Is Google Spreading Itself Too Thin?

I just read an article entitled Is Google Spreading Itself Too Thin? over at ReadWriteWeb. It repeats the endless canard that Google hasn’t built another business yet to rival its initial search franchise.

How dumb is that? No one has built another business on the web to equal Google’s initial search franchise. It was a once-in-a-technology-generation business. Not only that, in order to create that initial business, Google had three great successes: the search engine itself, the Adwords ad auction, and Adsense.

Meanwhile, Google is a strong #2 in maps (and growing), handily beating out Yahoo! and Microsoft’s offerings, and gaining steadily on market leader Mapquest (which created the category three years before Google was even created). Google’s got about 30% share to Mapquest’s 50% or so, last time I looked. Not only that, Google is totally dominant in mapping mashups and is the leading mapping application on the iPhone.

And I don’t know what planet the author of the piece is living on, but it seems to me that Google’s office apps are very strong. No, they don’t challenge Microsoft head-to-head yet, but I get far fewer word and excel files via email than I used to, and a lot more invitations to Google docs and spreadsheets. The article’s claim that Zoho is giving Google a run for its money seems extremely unlikely, given that both Quantcast and Compete show Zoho with only a few hundred thousand visitors a month. I have yet to receive an invitation to share a Zoho document. And yes, Gmail still trails Yahoo! Mail and Hotmail, but it’s doing quite well, thank you, given their ten year head start. At Science Foo Camp, I asked how many people had a gmail account, and virtually every hand in the room went up.

YouTube – yes, they haven’t monetized it well yet, but that’s because of Google’s caution in creating user-unfriendly advertising, a philosophy that has served them well in the past. Far better that than junking it up in search of premature monetization.

And as for Knol, whose reported lack of success was the trigger for this thin piece of analysis, well, I agree that it was a bad idea. In fact, I said so from the first. And to the extent that some of Google’s moves seem to be attempts to copy other successful sites, they likely will fail. But to read into this the idea that Google doesn’t have the capability to act strategically, or to win in new markets, is just silly.

I’m happy to criticize Google for shallow attempts to capitalize on opportunities created by others, and am very concerned about an increasing tendency to favor Google’s own content sites rather than distributing attention to others. But Google is a long way from eating their own children, as Microsoft eventually did. Both Android and Chrome demonstrate true strategic thinking, focusing on how to grow the market for everyone rather than just finding advantage for Google. They still seem intent on creating more value than they capture.

tags: ,
  • Nash

    Easy there! Its just technology. Why can’t we be analytical without fuming or sounding like that other O’Reilly :)

  • http://tim.oreilly.com Tim O'Reilly

    @Nash -

    Maybe I got out of bed on the wrong side of bed this morning, but that story just struck me as stupid. I have had a lot of respect for Techcrunch and ReadWriteWeb, but their new second-string authors aren’t anywhere as smart as the people who got them to their current level of success. This is the kind of inane article that we’ve all come to expect from “mainstream” media.

    Your reference to “the other O’Reilly” definitely made me smile, though. I’ll keep it in mind. If I really were channelling him, I’d have told you to shut up!

  • http://www.meemz.com Alex Tolley

    Zoho did very well with the recent GM deal, beating out Google. This was a big account – 400K users.

    Although I am an active GoogleDocs user – writer and prsentation, not spreadsheet – I still think the sharing of docs is a little difficult compared to sending a mail attachment. However, it seems pretty clear to me that the cloud based model, whether inside or outside the firewall can only increase in share vs MS Office. The coming recession will only further push companies in this direction faster. The other driver to cloud computing is the slow shift away from Windows as the OS platform, whether it is a Mac or more capable cell phone.

    It’s still early days in the adoption cycle of these products and there is plenty of scope for Google to add Web 2.0 features to these products to escape from their vanilla productivity feature set.

  • http://www.megginson.com/blogs/quoderat/ David Megginson

    Who is still using Mapquest, to keep its numbers so high? I haven’t received a single Mapquest link by e-mail for many, many years, and certainly not since Google Maps hit the scene.

