Why Google's New Products Need Not Succeed 235
RJS writes "There have been some industry analysts lately who have called into question Google's real success, claiming that while Google's search remains a big winner, it has missed the mark when it comes to generating profitable, secondary products. BusinessWeek has just such an article ("So much fanfare, so few hits") but others argue that success relative to the size of Google's bread-and-butter (search) ultimately doesn't matter because it doesn't cost Google much extra to keep these secondary services — like Gmail — operational: the Google grid is on and growing regardless of what services are being run on top of it."
Economies of Scale,Buliding a Brand,Marginal Cost (Score:4, Insightful)
Sure, they want to make money (Score:5, Insightful)
Funny thing (Score:5, Insightful)
Hmmm... maybe? (Score:3, Insightful)
I do disagree with TFA in that it treats other services as inconsequential. There is a reason that Yahoo! ranks #1 on lists of most popular websites. Although there are GMail and a customized homepage [google.com], Yahoo! still beats them on those fronts. The search market is pretty well defined. In order for Google to become an even bigger success it must become extremely successful in its side businesses. I refuse to accept TFA's arguement that it doesn't matter because they aren't spend that much money on it.
Googles real strategy (Score:4, Insightful)
Put another way, once people are Google-centric, they can use a Mac or a "GooglePC" or anything else. Linux anyone?
Dot-Com Mentality (Score:4, Insightful)
Re:So wait. (Score:4, Insightful)
Sorry, I'd rather trust Google's established business model of targetted ads than some dvorak like tro^h^h^hpundit on
Time will tell (Score:2, Insightful)
It takes time for new software to catch on. In the meantime I think google is doing the right thing by putting a lot of new products out there. Maybe all of them won't catch on but it seems like the majority of them are building a following.
Re:Funny thing (Score:4, Insightful)
And that's generally true of any product that attempts to enter an already established market. You make an initial splash but then it takes a while to build a base beyond the initial rush. Word of mouth eventually takes over and assuming a product is useful or even desireable, eventually its acceptance rate increases (look at Firefox's steady growth).
Money, bah! (Score:5, Insightful)
Google is building highly usable applications that are not OS-dependent. THAT is what is scaring the traditional software makers. The browser is the interpreter. Firefox is Google's wedge and everything they do is helping to change the way people use computers.
Secondary Products? (Score:1, Insightful)
Google hasn't made any statements about major secondary products. It doesn't look like they are trying to. They are providing tools that people find useful. The ultimate judge is the consumer, and so far, it looks like Google must be doing something right, because the consumers like most of what they are offering.
To say that Google will remain successful even if it comes up with "useless" products, is not true. Competition will ensure that they think of something new. Sure they have little knicknacks here and there (Google Labs?) but they're not MEANT to be big products.
If Google comes up with another major product, I'm pretty sure we'll know. They have the resources and talent for it.
FUTURE (Score:2, Insightful)
Re:Googles real strategy (Score:2, Insightful)
critical mass, similar to M$ approach (Score:5, Insightful)
Exactly! (Score:3, Insightful)
Exactly! I stopped beta-testing it because they made it so difficult to delete the spams. In the regular hotmail, you can tag-check the spams in your inbox quickly and then delete the tagged ones. In "Live", you have to right-click all of them and then left-click the "Delete" button which is too close to the "Print" button so you end up accidentally printing spams instead of deleting them. Of course, if Microsoft/Hotmail were to ever bother to put a spam filter in place, this would be much less of a problem.
Re:Funny thing (Score:5, Insightful)
The thing that bothers me about Google is: is it too much of a good thing? Put aside quality for a moment; is it possible Google's continuing expansion will spread it too thin? Mind you, Amazon has been expanding for what seems like eons now, but their main site is starting to get cluttered and I think they've been overstepping their reach with some of the areas they've gotten into (Groceries?). I'd be afraid of Google diluting itself too much in an attempt to become universally ubiquitous.
