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Summary:

Has Google, with its latest project, Google Wave, actually come up with the Next Big Thing in online communication, or is it yet another Googler vanity exercise? Wave is a combination of email, instant messaging and a real-time wiki — plus open architecture and APIs. Or […]

wave_logoHas Google, with its latest project, Google Wave, actually come up with the Next Big Thing in online communication, or is it yet another Googler vanity exercise? Wave is a combination of email, instant messaging and a real-time wiki — plus open architecture and APIs. Or as creators Lars and Jens Rasmussen and Stephanie Hannon put it, “what email would be if it were invented today.”

For now, Google is rolling out Wave as a developer preview and will launch to the public later. The company is looking for 3,000 adventurous, early adopter developers to “tinker” with the system and figure out “what else can we do with this?” And that’s where I stumble.

Google has a long history of launching or buying projects, only to get bored and abandon them months or years later. With Wave, as with so many Google projects, the company seems to be flinging things against the wall to see what sticks. No real thought has been given to its future beyond, “Wouldn’t it be cool if…?” When asked about marketing Wave during the launch Q&A, the Google reps said “We really haven’t thought about that too much.” What about advertising? “We haven’t thought about that yet.” What about competition? “It’s not something we really thought a lot about.” So what have the Googlers thought about?

Google, as a company, has failed at monetizing everything except search (and, though it’s based on the same tech, partner web sites through AdSense). Advertising on YouTube has been a failure, and is costing the company hundreds of millions of dollars a year in server costs. The culture at the company is to build first and ask questions later, typical for a company run almost top to bottom by engineers. Lucky for the Wave team, then, that search ads have been so phenomenally successful — absent such success, they would be forced to ask those hard questions about monetization and competition.

Wave could be a competitor to Outlook and Office if Google were to roll Docs/Gmail/Cal under the Wave umbrella. And as Om pointed out in a tweet, it could be a strong competitor to Microsoft SharePoint. When he asked about Sharepoint at the Q&A, however, the Googlers brushed it off, saying Wave has “far greater breadth,” and is superior because of its openness and federation model.

The breathtaking arrogance of blowing off potential competition and touting tech buzzwords rather than at least giving a cursory examination as to how one might make money from a product is the Google way. Technology is all well and good, but at some point one must go from “Look at this cool thing we’ve designed!” to “Look at all the money we’re making from this cool thing!”

Maybe it will work. Maybe Wave will take over the world. But, with the notable exceptions of Gmail and search ads, Google has a poor track record with product launches. It is really, really good at vanity exercises, though.

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By Jordan Golson

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  1. Wholeheartedly agree with your post. Google seems to be a single great idea company… granted it was a HUGE idea… but they’ve yet to do anything else very well from a biz perspective. Will there ever be a significant secondary revenue stream for this company?

    1. Can you not say the same thing about Microsoft, and many others? If only many other companies were hampered by the single revenue streams of Google and MS

      1. Microsoft has numerous revenues streams. Office, Windows, Server, Xbox, etc. Not to mention its Internet properties.

      2. Pop quiz…how many billion (with a B) dollar revenue businesses does MSFT have? The answer is >10. That surprised me too…and everyone else I ask.

    2. kc said “significant” revenue streams. Beyond their Windows/Office franchise, MS has never highly achieved, either.

      1. It sort of depends on what you mean by “significant”.

        There are entire countries that would be happy with some of the “insignificant” revenue streams that Microsoft has.

        Exchange, SharePoint, SQL Server, CRM/Dynamics, Windows Server, Visual Studio, — these are all >billion dollar a year businesses. Even the Online business, XBox, the keyboard/mouse business, Windows Mobile all make hundreds of millions of dollars a year.

    3. I think this is somewhat disingenuous. Whilst advertising is the way that they monetize (or the most significant way that they monetize) their various activities, they have a number of strong supporting products that drive revenue into that business.

      I think it’s also important to recognize that this is still a very young company, and it feels like you could have challenged Microsoft at the same stage with

      “When you are you going to make money from something other than software?”

  2. Did someone wake up on the wrong side of the bed today?

    Wave looks great, you should be clapping at attempts of companies like Google to innovate. I mean what did Microsoft talk about today? They are admitting they are YEARS behind in Search (and not likely to catch up) and YEARS behind in portable music / video players (and not likely to catch up).

    Bravo to Google for being forward thinking and offering so many great services, even if they fail from time to time.

    Go back to bed dude, and make some stronger coffee when you get up…

    1. Agreed. Wave looks interesting. Not sure if it will work, but I like the idea of informal and flexible collaborative documents.

      Speaking of Microsoft and collaboration, it is unbelievable how awkward Sharepoint is, how long MS waited to promote hosted Exchange for small businesses, and the markets they gave up with both.

      1. I also whole heartily agree. This is incredible innovation and of course risk comes along with that. I applaud Google for taking the risk and putting something out there of value. Perhaps we can’t see or understand that value yet but imagine the ideas that this type of product can spawn. Go Google!

