Understanding Google Inc (GOOG)’s Strategy

Chrome OS is somewhat of a misnomer, for it’s really not an operating system at all, but rather just a mobile browser. As cloud computing takes off, the need for users to have a local operating system — like Windows — vanishes.

Microsoft is making investments in web services (Bing, Sky Drive, Office Web Apps, etc) but Google still dominates the space. If Chrome can improve further, it could give Google’s service a foothold in the desktop arena, just as Android gives it a foothold in the mobile space.

What problems does Google actually face?

Google does face some real problems. But not many that commentators are quick to point out.

The first, exploited by Microsoft, is potential backlash over privacy issues. Find any article or blog post written about Google Inc (NASDAQ:GOOG) (like mine here), and one will inevitably find a comment about privacy issues. Even if Google never exploits its knowledge, the fact that it knows so much about its users makes some uneasy.

The second is why many investors remain confident in Apple’s ability to dominate the mobile space despite Android’s market share: Android is fragmented.

In contrast, Apple’s iOS ecosystem is in harmony. Developers can sleep well knowing that an application they write for iOS will work on all iPhones; Android developers must test on a multitude of different phones. Consequently, many popular mobile applications appear on iOS long before they show up on Android.

There’s also the issue of quality: all Apple devices are built with minimum standards. Conversely, someone may buy a cheap Android phone, find it to be lousy, and have their entire view of Android soured.

Investing in the tech space

Most tech investors should understand Google’s strategy. As Google competes directly with Apple and Microsoft, its decisions can affect those companies as well.

Bottom line, Google Inc (NASDAQ:GOOG) wants to get people on its web services so it can sell targeted ads. This causes it to do some seemingly wacky things, but the bigger picture remains intact.

The article Understanding Google’s Strategy originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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