Re:Hmmm... maybe? (Score:4, Insightful)
Re:Economies of Scale,Buliding a Brand,Marginal Co (Score:4, Insightful)
But if you own that overpriced stock on the premise that Google is going to keep generating new businesses to complement the only thing they have that makes them money -- then it matters whether GWhatever turns a profit or not.
Re:Exactly! (Score:3, Insightful)
not to say that i like windows mail beta. it's god-awful. i use gmail.
Re:Funny thing (Score:3, Insightful)
Re:GMAIL doesnt cost a lot? Explain that one! (Score:3, Insightful)
Re:critical mass, similar to M$ approach (Score:1, Insightful)
Um. Yes they do need to succeed. (Score:5, Insightful)
Re:Sure, they want to make money (Score:5, Insightful)
I think that the point of them doing this is that it adds value to their brand. Maybe they aren't turning a profit with some of their niche services, but those services are driving users to the rest of google's more profitable offerings. Have you used the google text messaging service? It's incredibly useful, and probably not directly profitable for google. Often when i'm driving around and realize i need to go somewhere (for example a hardware store) i can just text google, and seconds later receive a text with addresses and phone numbers of nearby hardware stores. They haven't made any money directly off me with this service, but since I enjoy and use the service so much I'd say I'm more likely to look out for other google offerings and use other google products in the future.
It's kind of like advertising - they're just building their brand and driving more and more users to their products. Even if their new products don't "succeed," per se, as long as they're pretty neat it will help them in the long run.
Re:Googles real strategy (Score:3, Insightful)
Yes, there are lots of things for which a stand-alone computer need to be used, however from a practical perspective, we've been discussing diskless workstations and thin clients as being useful in a large percentage of the "work" market. If that is true, then there is no reason (outside of security or redundancy
Re:GMAIL doesnt cost a lot? Explain that one! (Score:2, Insightful)
And how much of that 2GB isn't actually shared with other users? Do you have some pr0n there? Maybe other thousand users have the same, maybe even with the same filename. So they say "you are using 1.5GB", but of that 1.5GB much is stored in a shared space with other users.
Funny videos, PowerPoint Slides, pr0n... it's the same file stored there for you, or anyone in the world. A few security concerns about it, surely, but nothing THAT critical (think in something like: "if SHA256 and MD5 doesn't match, save in a new shared space").
Re:Funny thing (Score:4, Insightful)
I also think that, while unstated, one of Google's philosophies with hiring is to just get a bunch of smart people together in a room, give them resources, and say, "Make whatever you want, because probably other people want it too." This requires one thing primarily, an ability to find just the right people who will use this environment and not exploit it. The key to continuing Google success is being able to find the right people.
Re:Sure, they want to make money (Score:3, Insightful)
Is email simply a chronoligical list of snippits of information? Or could it contain actual conversations?
Maybe email can be more than you allow it to be, if you were to just let it do so.
Re:Funny thing (Score:3, Insightful)
There's one thing I've seen as constant in Google's products: they raise the bar on too-cheap-to-meter. Then they do a value add and make money with the pros. Some things, nobody can make money on, so they just give it away to drive the nickel-and-dimers back to boiler rooms and fax spamming where they belong.
The freebies also make everyone more willing to tolerate their main profit generator, the ubiquitous ads which they already take great pains to make as unobtrusive as possible. gmail, groups, news, earth, books, ... free. no ads. major resource commitments.
Damn straight their new products don't have to "succeed", because the guys who claim they're not succeeding don't know success when it's staring them in the face. You can spend your advertising budget telling people how great their lives will be after they give you money, or you can spend it making life great for people so they know who's doing it. Google sponsors good stuff. That used to be how advertising worked.
Re:Sure, they want to make money (Score:3, Insightful)
It's all a matter of what one *does* in email. I've never really used it for 1-off communications, so the conversation thing works. Folks who don't generally reply or *get* replies would probably rather sort via some other criteria. (Which they can do, BTW, simply by setting their account up for POP3 access and using their favorite POP3 client.)
