I was speaking with a friend who works for a major internet company recently. He has a theory that Google is on its way down. He based his opinion on a few observations: 1. Google gets most of its revenue from search advertising 2. Search adverising is maturing 3. Google is not able to innovate in other areas 4. Google is losing the talent war to other upstarts like facebook, twitter and new startups.
He asked me what I thought. I told him that while I agree with majority of his observations I wouldn’t yet say their best days are behind. I think online advertising is still in its formative stages. Google is the dominant player there. There is another mammoth area where Google is well positioned to be a major player. That is mobile. But they need to execute and innovate better than they are doing right now.
If you look at Google as a company they have more in common with Microsoft than you would think. They are good at improving something rather than creating something totally new. They were not the first search engine (altavista, yahoo, excite, lycos) but they created the best one. They were not the first to search advertising (goto.com) but they perfected it.
Let’s look at their other products. They were not the first to web mail, maps, web apps, display ads, rss reader, photos, video, blogs, social networking, browser, mobile os and mobile advertising. Out of these they have done a decent job in web mail, maps, rss reader and mobile os through internal development and in blogs and video through acquisition. But none of these have provided a major alternative stream of revenue yet. They have been a one trick pony so far.
What is their problem? They are too much in a reactive mode. They seem to lack a cohesive strategy. They spray and pray. They have mediocre me too products in too many areas (google buzz, orkut, picasa, google wave, nexus one). The innovation seems to stall in companies they acquire (blogger, youtube, dodgeball, feedburner).
What should they do? Just pick one or two major areas (besides search and digital advertising) and execute the hell out of it. What should these areas be? I would pick mobile and cloud and do everything to dominate these markets.
In the mobile area they should focus on making adroid the most pervasive open mobile OS in the world. Nexus one sends confusing signals to the market and partners. It seems like a desperate attempt to copy Apple’s strategy. Apple has a lot of experience in consumer devices and it is good at it. Google is not. Google should focus on its strength and that is being a platform.
On the cloud front, they should provide the infrastructure, platform, apps and monetization solutions to make is dead simple for everyone to move to the cloud. Gmail, google apps, maps, youtube, blogger etc. all come under this area. There are many holes for Google to fill here and they should do it ASAP.
I think the next great enabler is the combination of mobile and the cloud. I am talking about mobile apps powered by the cloud. This is a green field right now. Google can own it.
They should of course continue to execute their vision of organizaing all the world’s information and making it universally accessible and useful. This means continue to execute in search and online advertising.
So Eric Schmidt, there is your road map for success.