  • http://kiwitobes.com Toby Segaran

    You’re better off not worrying too much about the daily sentiments of the blogosphere. Tomorrow they’ll be talking about something else.

    The best thing about O’Reilly Radar is that you tend to write about the bigger picture. The commercial blogs often get noisy and jump on trendy stories, presumably because they’re under pressure to post often and attract controversy.

  • http://www.oshineye.com ade

    @Alex so you’re claiming that Zoho signed up General Electric and somehow forgot to put out a press release or mention it on their blog: http://blogs.zoho.com/

    You might want to read this: http://blogs.zdnet.com/collaboration/?p=145 which debunks the Zoho + GE story.

    Disclaimer: I work for Google but I don’t speak on their behalf. I merely find it hard to stand idly by whilst incorrect ‘facts’ are being repeated.

  • http://www.techsploder.com Juha

    There’s Chrome and Android as well, both of which hardly points to a company spreading itself too thin.

  • http://paulmwatson.com/journal Paul M. Watson

    If I had a billion dollar money printing machine (ads) I’d also happily hire people, build infrastructure and spread love without worrying about “the business model.”

    I’d also pay very little attention to most negative comments about the strategy.

  • http://allantyoung.com Allan

    Thanks Tim for this post. It’s easy for some to downplay the success of the most successful Internet company. Your comment about the strategic thinking behind Android and Chrome is quite right. As an open platform, I’m sure that some cell phone manufacturer will come out with something beautiful for Android to compete against the iPhone. Until then, which I assume will be sooner rather than later, great design will still be Apple’s advantage.

  • http://www.readwriteweb.com Richard MacManus

    Hey Toby, aren’t us kiwis supposed to stick together? :-)

    Thanks Tim for your thoughts. I found Bernard’s post to be a thought-provoking one – although ultimately, as Bernard repeatedly pointed out, Google has the cash and presence to do as much ‘experimentation’ as they like. So I do agree with you that Google is still creating a lot of value. That’s probably where the comparison to Yahoo’s peanut butter strategy falls down, because Yahoo is losing ground in many of those same areas – whereas Google has done well with everything except knol.

    And yes, please don’t turn into the ‘other O’Reilly’ ;-)

  • http://basiscraft.com Th

    It’s not that they are spread too thin.

    It’s that they are well outside their “comfort zone.”

    They started off early (after the IPO) with way too much cash. You may even remember that there was talk, for a while, that perhaps they should be regulated as an investment fund rather than a tech company. They had to start burning cash.

    They tried to turn that into a strength with the whole “brain drain” thing and maybe it is or maybe it isn’t, too soon to call. Either way, they are so widely spread because they have to be spending that fast to satisfy wall st. and the regulators.

    Then it gets vaguely creepy, at least, because given the problem of needing to spend that fast and having this enormous feedback system from the ad biz and search biz…. they’re approach to research and development is basically an AI program.

    George Dyson was perhaps more right than he knew.

  • http://www.readwriteweb.com/about_bernard.php bernard lunn

    Hi Tim, its “second string” Bernard here with the “stupid” article. Its OK, I have been insulted by experts :-) You may want to look at some of the later comments on my post, making some good points from the real world. I like to focus on where new innovation hits the mainstream. By innovating with cool stuff and then not following through Google may leave their most ardent fans a bit in the lurch. Anyway, its just my opinion and that’s just your opinion and so its probably a storm in the proverbial teacup. I notice GOOG was up 1.36% today so I guess Wall Street took no notice! Bernard

  • http://techfold.com rod / techfold.com

    Good to see the blowhard patrol is out in force. What planet is RRW on? What planet is Tim on? Evidently a planet where spinning out an increasingly complicated, underinvested, and unfocused product shelf can be justified by the fact that they’ve got some big successes under their belt.

    While, I’ll tell you what: Excite, Yahoo!, and all the rest of the has-beens were probably thinking the same way when Google came along and cleaned their clocks. How dumb were they?

