Google at 10: The Awkward Phase

Sunday was Google's (Nasdaq: GOOG  ) 10th birthday. Most articles are gushing with praise for its wildly successful decade. While praise for its past success is certainly deserved, maybe investors should wonder if the company has grown up, or if it's still just an overgrown kid.

True, Google has fought off formidable rivals such as Microsoft (Nasdaq: MSFT  ) and Yahoo! (Nasdaq: YHOO  ) as it monopolizes Web search market share. And it still makes breathless headlines with new products like Google Chrome, its new browser that will take on not only Internet Explorer, but the Mozilla Foundation's Firefox and Apple's (Nasdaq: AAPL  ) Safari as well. (Of course, the gbrowser rumor's been circulating since 2004.) And then there's Android, and cloud computing, and …

Whatever.

Granted, Google has come up with many services that have been great for consumers and pushed much-needed changes from old paradigms. For example, Gmail dragged Web-based email kicking and screaming into the future (although I recently ranted about how awful Gmail's related advertising tends to be).

Here's why I'm apathetic to all the Google hoopla: Its other products haven't come anywhere near its success with core Internet search (and lucrative targeted advertising). Fortunately for it, that financial success has allowed it to carry on like an abstract artist/prima donna, throwing a bunch of stuff against the wall to see what sticks. But so far, it has been impressive just how little these extras have really mattered to Google. (Is Google's core search and advertising business really a parallel to Orson Welles' Citizen Kane?)

YouTube? Google Docs? Google Earth? Chrome? Is it smart for Google to dabble in everything? If so, shouldn't it focus on stuff that hasn't been done yet instead of what often looks like a mission to irritate Microsoft? The frequent "me-too" mentality doesn't strike me as innovative. Last but not least, isn't it arguable that Google's manic product portfolio is awfully similar to the kind of corporate behavior Peter Lynch dubbed "diworsification"?   

Google may be a little too much like a typical 10-year-old, exhibiting some promising creativity but also wanting to be everything from an astronaut to a rock star to the president of the United States (when it's not irritating grown-ups). With the possibility that Google will be even more pressured by the current economic difficulties, hopefully its shareholders won't have to learn the hard way that sometimes creativity should be tempered with maturity and restraint.  

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.


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  • Report this Comment On September 09, 2008, at 5:25 PM, jthughey wrote:

    "YouTube? Google Docs? Google Earth? Chrome? Is it smart for Google to dabble in everything?"

    Yes, it is. For the main reason that Google is a web presence, not just a search engine or any of the plethora of applications it has developed. If Google limits itself to a search engine or an e-mail application it will be effectively handicapping this web presence.

    Right now recess is on for Google, Microsoft, Apple, Adobe and it is playground rules, and if Google doesn't get its foot on the four square before the other kids arrive, it won't have a chance of getting itself into the market up for grabs before the teacher rings the bell.

    More than anything I am afraid that Google's shareholders will force Google to start acting purely in the interest of profits, stifling innovation and reducing the overall quality of the products that it produces.

  • Report this Comment On September 10, 2008, at 5:36 AM, rockt wrote:

    I think that the reason Google looks like diworsification but is still going strong is because of the type of company it is, i.e. a web only company. For most innovative companies that brainstorm a load of ideas and dabble with a few, create a few prototypes etc, it takes a large step to launch a product and put a load of resources behind it. For this reason launching anything and everything that comes to mind can be detremental. For Google, however, this is not the case. Sure, they need to make sure something they launch isn't faulty and doesn't harm the brand, but after that there's not much more too it. They never market anything, they have a massive cloud of servers that they can launch a service upon and they slap a beta label on everything! With the exception of Youtube, most other web apps that they launch take very little extra capital to go from working prototype to launched product (I assume!). Compare that to a standard company and you can see why they seem to be relatively childish and distracted.

    Android is an exception to this, but it's also an exception to your claim of non-innovative. Chrome... well let's wait and see!

  • Report this Comment On September 10, 2008, at 5:14 PM, TMFLomax wrote:

    Points well taken, thanks for both of your comments. Jthughey, I agree with your comment in not necessarily thinking *everything* a company does necessarily has to be sheerly profit driven, since some strategies absolutely do provide intangible benefits to brand or customer experience, etc., or just may be the right thing to do. In Google's case though, the volume and frenetic nature and "get-Softy"-ness just makes me uneasy.

    And rockt, that is also a good point that in Google's case, it's not nearly as resource intensive to launch some of these new applications. (Although they also do a fair amount of acquiring...)

    I'm still uneasy, but we shall see, as you say, haha.

    Thanks for providing thoughtful debate here!

    Alyce

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