Google Winning By Losing?

eldavojohn writes "The CEO of a small search company wrote an interesting piece for Search Insider about Google's unique strategy. It notes that Google has yet to become a leader in any technology other than search — but that its mostly unsuccessful attempts to branch out all end up bolstering its brand, and thus its search ad revenue. Is the new recipe for success to do one thing unbelievably well and several other things indifferently? Does this remind you of strategies from any other companies?" From the article, "Some of Google's non-search projects are really extensions of its search monetization, and are likely to succeed. But others projects mean entering areas where Google doesn't have much experience, and is taking a risk. With regard to those riskier areas, the key question for Google's future is whether it can realize that losing is really one of the best assets the company has."

Ok and ....

[gomaze]

This goes right along with the saying that "Any news is good news". As long has the Google name keeps getting spread around and people keep talking about the new things they are doing, this will drive viewers it its different pages and products.

Indifferently?

[RedWizzard]

Is the new recipe for success to do one thing unbelievably well and several other things indifferently?

Indifferently? I hardly call Google Maps, GMail, Sketch-Up, or Google Earth doing things indifferently. They're all better than average applications, IMO, and certainly Maps and GMail have sparked major changes in competitor's products. Just because they're not dominating market share doesn't mean they're not doing well.

Give them time

[caitsith01]

My experience of Google's non-search applications so far suggests that they are far from mediocre. It's inevitable that it will take them longer to really come to the fore in fields which are more mature that the search engine market was when they first rose to prominence.

In addition, they have an excellent ability to fill niches in the market that are not being filled adequately (e.g. Picasa, Maps, News), and their products are differentiated by being ad-supported but otherwise free, which is a devastating approach for any competitor relying on a micropayment or subscription model. They seem to have the leverage to do things no other company could do at the moment, such as the book search system they are building and the Scholar academic journal search engine. This means that even if the implementation is 'indifferent' the sheer usefulness of the actual data being delivered still sets them apart.

In other news, why do we really need more Google news? Wake me up when something new actually happens. Some guy writing some vague opinions about some company is not 'news' in any sense.

Buzz is where it's at

[Salvance]

Google is trying to maintain the appearance of being innovative, and doing a good job of it. Every time they release a new product, even if they downgrade its importance or ditch it later, it gets tremendous buzz. Buzz is where it's at, and everytime they generate more buzz they drive more advertisers, searchers, and AdSense publishers to their site.

Another advantage to developing TONS of new products is that it keeps their folks busy on cool/fun new products. Most software engineers want to be able to go home to their families and have something fun to show them as an example of what they do. Showing your kid GoogleMaps or GoogleEarth will impress the heck out of them, and they'll think you're a genius.

If Google didn't have the 70/20/10 development principal, these engineers would be going home and answering their friends' prompts with "Ummm...if you want to know what I do, check out the results of searching for Mexican Pizza now vs. 2 years ago, the results are so much more relevant". Fun.

I don't know...

[tnk1]

Google has a lot of money to throw around at the moment, perhaps too much to not be trying something new.

On the other hand, I really think it needs to actually make one of those "side projects" into a real win, because I think that as good as Google search is, I don't know that its worth that market cap by itself. I think people invested in Google precisely because they thought they could use their search advantage to create other products that would be successful. To that end, I think Google is doing what it should be doing, but they may want to find something that works really well and maybe not go too far overboard with accepting indifferent projects. Loss leaders are fine, but you can't have every product be one. Even Microsoft has a fair proportion of revenue generators in addition to the indifferent crap that they give away for free. Google has... search.

The YouTube acquisition bothers me in that regard. People would like to think that YouTube could get common carrier protection, or that they can somehow reach a deal with the MPAA/RIAA sharks, but I'm not sure I'd bet the farm on that The acquisition was expensive and dangerous to begin with. Now, the Google ownership makes it worth the effort of having the sharks attack for a score. Google isn't an ISP and there's no reason that just because you have an unfiltered website for posting means that you are now in the same boat as telcos and ISPs in terms of not being liable for what goes over your lines. YouTube isn't infrastructure, its a leaf node.

Google's got a lot of goodwill capital, but eventually, I think someone is going to start asking where the bacon is if the investment money is being used for indifferent projects around plain old search.

Well that's funny

[The Bungi]

When Google does it it's an interesting and enigmatic experiment that everybody likes to watch, but when it's Microsoft (and we're talking about exactly the same thing here, except that they started 10 years ago) then they're "stumbling in the dark" and it's just "a matter of time before they fail". XBox, MSN, Encarta, most of their server products, etc. That's just too funny.

Why the obsession with winning?

[EmbeddedJanitor]

Yah goota be number one or you're nothing? This leads to competition focus rather than customer focus which is ultimately a short-term strategy.

Sure, being number one goes back to primeval days. However, various research has shown that while the alpha male chimpanzees slug it out, the next guy down is getting more sex.....

Perhaps Google are just not stupid enough to be pouring their energy into alpha-male business tactics.

Re:Looking for strategy where there is none..

[Anonymous Coward]

There's a name for this, at least in games like chess: an inexperienced or an intentionally wild (or just very _different_ in some way) player can sometimes do very well against a very, very good player because the better player is trained to make his choices based on the other player making the most intelligent choices possible.

Sorry, did you say ORACLE?

