Might Google’s China exit improve its business?

The Wall Street Journal wrote that Google’s China threat carries long term business risks to Google. Some others have commented on how Google will have to work very hard to replace the revenues it is leaving behind in China.  Still others claim that departing the world’s largest internet market (by users) was a thoroughly bad idea.

Let us hypothesize for a moment: Google’s exit is not necessarily a face saving move or  a public stab at Baidu, but a tactic calculated to gain market share in more lucrative western markets, which represent the vast majority of Google’s currently reported financials (Q1-3 USD 16.974 billion with Q4 results also expected to be strong). Google is getting excellent publicity globally about this issue  (outside of China, that is). Even more interestingly, Google has recently become proactive on similar sensitive topics and I would not be surprised if this situation ends up creating a significant rise in activity and demand for Google products and services.

Imagine for a moment that Google does not care much about China as a domestic market at present. Sound foolish? Not if you have tried to do business in China as a foreign company, which is famously difficult and frustrating. It is almost a taboo to talk about China as a market to ignore, but just because Google might not be planning to focus on the domestic market that doesn’t mean there isn’t a Chinese market to address.

Google won’t exit China completely. Even if Google is forced to shut down all operations (which I think is unlikely), it will continue to have a growing and lucrative base of Chinese companies advertising outside of China for as long as China will continue to globalize and export to the world. This is something that Baidu is absolutely not in a position to do today or in the near to medium term.

As  Rebecca MacKinnon points out on her blog, Google’s actions – like the actions of any other company – are automatically motivated by self-interest. There can be no exception to this rule in the world of business.

The search market in China is still emerging. Baidu, the clear market leader, generated USD 466 million in the first three quarters of 2009, which is roughly 3% of Google’s overall revenue for the same period. It is very likely that Google’s domestic China revenue is much smaller than Baidu’s. Even the projected USD 310 million of Google China revenues that some analysts were predicting for 2010 would be tiny in comparison to what Google could earn if it increased market share in the US and Europe by just a few percentage points.

I think a legitimate question that few (if any) seem to have asked so far is whether Google’s exit from China may not actually lift its short or mid-term business prospects.

Will Google increase their search market share because they have earned higher public trust? After all, trust and safety are key issues in the battle for the cloud. Google has a lot of new enemies today across a dizzying range of sectors, and may feel it is more relevant to address them than to struggle in China. Also noteworthy,  Google has advertised its China stance, making it clear to the public that Google’s exit is motivated by a mixture of idealism and security. The battle in core western markets is heating up as never before, and Google knows that few if any US technology or media companies owe their success to China markets.

It doesn’t sound particularly plausible that a concentrated hacker attack and espionage concerns could trigger a company to exit a whole market. If the hackers were interested in dissidents’ Gmail accounts there is nothing that prevents them from more hacking after Google exits China (cyber-attacks are not geographically restricted). And if Google was  concerned about espionage then why would it want to maintain a significant development presence inside China?

As a business person, I can see the business and financial logic of retreating from China: Google will regroup and live to fight another day in a market that is not only extremely difficult to penetrate but that also has a hideously complex and fluid regulatory framework that all foreign companies must adhere to. Google is no exception, having struggled for domestic market share in China just like other foreign media and technology companies.

Anyone who has attempted to do serious business in China will tell you that it is very difficult and challenging. For one thing, the playing field is not level by any definition or stretch of the imagination, as recently illustrated by China moving to ban foreign investment into the lucrative domestic online gaming market (in China, revenues in the online gaming market are substantially higher than online advertising and search).

We know Google’s imperative is to do no evil, but as an individual I don’t think Google’s departure is good for China or the Chinese or Internet freedom, and on that basis I think the exit is a bad idea. I certainly agree that China and the Chinese are better off with Google than not, but I have no doubt that Google’s motives are also informed by very pragmatic business reasoning.

There is, of course, no question that China offers significant opportunities and (as I  noted earlier) China is not necessarily closed to Google. This is a country still squirming its way through Internet adolescence and Google will no doubt find the right moment to re-enter that market, probably as a more serious and better prepared player.  I don’t believe the present spat between Google and China should be interpreted as a long term Google exit from China. Let’s not forget this is Google, one of the world’s mightiest and savviest corporations, with more than enough resources and talent to re-enter China when they think the time is right. After all, they can start the process of re-entry simply by  making an acquisition or two.

