Just how much trouble are Google in?

There are many ways you can view Google. Firstly there is this large group of people sitting on a campus, each with a brain the size of a planet coming up with amazing ideas that advance humanity and all of these people as wealthy as Croesus because of their stock options.

A second view is of a company with enough money in the bank to buy a couple of countries but which only has one revenue source, and that is under threat from several directions.

The third view is from that of being a consumer. Google has some pretty neat free products, without which the internet would be less rich. And they have pushed the technology to make all their competitors perform better.

Just as there are more than three views of Google, so there are at least four major problems they have to address. The first is that their sole big contributor to wealth is search advertising. They also have YouTube, which they bought and which is big, but not profitable. Gmail is also a success, but again not a massive earner. Then they have the failures,  Lively was a 3D virtual world which is now canned, Knol is an online knowledge competitor to Wikipedia that hardly anyone uses, Wave is a new way of communicating which is not taking off and Reader is another failed idea. There are loads more: Orkut, Video File, Catalog, Answers, Web Accelerator, X site, Checkout, Viewer, Voice Search, Coupons etc etc.

The thing is that most of these would have worked if Google had understood marketing. They seem to think that just because their original search succeeded as a result of product excellence it means that everything else will do the same. And they are very wrong. They need to communicate with the outside world a lot more effectively. Which brings us to their latest failure, Buzz. This social networking product was tested rigorously by the thousands of genii in the Googleplex till it was perfect. But when released to the real world it suffered an immediate disaster because of its disregard for privacy.

Their second problem, and the one most relevant to gaming is that computing and the internet are moving away from being desktop PC dominated to being mobile phone dominated. Over the next few years the production of smartphones will ramp up to a billion units a year. So processing power and an internet connection in people’s pockets will become ubiquitous throughout the developed world. In much of the undeveloped world there will be a jump from nothing straight into smartphone based computing. Google’s revenue depends on the desktop PCs that will soon be very much second best, they are yet to demonstrate a convincing business model to monetise this move to smartphones.

The third problem is that their flagship product, Google search, is becoming less relevant as people’s internet usage changes. Social networking is now more important. Facebook has now beaten Google for weekly page views in America. And Facebook can often provide a richer and more rewarding browsing experience than search can.

Number four is that their competition are wise to them now. Google search won purely because it was vastly better than the alternatives. For years nobody tried to take them on seriously with a better product. But now with Bing we have something that is actually considered better in several key areas. So people are moving to it in ever increasing numbers. And when it comes to mobile operating systems, Google made their Android open source. Nokia retaliated by making their Symbian operating system (which has about 40% of the smartphone market) also open source, in one of the biggest commercial give aways of all time. So for the first time Google is having to take on equal competition, which is not good for Google because they lack the marketing clout of these competitors.

It is this lack of marketing understanding that is Google’s biggest weakness. Their world view is technology driven whilst the real world is marketing driven. Steve Jobs at Apple understands this and is happy to release weak technology (no Flash or multi tasking on iPhone for instance) with strong marketing, knowing that it works commercially.

3 comments ↓

#1 docred on 03.19.10 at 1:47 pm

I agree with most of your points Bruce – as you said, excellence of product does not mean the product will survive. The Amiga computers were in many views vastly superior to anything Apple/Mac did at the time, but the suffered from several weaknesses, lack of effective marketing being a big one.
As for comparison of Facebook and Google search, if I understand you correctly – it is an interesting statistic but should it be a concern? The other day I needed info on Terminal Server licenses. I didn’t go to Facebook for the info. I ‘googled’ it. Personally I don’t use Facebook, I find it a waste of time, and I see it degrading co-workers efficiency in many cases as they spend hours answering little messages and poring over it. Richer and more rewarding experience….well, depends on what you are looking for :) I’m the exception to the rule though, I realize that. However, even the Facebook diehards at work turn to Google when looking for info. Now, if Facebook came out with a search engine to challenge Google…then Google should be worrying more. You are bang on with Google having all their eggs in one basket though…if their search engine gets dethroned, they are in trouble. Will Bing do it? Time will tell…

#2 Andy on 03.19.10 at 3:56 pm

I’m not sure that their primary problem is marketing.

They do have a real problem understanding social behaviour – as seen in many of their products which have been technically excellent, but fail on the way they engage with the public. Knol, Lively, Buzz, Wave – all do the technical stuff very well, but don’t quite ‘get’ the way that real people are likely to want to use them.

That’s not really an issue for Google though – it doesn’t matter if products fail. They can afford to launch stuff that dies a death, and (I hope) recognise that the hit rate of ‘concept’ web sites is poor. So their strategy should be to keep producing sites, services, tools until some stick. And some do stick – Gmail, Google home page, Sketchup are all well used, and retain Google’s visitors, which is all that they need.

Facebook doesn’t replace the need for search, it’s a far bigger threat to messaging tools. As such, Twitter is on borrowed time, and Gmail is less compelling (hence Buzz?). I’d expect Google to keep trying to find the ‘next Facebook’ in a range of experimental services (just as many would-be Facebook competitors are doing independently).

#3 Lee on 03.21.10 at 12:47 am

Like the other comments here I mostly agree but really.. comparing Facebook use to Google? More people chat more often so that means they search less? Hardly.

In fact with the facebook internal search now using Google as it’s primary engine, it now means that if anything the rise in Facebook users will eventually equate to a rise in Google searches.

Google are doing fine. They have had a few hiccups but if you look at any of these companies (in similar develop fields) they have all had the same or even worse degree of failure.
It is just the norm in the market. Google will keep trying and they will succeed with some other little net gizmo in the future.

As for the mobile gaming. It is a fad, a gimmick which is already starting to slump. A huge market with a lot more growth left, but it is mostly gimmick and niche driven. Mostly casual and part-time gamers.
This has happened before and what happens is that once the gimick value wears off the market will drop rapidly down to the niche market value, which is small for casual gamers – a tiny market in fact.
Coupled with the gradual and cyclical demise of console gaming, which while still being an obsenely huge market is still outsold (on game titles, not hardware) by the PC Gaming market, it clearly shows that PC Gaming is not only alive but still the way of the future.
The prices for PC hardware now make them more affordable than a Console, more multi-purpose and these days they perform as well – if not better in some cases. Coupled with the new cloud computing style of delivery for many games, it is starting to prove to be the way forward.

For now the focus is on the major growth areas in the mobile markets and the console markets are still strong and likely will now always be strong even though they will face periods of decline.
But the PC market is here to stay and through the crashes and booms will always be the stable and staple.

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