Posts Tagged ‘Google’
A lot of people constantly harp on the fact that Google is not the market leader in any other market segment than search and contextual advertising and hold it up as proof of the fact that Google is a one-trick-pony. While it is desirable for Google to lead the market in everything it gets into, it is not the only factor that Google is looking for when it kicks off a new product.
To understand why Google does things differently, you need to first understand how goes Google work differently as a company.
At its core, Google is one massive computing infrastructure. What the company excels is in building, and maintaining applications on top of this infrastructure, only parts of which are known to us as Big Table, Google File System and Map Reduce. Almost every application (yes, this is speculation, sue me) is built atop this infrastructure, giving Google the ability to have consistency across storage, classification, categorization of any data that comes into its system. Other companies, like Yahoo! and Microsoft, have years and years of legacy sitting on different frameworks and infrastructure, giving Google amazing leverage over them.
For Google, the only real product is user experience and the value the user derives from using Google’s products. This, in turn, helps further refine and better offerings across the plate for Google, creating an endlessly iterative and self-improving product ecosystem. And the products by themselves are a means to bettering the end-product of user experience.
For instance, not many would have much to say about Google’s “web history”, but not many know that the same is used to do drive recommendations in Google Reader, which also uses geographical data (I was recommended feeds related to Trivandrum after being there for a week) which Google collects in conjunction with ISPs (driven by Google Analytics) to further refine these recommendations.
In a similar manner, Google already tracks the clicks that originate from Gmail and I would not be surprised if they are already tracking and indexing the thousands of billions of messages that flow across Google Talk to better know and predict which link you are likely to click more on Tuesdays and Wednesdays (match data from the messages and your web history), compared to Friday or Sunday. And that is very much in line with their mission statement of being more useful to you, in a manner that borders on the eerie quite a few times.
And that is where the greatest challenge lies for companies that aim to compete with Google. Learning systems that improve itself iteratively with time and usage are hardest to beat, because it improves by using you against yourself (something like going against your best time in a racing game than against a pre-programmed computer run) and since Google has been around for such a long time, the amount of data it has about you is something that the competition can’t match unless a vast majority of Google’s users switch overnight to the competing services.
Which brings us back to the non-search problem. Google really does not need to be the number one in other areas (other than the silly acquisitions like Jaiku). It does not cost Google much to create new products (many Google projects like Reader and News were started as 20% time projects) and it does not cost them anything to run those either (they are written with the same framework that is maintained for their core offerings). So, even if all of them were to fail, it would not make a dent on Google, while the fact is that a lot of them don’t.
Now, add Google App Engine to the mix, which opens up the same infrastructure (leveraging the same Google Accounts identity system) to the wider web. With the App Engine, for the tiny cost of supporting the bootstrap process for free, Google now gets even more focussed and specific data regarding usage(in the hierarchy of usage quality, context is king. Apps would have a context that is locked-down taking out the guesswork for Google and the data that is stored in such contexts would also be in a format that Google natively understands).
It would really be stupid to assume that all these processes and data collection is not already being used to improve the advertising business, which is from where they earn their bread.
p.s: This post has been edited for clarity and a couple of grammatical snafus from its first version.
There are events and then there are not-so-ordinary events that give us hints, even in their disassociation, about the direction that technological (or any other type, for that matter) developments will head.
In the past week we have seen three such events – Microsoft’s formal overture towards Yahoo!, Facebook’s less-than-stellar numbers and Twitter’s ongoing saga in trying to keep a web-scale messaging framework up and running – that give us tasty hints as to where we may be headed.
The simpler, shorter version of the Microsoft – Yahoo! story is that companies that do business in the old school way – a manner similar to a behemoth, clumsy and ugly in gait – are history on the internet. Lock-in of the user and his/her data to platforms or products is a strategy that is history. It is only a stellar product that will keep companies alive in the future. And neither Microsoft, nor Yahoo! have built and in-house hit web-scale product in recent times.
The feeling that keeps coming back to my mind is that Microsoft and Yahoo! will be one of those weddings that look perfect as a mental image (for the shareholders and business wonks), but in practice it ends up being an absolute nightmare. There is a staggering amount of redundancy (for every Yahoo! product you can think of, there is almost a competing one with MSN/Live.com) and the integration will also be rotten in terms of platforms and cultures.
Even if you set apart the strong stench of desperation in the move, the fact remains that these are two companies that are struggling to catch the imagination of the younger and upcoming generation. By the time the dust settles on this one, much confusion would have ensued, which would tick off the loyal users who make up a vast majority of the numbers that make the deal look exciting.
That said, it is indeed a sad development to see an internet icon like Yahoo! being in the position that it finds itself in now. And in that state of distress lies a story for everyone who makes a living off the internet – don’t take anything for granted. Earlier, a company’s lifecycle – from inception to success to the demise – used to take decades, now the same is being compressed into ten years.
It is a theme that I will never tire of telling everyone I know: being nimble is a priceless asset in doing business now – nurture it, grow it and covet it with as much care as you covet your bottom line.
Just a quick note before the day starts in full flow choc-a-bloc with meetings. For all those really loud people who have dismissed outsourcing and given it so much grief, go and take a look at IBM’s Q4 2007 earnings call. A lot of IBMers in the US are getting to keep their jobs because of their company’s strong performance have to thank outsourcing for it. Services, which is mostly driven by outsourcing has been their rock star performer:
Looking at our results by segment, Services continued the momentum we’ve seen over the year. Global Technology Services revenue was up 16%, profit up 26%. Global Business Services revenue was up 17%, profit up 9%. And we signed $15.4 billion of new business, and importantly short term signings were up 8%.
They have also benefited from having a truly global operation, which enables them to focus on emerging markets, that drew in a 3rd of their revenue for the quarter. You can expect a similar set of results from Google (growth, but at a much slower rate) and from other geographically diverse companies who can limit their exposure to the carnage that we will see this year in the US market. Google itself crossed the crucial landmark a while ago, when, in Q1 2007, their international revenues pretty much hit 50% of their total revenue.
Once again, companies that will take a huge hit are ones like Apple, who depend extensively on retail spending in the US markets, which is why they have been gradually moving into other segments (iPhone) for which you can look at recurring revenues per customer than a one time engagement. 2008 will be critical for Apple and if they have to escape the carnage, they have no choice but to forge ahead with the launch of the iPhone in other markets.
Then again, the iPhone is vastly overpriced for a market like India, even if you were to assume something like INR 16,000 as the price point. If they need a winner, they’ll need something in the sub-INR 10,000 price range to set the market alight and I don’t see something like that coming from Apple.
On an unrelated parting note, I think I’ve linked to David Manners’ blog on the semiconductor trade, but it is an absolutely lovely blog to read even if you are not a semiconductor wonk. Highly suggested.