In 2004, Google filed the following IPO prospectus:
"We serve our users by developing products that enable people to more quickly and easily find, create and organize information. We place a premium on products that matter to many people and have the potential to improve their lives, especially in areas in which our expertise enables us to excel. Search is one such area. People use search frequently and the results are often of great importance to them. For example, people search for information on medical conditions, purchase decisions, technical questions, long-lost friends and other topics about which they care a great deal."
Do you recognize anything ironic about the last example? Facebook is now the place that anyone would turn to connect with long lost friends. Search is no longer necessarily the dominant means for finding information on the internet -- people are connected through their social networks who they can ask directly for information. Did Google's geeky projects blind it to the importance of social networking online? The following case will outline investor concerns over Google's apparent lack of strategic focus.
- Case Summary of RM Grant 2010, Case 21: Google Inc. Running Amuck?
- See also this Google Case.
- Reference 1: July 19th 2009: (Source: San Jose Mercury News)
By Chris O'Brien: There are a handful of reasons people generally cite for Google's success. The power of its search engine algorithm. The elegance of a business model that matches text ads to searches. A restless, innovative culture continually striving to improve and evolve its products. Here's what always struck me about Google: its simplicity.
At the start, Google did one thing phenomenally well. Its search engine was so superior that the company's name became synonymous with search itself. And its home page was, and remains, a visual model of simplicity: a sea of white space, the Google logo, a search box, a couple of links -- and no ads.
That last feature remains an awesome example of restraint, forgoing what would most likely be millions of dollars in revenue to maintain an experience cherished by its users.
The homepage aside, though, Google increasingly feels like a company running in a thousand directions at once. Over the past year, it has released a steady stream of high-profile products that seem to have little or no relation to the core identity expressed on its corporate homepage: "Google's mission is to organize the world's information and make it universally accessible and useful."
The problem is that in expanding into so many different areas -- productivity applications, mobile operating system, a Web browser -- that the identity of Google itself has become muddled.
No doubt, this all follows some clear logic from inside the Googleplex. But from the outside, it's getting harder every day to articulate what Google is. Is it a Web company? A software company? Something else entirely?
This is more than just a semantic problem. That core identity helped build a bond with Google's users, whose fanatical devotion built it into the phenomenon it is today on the wave of grass-roots fervor.
Recall that in its earliest days, Google did little in the way of advertising or marketing. Its success was pure word of mouth, driven by the overwhelmingly positive experience users had. Google didn't need any spin or commercials to tell you its product was great. Users testified to that fact by telling their friends how awesome it was.
Because of that intense interest, Google continues to command hype for every product it launches that rivals the marketing magic of Apple. Just in the past few weeks, there was Google Wave, a new communications system. And more recently, the announcement of a new operating system.
It's not just that it's hard to see how these fit into Google's stated mission.
It's also that it's hard to explain to someone exactly what they are, or why they might, or might not, want to use them. Or to communicate why they are different from or better than any other things out there. How would you neatly describe Google's mobile operating system, Android, to a friend and why it's better than or different from Apple's iPhone?
Part of the challenge, of course, is that we haven't seen either Chrome OS or Google Wave in action. But at its recent developers conference, it took a Google employee more than an hour to explain Google Wave. The average person won't invest more than just a couple of minutes trying a new product.
And in the case, say, of the Chrome browser, why would we learn a whole new set of behaviors and tools when we're comfortable with our current browser options?
And why would I take the time to learn my way around a new operating system? What is the compelling reason? I can say from my current experience of having just bought my first Mac in 14 years, I love it, but I still feel left-handed much of the time as I figure out the new commands and menus.
These new products have the whiff of engineers building things for other engineers, rather than you and me. This ought to be raising some giant red flags at the Googleplex.
If it's not, that insularity might be a bigger threat to Google's future than any challenges it faces from rivals like Microsoft and Facebook.
Contact Chris O'Brien at 415-298-0207 or cobrien@mercurynews.com. Follow him on Twitter at twitter.com/sjcobrien and read his blog posts at www.siliconbeat.com. - Is Youtube profitable?
- 500-1000 Million per year overhead
- generates 250 Million in revenue
- Is Gmail profitable?
- Is Google Over-diversified in its technology projects?
- "Inside Google: The Man with All the Answers"
- Reference 3: Google the One Trick Pony
- Is Google Overly dependent on Add Words?
- Google's Bermuda Tax Haven
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