    Anyway, I got into this same meme yesterday:

    …meanwhile, Google Labs, which should be their beta ghetto IMHO, looks more and more like where projects go to die – look at the update dates: of 14 projects listed, 11 haven’t been touched since 2006.

    http://techfold.com/2008/09/23/does-anyone-else-think-google-is-over-extending-itself/

  • http://www.sumolabs.com Jordan Willms

    SNAP.

    Big companies grow, gain dominance, then struggle to maintain innovation and creativity because of their size.

    I personally think Google has the collective brainpower to come up with more disruptive technologies and products.

    Even Google Apps, will eventually move up market to the enterprise — especially if they start offering it as an appliance.

    My 2 cents.

    J, http://www.sumolabs.com

  • http://www.mymeemz.com Alex Tolley

    ade – many thanks for the correction. Mea culpa. I should have paid more attention to the common source of the stories.

  • http://www.opengoo.org/ Conrado

    So, because Mr. O’Reilly gets Google Docs links, and Mr. O’Reilly doesn’t get Zoho links, and Mr. O’Reilly audience, full of GOOGLE GEEKS, use Gmail, then Google office apps are very strong?

    Against such a set of strong arguments how, yes, dare RWW publish their dumb articles.

    Shame on them!

  • http://jeremy.zawodny.com/blog/ Jeremy Zawodny

    Well said, Tim.

  • Sven

    I think your maps related numbers are wrong. Last time i compared the monthly numbers of unique US visitor from Google Maps with Yahoo Maps it turned out that they were pretty close (Yahoo was aroung 125 million; google at around 130 million). Given the fact that Yahoo has a much stronger position in Asia than Google it might be that actually Yahoo Maps has more unique visitor worldwide

  • http://tim.oreilly.com Tim O'Reilly

    @bernard -

    Thanks for taking it so well. You’re right that the way I framed this response had a personal touch that were fairly insulting, and for that I do apologize. I could have made the same points without suggesting you were a dope. I don’t know you at all, and this is the only article of yours I’ve read, so I have no grounds for assuming any such thing.

    I stand by my comments on substance, though. I’ve seen this “google hasn’t done anything new and successful lately” story many times before, and it seems to me not to have much substance. A lot like saying “Microsoft never had any successes beyond Windows and Office…”

    Even if true, rather irrelevant. And in fact, not true in either case. It’s just the scale of the HUGE successes makes everyone discount the others.

    Come on: how many startups out there wouldn’t wish they could have the success of Google Maps, gmail, or Google Docs and Spreadsheets? Maybe Facebook and LinkedIn. Who else?

  • Greg Noble

    Gosh I tho’t this was the BILL O’REILLY site. Dad-gumit!

    But anyway I think google is on the verge of becoming the enemy, much like Microsoft. They are a mediocre company that seems focus on being elite. Anecdotes from friends at Google seem to somewhat resemble ghosts of companies past pretty closely.

    Google has a pattern of throwing money left and right and at the same time being myopic about projects. If you tolerate the perspective, I’ll just say I tend to look for better behavior before I’ll invest in a company.

  • Michael

    Tim: “YouTube – yes, they haven’t monetized it well yet, but that’s because of Google’s caution in creating user-unfriendly advertising, a philosophy that has served them well in the past.”

    Wow, that is wishful thinking. The don’t have a lot advertisement because YouTube has lot’s of pirated, low-quality and otherwise disturbing content and there is no proper way to say which is what. Additionally there is an unsure demographic of the audience, low attention span and a lot content is getting embedded in other sites with an even more unpredictable profile (unlike AdSense were the ads are somewhat relevant to the content and there is a basic approval process).

    All this is very unattractive to advertisers, especially large “family” companies being cautious about their image (Disney, etc).

    This is why companies like Hulu make money in the range of YouTube much more easily: http://www.readwriteweb.com/archives/report_hulu_youtube_advertising.php

    Google does not make a loss with YouTube because they are nice – they make a loss because they can’t squeeze money out of it.