To each their own, and amazingly, GMail does it all.
Re:Funny thing (Score:3, Insightful)
That simply isn't true. When a new and better search engine comes out, it spreads like wildfire. Google search gained market share extremely quickly, as did Lycos and Alta Vista when they each introduced search products that were markedly better than what was available at the time. Google took only 3 years to go from first round financing to absolute leadership of a mature market. There's no significant inertia there, just wildly fast market acceptance, virtually unparalleled in any other business in history.
Now, it is competing against much longer established business (e-mail has been around for multiple decades).
Webmail is a newer, less well established, and less profitable business than web search. There is no reason whatsoever to expect steeper competition in webmail than in web search.
In any case, the reason investors are concerned about Google's multitude of services is not market acceptance but profitability. The overwhelming majority of Google's revenue comes from search and AdSense. I have no doubt that Google has achived and will continue to achieve good market penetration with GMail. The question is whether they can make money off it. So far, the answer is no.
Re:Economies of Scale,Buliding a Brand,Marginal Co (Score:5, Insightful)
I think the GP's point is that all these secondary 'misses' are just another way to keep the google brand (and google search and adwords) front in center in Internet culture. One could argue that Coke wastes tons of money developing advertisements and promotions, but they have a very strong brandname and they got it because they continually push it. As soon as Google stops releasing a new beta for everyone to go gaga over once a month, they will no longer hold the spotlight, and people will take them for granted. As long as google uses new products to generate buzz, they will keep generating revenue for their ads.
An analogy would be how Nintendo used to operate... I'm sure they didn't make a ton of money on each game title, but having a good collection of games was critical to get people to buy the console in the first place. This analogy isn't too great though, because nowdays the consoles most likely sell at a loss and the bread and butter are the games and accessories.
Gmail -- logins! (Score:3, Insightful)
Re:Funny thing (Score:3, Insightful)
In contrast, while webmail came about in early 90's (I seem to recall several companies in 199[23]; hotmail comes to mind), e-mail has been around for decades. The real market is not just web-mail but e-mail. That is why google allows you to download the messages rather than totally controlling them (like yahoo and hotmail). And that is a VERY mature market.
I doubt that e-mail will ever make google direct money. What Google is doing is using that info to better target what ads you are directed at. In fact, if you have paid attention to the ads being directed to you from sites, you will see that they are doing a better job of targeting you, your location, and I have noticed that they have now figured out a number of interesting things about (home address being one of them and obviously gleaned from the e-mail). In addition, I suspect that gmail is taking profits away from companies such as AOL, Yahoo, and MS.
And yes, I suspect that Google understands profits better than these other companies and you. They, like MS, is in this for the long haul rather than quick turn-around profits. We will see some more interesting services coming from Google that will be geared to getting into the sale. All in all, Google is doing legally, what MS has tried to do for nearly 12 years; get a bit of every sale.
It's called R&D, folks (Score:3, Insightful)
Google is doing the right thing in two ways here - they are allowing their developers to think and work on their own pet projects, which will ensure retention of some of the best and brightest, and they are understanding that for every brilliant idea there will be a string of failures. If they spend one billion on R&D (made that number up for the sake of argument), drop 999 products that aren't winners and get one single product that becomes a 6-billion-a-year success, they will have done the best thing for their investors, for their developers, and for their own continued growth.
Re:Money, bah! (Score:3, Insightful)
If a Web application can do 100% of the 5% of functionality of Excel or Photoshop that most users use, and the intermediary software is free and cross-platform, what do you think is going to happen to revenue for these products?
But hey, what do I know? I'll just go back to min-maxing my role playing character's grocery shopping list.
Re:Why Gmail hasn't caught on yet (Score:1, Insightful)
Yes exactly, anyone already had the opportunity to be invited. This invation scheme is not blocking anyone anymore, excepts bots maybe.