The cracks in the Google machine

Few companies generate as much hype and breathless excitement as Google. Its incredible size and growth mean it is the company on everyone's lips, and every time it moots the idea of a new product launch, competitors are threatened and analysts fascinated.

by Business Week
Last Updated: 23 Jul 2013

But how much of this hype is justified? Sure, Google is the king of search, but how many of its ideas outside of its core business have landed a punch? A close look reveals that so far, there's not a market leader among them.

An analysis of two dozen new ventures launched by Google over the past four years – such as Google Talk (instant messaging), Google Checkout (online payment), Gmail (email), Google Finance (financial information), Froogle (shopping search) and Google Maps (online mapping), shows them all lagging behind the competition, despite being greeted with fanfares and prophesies of glory at launch.

Instead, most of Google's non-search products have faded quickly from view."People give Google the victory in the beginning and then don't show up later to notice that things didn't go anywhere", says Paul S. Kedrosky, a venture investor at Ventures West Management Inc.

Although Google's $120 billion valuation is based on its domination in search, many analysts are keen to value its stock on the basis of new offerings taking hold. But this isn't happening, and people are beginning to worry that the company still derives almost all its revenues from one business. Only 10% of Google visitors use it for anything other than web and image searches.

The company's struggles with expansion are blamed on the thing that has made it so successful – its simplicity. The minimalist Google homepage is not designed for cross-selling – and messing with this user-friendly interface risks jeapordising the $6 billion Google makes from search ads.

Another factor inhibiting expansion is Google's culture – its strategy of launching 'early and often' doesn't breed truly innovative products, and staffers say product managers have less power in this famously 'nerdy' company than engineers.

Google counters that, like a lot of innovative companies, it factors a high failure rate into its strategy, comfortable with the estimate that 60-80% of new products may not survive. Instead, it hopes to encourage risk-taking and allow the few that do get through to truly thrive. The problem, in reality, is that most of these seem to be treading water, not surging ahead.

The conclusion is that if Google want to live up to its reputation as the beast of Silicon Valley, it needs to search harder for products that people want to use.

Source: So much fanfare, so few hits by Ben Elgin
Business Week
Reviewed: 5 July 2006

Review by James Curtis

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