    2. worldwidefuture nerolabs Friday, May 29, 2009

      Bravo! Hard to believe someone would bash Google for not being innovative enough. Google Maps, Earth, Docs, Gmail, etc. whether developed or acquired have all blown away any meager attempts of Microsoft to catch up. Its a new age, and its Googled. Microsoft is so yesterday, unfortunately.

      1. Google Maps? I’m sure MapQuest was before them.
        Google Earth? Terraserver was before them (hosted by Microsoft even).
        Docs? Really?
        Gmail? What, webmail?

        Heck, Google search itself was of course after Altavista and all the other search engines of the time.

        Should Apple quit their OS business because they’ve never caught up to Windows in terms of market share?

      2. m-s:
        Mapquest *was* long before google maps. And it was great at the time. But just 5 years later, who the hell do you know that still uses it?!? There are reasons.

        Google earth. Free, works great, incredible product.

        Docs.. wonderful! You may not be innovative enough to find uses for these, but I guarantee there are *plenty*! Especially with cloud computing/netbooks/etc taking bigger hold. My boss’ many kids do their homework on it. He can see what’s being done and make suggestions from anywhere, anytime, even if they’re at their mom’s house. My wedding planning Master Doc and Guest List spreadsheet are on there – my fiance and I can work on stuff from anywhere, at any time, together! “Hey hun, let’s both go through and add in the addresses for our families”… “Oh hey, I just put a picture of venue-x under the possible locations bullet, see what you think, there’s a link to the website too”.. awesome! Can’t do that with anything else, especially not in real time working on the same document from any computer with no software to install. Wave takes these great features, and integrates in better communications (so we don’t even have to be on the phone working on things together), plus gives the playback (which really could be useful a *lot*.. “how *did* we arrive at these conclusions”)

        Gmail.. I’ll kick your ass if you’re comparing Gmail to everyday webmail.

    3. Well Said,

      The Google culture is what sets it apart from the other high-tech companies and is actually an asset for the company.

      It’s there way of avoiding the big company paralysis which affects almost every other big tech company, where in order to keep up your reputation you have to come up with elaborate business plans before a revolutionary project can be undertaken.

      Small startups, where the real innovation happens don’t have this problem because they are not answerable to anybody, Google by having the revenue stream from ad-sense and search as an umbrella to protect such projects from being questioned about monetization, tries to have similar environments for new projects.

      Now the real question is whether we want to put all our money in Google’s hands to be the forerunner of technological revolutions or not? If you ask me it’s a big yes with Google’s engineers being the best in the world and the companies love for Computer Science as a field. Mr. Eric Schmidt mentioned during the IO keynote that he feels computer science is the center of the universe, what could be a better testimonial to their dedication to the cause.

  3. Good article. People will have to take protecting their privacy into their own hands. A great tool I found for Internet Privacy is Covert Surfer. It is designed to encrypt your Internet connection and prevent cookies from collecting information about you. Can operate completely from a flash drive so you can use it on multiple computers. Check it out at http://www.covertsurfer.com

    1. Like anyone in their right mind would use security software from a company that spams comments. You have got to be kidding.

      1. give “Jim Smith” a break — if you knew the grip that Google and other big tech companies have on tech “journalism” and media outlets, and the very real pay-to-play coverage that tech media thrives on, then you’d sympathize with a startup that might have great product but is finding it hard to get the word out using traditional (aka Paying Google for ads) means.

        in fact, what more relevant place to mention alternatives to the incessantly blogged-about big brother technologies than in those very same blog postings?

        comment “spam” is not cluttering your inbox, didn’t cost you anything to download, cannot contain viruses, and often times is the effort of a real person trying to inform a message thread full of readers about other options.

        on the other hand, covertsurfer.com sounds like nothing you can’t get using InPrivate browsing through IE8 or any number of Firefox plugins, so I wonder if it has much chance.

      2. Milton Segura No Friday, May 29, 2009

        I’m already happy with Google Chrome :)

  4. Hmmm. Lots of passion there. How do you know that they are not making money in anything besides search? They don’t break out their revenue by product. However it breaks down, you have to admire the sheer volume of their numbers.

    I’m no G-Fanboy, but they have do have a unique ability to change the technical landscape (Chrome? HTML5?), and potentially do even more (Voice?). Should they ever get deadly serious about hiring the “execution” types that you advocate, then they will be even more dangerous.

    1. Exactly. It’s the advertising that’s making money, not search. And the ads have worked well, and are easily integrated into other services they provide (see Adsense, Google Maps, Gmail, etc.). They want as many people as possible to be using Google services because they can earn revenue from advertising on any one of them, so why is a new product so confusing?

