December 15, 2007

Thoughts on Google's playbook

This post is very much thinking out loud, so please add your thoughts in the comments.

Google is launching a lot of products and initiatives, lately Knol, OpenSocial and Android, in addition to their core search and advertising business. Often Google is given the benefit of doubt that was given to Microsoft in the 90's, i.e. Google's new product is expected to dominate the market. History indicates that such an expectation isn't always well-founded.

Google Base, Blogger and Checkout are some of the products that didn't go on and dominate their markets.

Orkut has been successful in some markets, but is not a global phenomenon.

Google Apps hasn't replaced Microsoft Office, and is not close to doing it anytime soon, but has some traction and is improving product quality.

Is there a better way to forecast, than assuming Google will always win, what Google products will take off?

First let's remember Google's "70/20/10 rule": 70 % of efforts are spent on search and ads, 20 % on nearby business areas and 10 % new stuff.

Generally products outside the search and ads area are likely to get less resources. Thus their success isn't guaranteed by Google's sheer size or its lead in search or advertising. Some of these will compete on the same terms as leading Internet services, others seem to be more experimental.

The products Google seems more likely to invest in are those that establish or fortify Google's standing as the primary search or start page of its users (iGoogle, Google Reader, Google News etc).

Then there are products that make Google's strategic position stronger, but may not directly be highly financially lucrative. Blogger is one, as blogging weakens traditional media companies strategic position when dealing with Google.

Knol seems to be an experimental product outside Google's core. Even if it had a better product design, I'd give it quite a small chances of being as big as Wikipedia or Yahoo! Answers.

OpenSocial seems like an initiative that lies in the "new 10 %". But it has the bonus of making life more difficult for Facebook. Might work, but I don't think the partner alliance is dedicated to making it a success.

Open Handset Alliance and related mobile initiatives are a mixed bag. At its core is about search and related advertising, i.e. billions of dollars of potential revenue. The things Google is doing right now seems to be strategic moves (open handsets and open spectrum) I'd put in the 10 % new box and user-behavior changing stuff which today is in the 20 % box but is moving into the 70 % box. Success is not guaranteed, but the upside is great so Google is likely to, in the school of Steve Ballmer, keep on pounding until they get it right.

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