Why Google's New Products Need Not Succeed

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."

Comments

Economies of Scale,Buliding a Brand,Marginal Cost

[Marc2k]

These are all basic principles of economics. Nothing for you to see here, move along.

Sure, they want to make money

[solidtransient]

Gmail is by far my favorite web-based email client. Google Calendar has proven to be a very useful tool as well. I use Google Local at least once a week and on and on and on. Maybe Google knows they make enough money on search and that they just want to release good, useful, user-friendly products that are miles better than the competition, even if they aren't profitable. Yahoo's gazillion ads on their email service is one reason I don't use it anymore.

Re:Sure, they want to make money

[iced_773]

Gmail offers POP3 for free while Yahoo makes you subscribe to Yahoo Plus.

Also, Google Sketchup is pretty neat...

Re:Sure, they want to make money

[lowid (24) _________]

Maybe Google knows they make enough money on search and that they just want to release good, useful, user-friendly products that are miles better than the competition, even if they aren't profitable.

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:Sure, they want to make money

[Om]

Maybe Google knows they make enough money on search and that they just want to release good, useful, user-friendly products that are miles better than the competition, even if they aren't profitable.

*slaps your face*

SNAP OUT OF IT! Don't you understand!? They're here to kill us all! ALL OF US!

++Om

Funny thing

[WindBourne]

it took google's search engine 3-5 years to overcome inertia in a relatively new arena (web search). Now, it is competing against much longer established business (e-mail has been around for multiple decades). It will not be overnight that Google services will grow, but they will grow.

Re:Funny thing

[WindBourne]

The difference being that Firefox had to build a new brand. Yes, the internals are mozilla, but mozilla pretty much killed its name 5-8 years earlier. Firefox is working on creating a brand name in a very saturated market.

Nice thing for Google, is that although they are the new player on the block (vs. yahoo, aol, MS, etc), they have a superior reputation to all the other players. They just have to capitalize on that (i.e. no crap products that take their name down).

Re:Funny thing

[Billosaur]

Nice thing for Google, is that although they are the new player on the block (vs. yahoo, aol, MS, etc), they have a superior reputation to all the other players. They just have to capitalize on that (i.e. no crap products that take their name down).

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:Funny thing

[WindBourne]

That will depend on management. They are hiring good geeks (actually great geeks) that are tech savy(able to invent and do things) rather than busines savy (read political a**kissers who learn how to take credit and spread the blame). The real question is, have they been hiring the right middle management. These are the guys who can break the company (even though they rarely make the company). Yahoo screwed up long ago, by hiring business ppl who let their tech edge go (hiring business savy geeks rather than tech savy). MS, same way (their monopoly kept them alive). Amazon is whole nother creature. I have not stayed up on them and I have no friends working there, so I really can not comment on them. But from where I sit, they seem to be doing ok. Of course, they probably should do some updating on their website and consider taking on e-bay. Perhaps work with google to accomplish such?

Googles real strategy

[Anonymous Coward]

These analysts miss the point. The big win for Google is to replace Micro$oft as the default platform. As Google tools, google desktop and of course Google search as the homepage become the default start point for users, the operating system becomes less relevant.

Put another way, once people are Google-centric, they can use a Mac or a "GooglePC" or anything else. Linux anyone?

Re:So wait.

[slindseyusa]

They won't charge. They don't need to. You use it, they get to show you ads (their main revenue stream) AND use your data later with advanced data mining techniques so they can sell aggregate data on users. The more users the better.

Re:Hmmm... maybe?

[theStorminMormon]

I think you're crazy if you think Yahoo! Mail is better than Gmail. I have two accounts for each. My first web-based email account was Yahoo!, so I've been with them for a very long time.

The reasons I like GMail so much better are:

1. I got on board early (admittedly not a design feature) so I got the names I wanted
2. Better GUI - simpler, more powerful
3. Integration with awesome products that involve sharing I love being able to share Google Calenders with my wife. We each have a personal calender and we share a calender for stuff we do together - and it all shows up (color-coded) on one display. It's brilliant. We use Google Spreadsheet for simple budget tracking as well.

