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Is Google Spreading Itself Too Thin?

Google’s search advertising is the best cash cow ever invented for the Internet. None of the well funded alternative search engine contenders are able to put a dent into that dominance. But all of Google’s other experimentation, all that frenzied innovation from their assembled brains trust, seems to be hitting headwinds. A tiny Indian company called Zoho is giving them a run for their money in Web Office and the latest report indicates that Knol is not even making a dent into Wikipedia. YouTube monetization is also hitting hurdles. We look at why all of this should matter to Google.

Rounding Errors and Confidence

All these experiments are mere rounding errors in Google’s financial results. So why does it matter? Confidence matters to Google. More importantly, the fear of Google matters. It is important to them that every initiative has the early adopters jumping on board and declaring the space that Google has just entered to be “game over” for the existing players. Then VCs won’t back anybody in that space.

This game worked for Microsoft for decades. But the market is bigger and savvier today and the Internet just looks too darned big for any single firm to dominate.

The Bigger Game – Creating More Content for Search

One explanation for Google’s almost anarchic experimentation is that revenue from those products don’t matter. They just want more “search fodder” to feed their cash cow. That makes sense. Zoho is committed to being ad free, as is Wikipedia. They have different reasons for being ad free, but that is not what matters.

If Google doesn’t dominate web office, they will only be offering advertising on those who cannot afford to pay Zoho their really low price – which sounds like advertising to the sub, sub prime market. If Knol cannot get content up to Wikipedia standards, advertisers will have to associate with sub, sub prime content.

That does not look like the strategy of a winner.

What About Chrome?

Chrome showed Google’s brand power in the market. A pretty geeky story (better performance and sandbox security for plug-ins) got tremendous traction in the media and prompted people who had never even made the jump from Explorer to Firefox to look at Chrome.

But it is very hard to see any strategic advantage for Google in splintering the browser market even further. Surely their interest lies in making sure Firefox gains against Explorer? Why not simply continue helping Mozilla?

This looks like an engineering project (yes, a very cool engineering project) that got out to market with a “oh, well, why not, seems a shame to throw it away” rationale.

Has Boredom Become an Issue Inside the Googleplex?

It is almost as if Google is bored. The cash just keeps rolling in. How do they exercise those amazing minds? This is not an uncommon problem. My first job was with a small publishing company in London that had one amazing cash cow and lots of “loss leaders”. I naively asked one of the owners why he did this, why not just have the cash cow? He thought for a while and said “well, what would I do every day?”

YouTube, Now That’s a Biggie, Right?

Well yes, it is the dominant online video sharing site. However as an advertising business YouTube still has big problems and may still be losing money. At Web 2.0 I asked many people “how would you monetize YouTube?” and a surprising number came up with the solution of getting people to pay to upload. It sounds plausible, small amounts from millions of uploads might add up. But that is totally contrary to Google’s mantra of free content funded by advertising and it would allow a “free to upload” competitor to potentially disrupt the market.

Is The Sum Bigger Than the Parts?

Google looks increasingly like a giant private equity firm with lots of unrelated businesses betting on one making it big.

About one year ago, an internal document by Brad Garlinghouse, a Yahoo senior vice president, said that Yahoo was spreading its resources too thinly, like peanut butter on a slice of bread.

Is Google doing the same? Albeit with a cash cow that is massively better than Yahoo’s?

What do you think? Is Google spreading itself too thin?

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