  • bowerbird

    how ’bout them dodgers?

    insert spin on google here,
    clockwise or counterclockwise,
    makes absolutely no difference.

    -bowerbird

  • Kevin Coates

    “I’ve seen this “google hasn’t done anything new and successful lately” story many times before”

    There’s a well known story about Joseph Heller who, when a journalist told him that he hadn’t written anything as good as Catch-22, repled: “Who has?”

    I suspect that there’s not a lot of point having the discussion, unless you can answer the “who has”. Is there something new and successful that someone has done but Google hasn’t? As Google’s ads+search was to Microsoft, so x is to Google?

    If x doesn’t yet exist, then it’s hard to say Google is failing to innovate. And even if it were failing to innovate, there’s no evidence to show that in ads+search its core business is coming under threat. Google outplayed Microsoft on the internet, but Microsoft’s revenues on Windows and Office remain fairly healthy.

  • http://tim.oreilly.com Tim O'Reilly

    Kevin, you nailed my argument exactly. This is a story that’s been repeated again and again. That’s why I called it a canard. But you put the point on it.

    Unless someone else has done that next big thing that Google should have done, this is, as bowerbird points out, a lot like an argument about the Dodgers – fun, but of no real moment, except perhaps as an exercise in persuasion.

    Now, I will argue that there are a couple of things that I bet Google wishes they’d done:

    1. S3, EC2 and Amazon’s infrastructure web services. This will be a big business, albeit not one that’s profitable at the level of the ad business.

    2. Some of the things that Apple has been able to pull off with iTunes. A lot of people have failed to note that iTunes was one of my canonical Web 2.0 applications from the start. Apple, along with Google and Amazon, is one of the companies that will be a business school case about how companies took advantage of the new network application paradigm that ended the PC era (and that we currently call Web 2.0). But that’s why I do think Google should get a lot of credit for Android and Chrome. Whether they succeed or not, they indicate that Google understands, early, the threat to their model represented by Apple’s success with a closed application ecosystem on the phone.

    And we should all be rooting for Google. If they fail, the excitement and opportunity we’ve all enjoyed on the web will not make it to the phone.

    This is a counter-argument to Greg Noble’s point. Yes, I do agree that in many areas, Google may be on the point of becoming “the enemy”, as Microsoft did. (See my post “Trading for their own account” that is linked at the end of the piece above.) But unlike Microsoft at this stage of its existence, Google is still investing heavily in things that don’t have obvious business benefit to themselves, but do create opportunities for themselves and others downstream.

    Android is the best example of this right now.

    But I do agree with Greg that this is a tricky time for Google. As their growth slows, they will start to eat some of their children.

    Every company does this, though. The question is whether on balance, they are still creating more value than they capture. And with the kinds of investments they are making in the future, from mobile to book search to energy, I do think that is still true.

    When all of their initiatives are designed to rain on someone else’s party, and eat someone else’s cake, we can pass Greg’s judgment on them. But right now, they are still baking a lot of cake for other people’s parties.

  • http://www.readwriteweb.com/about_bernard.php bernard lunn

    @Tim, thanks for the personal apology.

    As far as substance, I do not buy the argument that you can judge Google on the same criteria as a standard startup spending their $3m Series A. You have to judge them by the ability to move the needle for Google.

    I have actually not seen a lot of articles about Google spreading itself too thin. Maybe I should “get out more”. What I have seen is mainly totally uncritical raves for everything Google does, whether good, bad or indifferent. I was reacting against that.

    Innovation is great. Google has incredibly brilliant people and they come out with amazing stuff. My beef is with follow through. That is what came out in frequent comments on my post from people who (like me) think Google is great. For example:

    “I, too, tried to be an “individual evangelist” for Google Apps, and feel like they left me hanging-out in the breeze once they got bored, and moved-on to other things.”

    The one thing that Microsoft always had was persistence. Their creed was “if at first you don’t succeed, try and try again”.