Congratulation to IBM, Hong Kong and Outblaze for the opening of the first Cloud Computing Lab in Hong Kong

At its foundation of this Cloud Computing Lab was the cloud technology and expertise of Outblaze which IBM acquired from us not too long ago and having recently launched Lotus Live iNotes the team has started offering the first results of this Lab.

Even though the asset acquisition happened some time ago, the lab officially opens in Hong Kong today with Financial Secretary Mr.  John C Tsang opening the event and gave a speech. As I am in Paris for Le Web I was not able to attend it but wanted to congratulate everyone.

I congratulate IBM for officially opening this Cloud Computing Lab, this is a strategic investment to IBM and is only one of a few such centers world wide. I am happy to hear that IBM will continue to invest and grow this Lab and lead the way of large multinational technology companies to grow and build some real R&D effort in Hong Kong. This is a subject that I have been talking about before and I hope more multinational companies will emulate.

I congratulate Hong Kong because it demonstrates that Hong Kong has the stuff to develop leading and cutting edge technology with a global reach. Lotuslive iNotes is made in Hong Kong!

and last but certainly not least I wish to congratulate everyone at Outblaze who have made this possible through their effort, dedication and passion. You have demonstrated what is possible in Hong Kong and that will continue to foster and grow the spirit of research and development  in the field of technology here in Hong Kong.

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The smallest commercially available desktop PC today?

The Giada Slim N10 is probably today the lightest and smallest commercially available “nettop” which is to say that it’s really a full fledged desktop solution. Weighing less then 1kg, this tiny computer has a dual core Intel Atom N330 CPU, NVIDIA ION graphics, up to 4GB RAM, a 2.5-inch hard drive bay with 320 GB, a 3-in-1 card reader and a choice of either Windows Vista or 7 OS. In terms of connectivity ports, it offers 5 USB 2.0, eSATA, VGA, HDMI, WiFi and Ethernet.

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I found it while strolling around Wanchai Computer Center and I spotted this tiny thing while looking for a suitable small desktop PC for my children and that is when I was offered a chance to look at the Slim N10.

I couldn’t resist given its extraordinarily slim size and the fact that this was not only made in China (what isn’t these days?) but this is a Chinese brand trying to make a name for itself. I expect to be seeing a lot more “gadget like” innovation originating from there is what intrigued me and is a theme that I have been harping on for quite some time, Newsweek recently had a very interesting article on this related topic. After a bit of haggling I purchased it for the equivalent of approx. 350 USD (or 230 EUR or so). It came out of the box with 2 GB RAM and a 320 GB harddrive, no OS.

I have taken some out of the box images and as one can see, it is a very tiny PC indeed. It comes with a stand that sets up the PC very much like a Nintendo Wii, infact it is both smaller and thinner than one but it does not come with a DVDROM which needs to be external, or you install your OS using a USB stick.

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To give its size some perspective I placed a La Fonera 1.0 router, the smallest router from FON which as many Foneros and gadgeteers alike will recall as one of the tiniest routers on the planet and the Apple iPhone 3GS side by side the Slim.

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It is infact a little thinner than the Fonera 1.0, and while of course not as thin as an iPhone it does demonstrate how super slim this PC is. When placing the iPhone and the router on top of the slim it should help give it some perspective on the overall dimensions of this PC, when I saw the product marketing pages I didn’t feel that it gave a good feel of the true size of this device.

I successfully installed Windows XP on it and don’t see any reason why Vista wouldn’t work on it either and because of the NVIDIA ION it is able to play 1080p HD with no slow down at all provided that you take advantage of DXVA. I typically recommend that you install something like KLite Codec Pack which includes a handy setup for Media Player Classic like the below.

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I’ve been testing it with various high def trailers/movies etc. and it works quite well, been running it now for a little over a week and in a standup position it seems to manage the heat reasonably well.

It’s obviously not the smallest PC ever, that achievement likely belongs to the Pico-ITX but both the price, weight and general commercial availability in shops make this a really interesting device, whether this be for a space saving PC, or a media player. Infact, if you compare the price of this device with a hard drive vs. other focused media devices such as the Iobox HD100 and Qnap NMP-1000 the Giada is far more multipurpose and value for money.