision by the CEO.
So what would I do if I was Eric Schmidt and was single handedly responsible for missing the two largest opportunities in Internet History? (Missing the boat with Novell which should have owned the entire internet infrastructure / network operating code, and missing the boat with the largest internet economy on the planet) I would write a book called , “The New Digital Age” and say how tough and unfair the Chinese government was to me.