    We agree on Knol. Any publisher would. It is ill conceived and badly executed. We all hope they don’t persist with that one.

    YouTube, it is just a damn hard problem to solve, its not for lack of trying.

    Where I find fault is with Google Apps. I have been a fan for a while. Like others I find the progress disappointing. Google Apps matters a lot to a lot of people. Rather more than say another Maps mashup.

    I stand by the substance of my post as a fan of Google who has become a bit disappointed.

    Now for the really important stuff. What is a “canard”? Is that French for duck. You will never get on the O’Reilly Show if you talk French. Seriously though, I watched you give Obama a rousing endorsement in your Keynote at Web 2.0. Thanks for that, I assume not everybody in our industry agreed with that, but I certainly did/do.

  • Michael R. Bernstein

    I think Facebook is another example of something that Google wishes they had done or at least done better (Orkut was never a serious contender, except in Brazil), and are now moving to counter with OpenSocial. We’ll see how that works out, but I’d bet on OpenSocial.

    Google’s efforts with image hosting and search (Picasa and Google Image Search) don’t compare to Flickr.

    Blogger/Blogspot has stagnated for a while, but we’re starting to see more activity and new features there, and the complementary Google Reader service is extremely popular.

    I think that a lot of Google’s recent moves toward enabling widespread adoption and federation of distributed services (in opposition to new centralized ones) is also playing toward their strengths in indexing and search.

    IOW, if new classes or types of services come along (and they will) that no-one dominates via a centralized offering, then Google’s domination of search guarantees them a cut of the action (even if the services are not directly monetized via Adsense). It is easier for Google to take this route than trying to dominate new centralized service classes directly, because then failure allows the non-Google market leader to easily exclude Google. Example: I doubt many people would really care if Flickr excluded Google Image Search from crawling them.

    Meanwhile, it is obvious that App Engine is intended to make it a lot easier to build (and more importantly, deploy) new services that Google will receive another cut on (if they are successful), and incidentally make it much easier for second and third movers to launch copycat services that scale. The window of opportunity for network-effects-based dominance of a niche is consequently getting much shorter.

    I strongly suspect that we’ve now seen the last large service startup success stories (Myspace, Facebook) that build their own hardware infrastructure at any phase of their growth (beyond a single server, at least).

  • http://www.koona.com Tomas Sancio

    Hi Tim,

    A problem for Google’s future cash flow, one that relies so much on advertising and selling keywords is that the inflation per word is much higher than for everything else in the tech industry. Software in general is either cheaper or adds more features for the same price each year and Moore’s law for hardware just makes it more powerful and inexpensive.

    But not Google adwords.

    Since the English vocabulary doesn’t grow but advertisers do, the current ones have to pay more and more for each keyword. And with click farms and sleaziness everywhere, the dubiousness of the click quality will just increase.

    No, Google is not “doomed” but they should be showing people in the upcoming years that they have a different revenue stream.

    Cheers.

  • Ted

    Hi,

    While it’s true that Microsoft cash cow is in “Windows & Office”, people should acknowledge that there are more products within “Windows” and “Office themselves.

    Please note that Visio is making $800 million revenue annually (and on track to be $1 billion soon).

    MS Projects 2007 got split into server-side and client-side. That’s another big money maker too.

    MS Sharepoint is another up-and-coming product that would likely to hold its own ground (revenue-wise).

    What about Visual Studio suites and MS-SQL Server?

    MSDN subscription is also a paid-service.

    MS Biztalk (EAI), MS Dynamics (or pretty much MS Enterprise offerings) are gaining momentum lately).

  • http://www.richappsconsulting.com Mudassir

    well said Jim,
    I am 100 % agreed with your points and more I myself love Google and its sister sites..

    Mudassir
    http://www.socialmediaplex.com

  • Ben

    On the same line as Tim, that’s why i’m using Hibernater together with MS Office to save my work anywhere and resume it later. good old system with new way of working.