      All of their services are free (or at least have a free option) and many of those services have failed, but that hasn’t stopped things like Google Maps and Gmail from gaining market share so I don’t get the basis for the position this article is touting so loudly. The “throw things at a wall and see what sticks” mentality is what got them where they are today so the tone of this article seems misplaced or based on a misunderstanding of how Google operates and makes money.

      1. StareClips.com Niraj Friday, June 12, 2009

        It’s also worth pointing out that Google Maps has surpassed MapQuest as the number one mapping site. MapQuest has been around forever. Yahoo Maps had also been around for a while before Google Maps. Microsoft has had maps for a really long time as well. So, why did Google Maps become so popular? Because Google was willing to building something more than just a “me too”. They did something with maps that no other larger player before them had done… and with things like Street View, they are continuing this trend. Sure, they didn’t invent the Street View technology… but they had the foresight to use it and feature it in a much larger way than their competitors. Google succeeds when their competitors rest on their laurels. Even if Google fails at a project, they at least succeed in getting others to keep up with the new pace of innovation.

    2. Deadly serious execution and danger! Google isn’t a secret ninja assassin organization, dude. Jason Bourne, CTO! Do you have an actual business vocabulary to draw from, or are you one of those guys who’s never going to return The Art of War to the library?

      1. It’s a first edition signed copy, would you return it? But just for you, I’ll rephrase:

        Google makes a boatload of money, and will probably make even more – regardless of what you, I, or Jordan think of them.

    3. Subhankar Ray TimB Friday, May 29, 2009

      It is always good to see they are trying. Humble people with arrogant ideas make all the difference.

  5. 1. Build and Ask questions later is exactly how many successful products are built. If it solves some problems for users or is otherwise useful you can probably find a way to make money from that. Google itself was made this way. So is microsoft foolish in going after google with bling ? Are you suggesting that every idea should have monetization plan right from the start ? Will firefox/mozilla have been built with this “ask questions” first strategy ? Do they not make money from their product now ?

    2. The bandwidth costs for youtube is pure speculation. The analysts do not have any idea about the peering arrangements google have with large ISPs. Even if you discount that, Google’s cost as a percentage of revenue has either been flat or falling http://investor.google.com/fin_data.html .

    3. “It has failed at monetizing everything except search”. That is again speculation. Search is clearly their leading profit generator but google maps and gmail are successful products and since google does not break out revenues product wise, we have no idea how much each of these services contribute to the bottomline.

  6. I think they have thought about monetization–every thing they do to improve the web increases web usage, and drives use of Google search.
    Also, I like how they threw this out there without thinking too much first. In fact, I wish they would have thrown it out even more prematurely. When your goal is to improve the web, and not to sell software, as Google is trying to do with Wave, you open source the thing from the start and tell people about it when you first start thinking about it. That way, you build up a big developer community and get people talking about it. For example, they should have revealed Android when they first started it, not after a couple of years. If they had, Android would be THE mobile linux and competing a lot better with the iPhone.

  7. One more thing I forgot to mention: if you reveal your thinking early, you get to find out if it makes sense or not before you waste a lot of money on it. Also, good job stirring up the Google fanboys.

  8. 18 Android phones are launching this year. Id say thats a success.

    Also: why does the author & any poster care about monetization as a measurement of success? Id much prefer their “build cool things that I can choose to use or not use, for free” mentality. No skin off my nose if it makes a lot or nothing. I dont get the animosity against that.

    1. Craig Matthews Maddox Tuesday, June 2, 2009

      Because, for some reason, since around 2003-2004, tech media has been obsessed with stock price and tech editors and authors have all become armchair stock brokers. There’s barely anything technical about technical media anymore.

      1. I was wondering this myself, and came to the same conclusion – unless you have a load of stock in Google, what do you care how much money they are making out of anything? Surely they have brought the world some breathtaking products.

  9. GrumpyWookie Thursday, May 28, 2009

    Looks like a combined Google Apps + GMail -> aimed at FaceBook ? Not really going to challenge Microsoft SharePoint for a corporate/business user.

    I guess the “success” of Google Chrome tells a lot – aka FAIL.

  10. Personally, the concept makes a hell of a lot of sense, especially as an open platform play.

    My simple net out is that this is a model that deals elegantly with both messages and payloads, where the payloads could be pics, videos, posts, songs, maps, people/product/business listings, etc.

    As such, there is a lot of value in how the handling layer processes these messages/payloads, enabling them to be aggregated and/or filtered into logical constructs, like NOW, LOCAL, TYPE, POPULAR, VIRAL, ENGAGING, etc.

    I blogged about an application model that is very complimentary to this (and for which I have modeled out six very specific use cases) in a post called:

    “Right Here Now” services: weaving a real-time web around status
    http://bit.ly/i40h

    Check it out if interested.

    p.s., if you want to fault the company for planting a lot of seeds not knowing which ones will sprout, so be it, but personally I salute the approach. So long as they build on the culture of learning to starve the losers and feed the winners, that model can scale into a lot of great products. Food for thought.

    Mark

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