[Fuzuli]

This is what Oracle does. To me, they are a database vendor. Yes they have development tools in java, application servers, soa solutions etc. I have been working with their technology for over two years now, and the products other than the database really sucks. The database sucks too, but it sucks in a stable manner.
Especially the application server is a pain in the a.s, and their development tools make you question your life as a developer. At the moment they have a product portfolio hidden behind their brand constructed by the database. This seems to work though, they somehow reflect the image of a large vendor with many solutions. (not to me, but to managers, market etc.)

Re:Why the obsession with winning?

[kjart]

Yah goota be number one or you're nothing?

I don't know what you're smoking but that's even more true in Google's business than in many others. If they lose the edge in search and someone does it better people will start migrating. Brand loyalty is one thing, but who would continue to use Google if there were (significantly) better competitors? Being number 1 is the only option Google really has.

Re:Indifferently?

[Schemat1c]

I have to agree with some of the items above but it does seem that google will the same downfall as many in the past Dot Com days. Its doing well but for how long just as yahoo was the brand name of its time so is google. So for those who own the stock cash now not later. Now here is another one Microsoft it too was the giant now its hold own by strings. Nothing last forever.

Bah, Yahoo was nothing but an ad infested portal. The only Yahoo app I continued using after 1998 was Yahoo groups. Google is my home page, email, calendar and map application. They all work very well for me and I don't see google going anywhere soon. Your post is nothing but kneejerk FUD.

Except it rarely works that way

[Moraelin]

Except it rarely works that way. I have some experience with both chess and Go, and have been the inexperienced player in that scenario more than once. I've yet to see even one single instance where it works like that from beginning to end.

The inexperienced player may pull one or two surprisingly good maneuvers out of sheer dumb luck, maybe even gain a temporary advantage out of those. But in the long run he'll fail to use and consolidate that advantage and the more experienced player will _bury_ him.

The chance to win a match by sheer dumb clueless doing something random that the other isn't expected is negligible because it just needs too many moves in a row where that happens. If the chance to make a surprisingly good and unexpected move is, say, 1 in 1000 (remember, it has to be not just good, but also some radical new strategy that noone tried before and the good player isn't expecting), then the chance to make two in a row is 1 in 1,000,000. And the chance to make 4 in a row is 1 in 1,000,000,000,000. Keeping up like that for a whole game is just not going to happen.

Plus, good players are good because they can adapt and use logic to different situations. He's not going to just give up and run in circles for the next half an hour just because you did one different move. He'll keep reacting and probing and you only need to get out of that lucky streak once or twice for him to fully use it against you.

Basically "beginner's luck" is a myth. It's a crap excuse by people who aren't as good as they think, to not admit that they played badly. Or that maybe they let you win. But if they didn't, then that supposed beginner actually played pretty damn well.

And if Google's secret sauce is "beginner's luck", then maybe all it says is that the big "experienced" players are the ones playing badly in that space. Maybe it's not Google who's clueless there.

Re:Why the obsession with winning?

[QuantumG]

Nah. You don't get it. The people buying shares in companies are looking for growth. If there's no growth, they make no profit. So how do you maintain consistent growth? It's not enough to keep your current customers happy, you have to get more customers, and to do that you have to play silly games like aquiring other companies and running advertising compaigns and blah blah blah. If you don't do all that crap people will sell their shares.. they can't afford to hold onto shares that are not increasing in value as fast as other shares, and without their money, you don't have a company.

Search? Mail? Maps? eh? You're all wrong.

[Colin Smith]

They're what bring you to Google's product.

Google's product is adsense and adwords.

 

Re:Why the obsession with winning?

[dangitman]

Nah. You don't get it. The people buying shares in companies are looking for growth. If there's no growth, they make no profit

No, you don't seem to understand. A company does not have to grow to be profitable on the stock market. They just have to make a profit. And, the people buying shares look for many different qualities, it's called diversification. Along with a potential growth stock, many willalso buy a mature company that isn't growing but pays dividends, to balance out the portfolio.

Re:Indifferently?

[Anonymous Coward]

Exactly -- what does it matter if GMail is the fourth most commonly used online mail service, instead of the first? As long as it's taking more in from ad revenue than it costs to run, it's a net win for Google.

This baffling sort of analysis ("if you're not in first place, you're failing") also gets applied to Apple, where you see nonsense like the Gartner Group announcing, after Apple has just posted its most profitable quarter in history, that they should fundamentally change their business plan because otherwise they'll never take market share from Dell -- which makes a lot less profit on a whole lot more volume.

Business is not about having more sales than everyone else. It's about building quality products and not taking a loss while doing it.

Re:Well that's funny

[evilviper]

but when it's Microsoft (and we're talking about exactly the same thing here, except that they started 10 years ago)

Not at all. When Microsoft does something similar, it's to make it more closed, not open. It's to give it fewer features, not more. It's to close it off to competitors, not open it up. etc. When Microsoft buys a company, it's to suck all the marrow out of it.

Remember when Hotmail had more space, less adds, free POP service, etc.? You know, back before Microsoft bought them and made Outlook the only MUA that could access Hotmail accounts, cut down on space (until Gmail went online) made everything require javascript, munged the URLs in emails, etc. so you couldn't avoid the hordes of ads?

Everyone gives Google the benefit of the doubt, because it's earned it. EXACTLY THE OPPOSITE of what Microsoft has done every single time in the past.

Re:Ok and ....

[Captain Splendid]

Are you kidding me? That's frigging genius. It means that people with Gmail accounts do the work for Google of spreading the gmail user base, which gets everybody more involved in the process and turns what is basically just a good webmail service into something just a little bit more special. You think Hotmail or Yahoo mail users feel/act that way? Hell no. Gmail is a perfect example of growing and differentiating a brand.