Yahoo is #1 because of the head-start, that's it.

-stormin

Money, bah!

[Dystopian Rebel]

That's right: Bah! Following the example of my heroes W Buffett and W Gates III, I hereby announce that I'm giving all my savings to the Bill And Melinda Gates Foundation. I don't want any dynasty founded on my $763.84.

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.

Yet they've caused innovation

[JGuru42]

Google might not be making large sums of money off of their other products that have been created but it's hard to deny that they haven't caused a major change in how other online companies do their business.

After using Hotmail for all those years and then switching over to GMail as my primary e-mail I was stunned by how many things Gmail did that made it easier to work with. Now my junk e-mail account was still at Hotmail and when they asked me to be part of the beta testing for Windows Live Mail I figured it's only the junk e-mail account so I gave it a shot.

Windows Live Mail seems like someone tried to take Outlook and GMail and just mash the two of them together. However, Microsoft has still dropped the ball in making it easy to work with. For anyone who is part of the beta just try and delete multiple mails at the same time. Due to my long time of using computers I have no problem but most regular users are going to have trouble.

Even before Microsoft went for the complete overhaul they upped their maximum storage capacity in order to compete with GMail. So while it may not be a giant winner for Google money-wise, they've been a great boon to the end users who have finally started to see things get shaken up

Just like the article mentions I'll leave this innovative and beautiful Google web program with just a name, as if you've used it it's not likely you've forgotten it: Google Maps.

critical mass, similar to M$ approach

[192939495969798999]

Actually, their approach isnt that much different from Microsoft's, at least from an abstract view. They are slowly accumulating more and more useful products, and over time this will bring them to a critical mass. Once they surpass this, then more and more of their "other tools" will be the tools of choice in their specific areas, and then Google will be a monster in the marketplace. The trick will be to not then turn around and be "evil" (i.e. charge for services that were once free because you can, etc).

Um. Yes they do need to succeed.

[washirv]

Whoever wrote this silly blogpost clearly hasn't considered the real reason Google needs their products to succeed. Google's bread and butter is their search product. But here's the problem: search growth is slowing. The only way for Google to keep growing their business at the breakneck speed that they and Wall St have become accustomed to is to find new places besides search pages that they can stick their ads on. Right now Google gets to do that using their Adsense program. Thousands of websites around the world are making Google tons of money. But the margins there will keep slipping as more competitors (Yahoo, MSN etc) come on in and offer to share higher percentages of their revenue with 3rd party publishers. This leaves Google with having to own their own "content" pages where they can stick their ads and book 100% of revenues from them. Unless their other products succeed, Google will truly become a one trick pony as far as their revenues are concerned. No responsible business can afford to become a one trick pony. That way lies death.

Re:Economies of Scale,Buliding a Brand,Marginal Co

[Xichekolas]

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.

Re:Hmmm... maybe?

[theStorminMormon]

So you admit to breaking the agreement with Google?

Yes, I did it, alright! I admit it! I did everything.

But why!? Why would you do that to Google, Stormin?

It was for the money. Money I needed. Money I could only get with 2 Gmail accounts.

Well do you think it was worth it now, Stormin? Now that we've got you red-handed? We're taking you downtown after this. It's the big house for you, Stormin. You threw your life away!

You don't know nothin copper! Was it worth it? Damn straight it was worth it! I did what I did to survive. Out on the street it's have 2 GMail accounts or die. I ain't sorry about what I done. I lived my life like a man, a man with with TWO GMAIL ACCOUNTS. Even if it's all over now, you can't take that away from me!

Sorry? The only thing I'm sorry about is getting caught. If only I'd kept my mouth shut on the stupid Slashdot forums, I'd have made it. I nearly did make it. You just got lucky, copper, and I didn't. You and I, we ain't so different.

Watch your mouth, Stormin, you want to run into an accident on the way to the station? Is that what you want?

We're through here. Just take me in already. Let's get this over with.

-stormin