Google: The one trick pony learns a second trick
It sells ads. And it clones other people's products
Open...and Shut Google has a nasty habit of cannibalizing others' businesses based on its own seemingly unassailable lead in search and online advertising. The problem is that each time this involves giving away free software and services to undermine competitors at the expense of growing its own. Or can Google make a business from giving competitors fits?
Let's look at Google's track record. Google Android is intended to be the Apple iOS killer, and it's doing a pretty decent job of taking share, though primarily against RIM, Microsoft, and HP/Palm. Early on Google accomplished this, in part, by paying companies to ship Android. If you were Motorola or HTC, you didn't have the option of shipping an Apple device, and so could either pay for Windows or WebOS or you could be paid by Google to use Android.
Easy decision. Android won.
This is an old game for Google. For years the company has been giving away (or selling very, very cheap) software that Microsoft depends upon to mint billions every quarter. Microsoft continues to print money, but Google is getting a foothold in enterprises with its free-to-cheap services like Google Apps. Google is now attempting to shrink Microsoft's Windows market share through its ChromeOS initiative.
Will it be successful? Certainly not anytime soon, if ever. But it's a shot across Microsoft's bow, and a reminder that Google plays by very different rules, because it doesn't make its money from software. At all. Nor is Google content to pick on software and hardware companies like Apple and Microsoft. Most recently, Google's Google+ aims to give Facebook fits, and may even overrun Twitter along the way.
Even if Google+ doesn't end up wholly lobotomizing Facebook, it challenges Facebook's fundamental business model, as Udayan Banerjee speculates, to justify its mammoth valuation Facebook is likely going to need to expand the volume of ads it shows its users. Google, however, needn't directly monetize Google+ through ads. By running a largely ad-free social network, Google puts pressure on Facebook to make money through alternative means, or face an exodus of ad-fleeing users.
Google has been accused of being a one-trick pony, with some investors worrying about "a fundamental cultural inability to create new lines of business that can keep the company growing." I don't think this is quite accurate. With Google+, Android, and other initiatives, Google demonstrates that it can build new products, but perhaps not new businesses.
That is, Google has been adept at fostering clones of others' successful products (iOS, Facebook, Microsoft Office), while remaining them for a web-centric world that feeds its search and advertising business. This is a great strategy so long as none of Google's competitors figures out a way to undermine those advertising dollars.
So far, so good. But no monopoly lasts forever.
Microsoft knows this, and so it's instructive to see how that behemoth has finally gotten around to cannibalizing its own server business with a (finally) serious cloud computing push. Microsoft has rewritten its rule book (and volume license agreements) to accommodate and embrace its one-time nemesis, cloud computing.
Is Google ready to do the same? What if, for example, Microsoft's attempts to burden Android with patent fees makes Windows into a viable mobile competitor, one that can displace Android? How will Google respond to a market that defaults to iOS (and whatever search/advertising partnerships Apple embraces) or Windows/Bing?
And what if Google+ fails to attract users away from Facebook, such that more and more of the world's content is locked away from Google's search engine? That's a big loss for users, of course, but also revenue lost for Google, too. Google is still in fine shape, and it's unlikely that this will change in the near future. But the company needs to become as good at building new businesses (not just products) as it is at wrecking others' businesses.
Matt Asay is senior vice president of business development at Strobe, a startup that offers an open source framework for building mobile apps. He was formerly chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears twice a week on The Register.
re: I Eat Cannibals
You said: "The only true source of creativity I see in today's tech landscape is Apple, inventor of the cell phone, the tablet, and the MP3 player"
This is a joke, I presume? Apple invented none of those.
A modern day water dictatorship
If you're a ruler, the simplest way to keep the plebs under control is to give yourself (and enforce) the power to allot some vital resource. Someone does you a favour? Give them some more. Someone honks you off, cut off their supply.
We've recently seen Russia do this to some ex-USSR states and their supply of oil and natural gas.
In times gone by, the ruler used water as the subjugating force. Without it, crops died, farmers went broke, people starved.
The neat thing about this technique is that you don't need a large army or internal security force to keep yourself at the top of the pile. You only need enough power to control your resource and everything else follows from that. The bad thing is that because you don't have a strong army or defensive force, while you can control internal threats you are very vulnerable to external ones. An invading army will have little trouble taking over as what forces you do have are not used to conflict: they're used to people doing what they're told.
Historically, water dictatorships seem invulnerable when viewed from the inside but their fall is inevitable.
So it is with Google. They have a firm grip on the internet's jugular. They control who gets the eyeballs that makes the advertising pay the rent. They don't need to be competitive, or innovative. They just need to batter competitors to death with their giant wad - and if that doesn't work, turn off the eyeballs. However, as soon as someone comes along who is NOT dependent on advertisements or search hits they're screwed.
The question is who, what and when.
didnt know apple were so inventive
agree on toto but:
"The only true source of creativity I see in today's tech landscape is Apple, inventor of the cell phone, the tablet, and the MP3 player,"
whut? really? I know they currently make the popular ones but surely they didnt invent those things?