How will the shortener impact Bit.ly? Here are some very imaginative numbers, and then a bit of common sense.
Bit.ly has ~8MM monthly uniques, and if complete.com is to be believed, toolbar.google.com has 1.4MM monthly uniques. With 146MM google users, my crazy guess is that toolbar adds about 5.6MM users per year (a third of its annual unique visitors).
Google launched its toolbar on December 11, 2000. Use the same install ratio for the nine years 2000-2008 (ha! total black box, as good a guess as any) and you’ve just guesstimated that about 32MM computers currently have installed Google toolbars (how many active? if you know of any toolbar activity data please comment, I’d love to see it).
Aside: Right now I think it’s a beta release, you have to manually upgrade your toolbar, or at least I couldn’t find it on my Firefox install, so I went to toolbar.google.com and upgraded, which gave me the Share button, but the URLs on shared pages where not automatically goo.gl’d for Twitter, but let’s pretend all active installs will have this feature by year-end 2010 for the purposes of this discussion.
So now for some common sense. What will the impact be on Bit.ly? Zero.
Toolbar users and bit.ly users are not the same users. And bit.ly is just more focused, URL shortening is all they do versus Google’s yet another feature to support. Bit.ly is moving faster to develop features based on their user’s needs than Google, eg. reaching its users through all of their online access points (mobile http://m.bit.ly), and I predict Bit.ly will continue to have the velocity advantage.
I don’t know what the future opportunities/exits could be for Bit.ly, a technology acquisition by Twitter or another growth-hungry fish in the internet sea is obvious, standalone revenues are not so obvious to me. I can sort of imagine where virtual goods and custom short URLs could intersect to make money, but not in very coherent detail. But, they are the best solution for active tweeters, facebookers, etc, and like posterous.com, they are using the velocity and intelligence of their product’s evolution to win. Toolbars are the lowest-common-denominator for being more productive online, the exciting activity is happening with dedicated innovators like Bit.ly and the “bleeding edge” market in the US is large enough to sustain and propagate them against lesser and later competitors.
Another thought, Google’s scale is much less relevant when the determining factor is application (versus advertising) user experience. In advertising, they historically have the advantage (search and AdSense are a “better” UX, and thus out-compete other types of ads (display) in many situations), so when they do something like purchase DoubleClick or AdMob, it’s a big deal for their competitors. With other products, GMail being I think the best example, even with a superior user experience their road to dominance is a much less certain / longer proposition.