After the acquisition of
Writely, a collaborative online word processing tool, and
SketchUp, an illustration tool for creating 3 dimensional models, the recent rumors about a Sun Microsystems acquisition seem to point to a bundling of PC applications offered either online or on a low cost (Sun?) PC. Others have speculated about using Sun computers to run large high speed database applications to support or sell Google services. In either case, Google is once again offering products that are already in the marketplace, and, at best, will offer only marginal gains in productivity. Even if all of these products were actually sold to the public, they would not generate the massive earnings growth reflected in Google's stock valuation.
Google's need for higher earnings growth has sent it on a search for new products outside its core business. Foreign territory for two geeks who have only demonstrated big profitable success in the area of targeted ads posted on their search engine. Most of the recently introduced products have been a series of me-too products: Picasa, photo management, Google Maps, navigation, Google News, etc. While some have been very good refinements of their competitor's products, they do not provide a great leap in productivity for customers. Even worse, the vast majority of theses new products don't appear to have been monetized in any significant way.
The founders of Google don't seem to be trumpeting any grand improvement to their search engine technology either. Something that seems to have lot of room for improvement (see
my earlier entry, "Google A Go Go Gone").
It's not uncommon to see this kind of one-hit-wonder phenomena in the tech world, after all, designing just one great tech product usually requires a lot of skill, labor and good timing. What is surprising is that Google doesn't seem to be going after a large under-served market. Nor does it seem to be close to developing new and vastly cheaper solutions to some of Information Technology's most expensive and time consuming tasks.
One wonders if we still need large software companies to solve big problems. Look at the recent success of small software shops like
37 signals. They developed the Ruby on Rails web framework which has vastly reduced the complexity and expense of database backed web applications. Once upon a time, Google was a very small company that greatly improved upon the search engine of Alta Vista.
Increasingly, the most exciting news in software tech seems to come from small outfits:
Digg.com, 37 signals (not only Ruby on Rails, but their very good applications Basecamp and Backpack),
del.icio.us -- to name a few. Why not buy one of these companies instead? If Google is going to seek out small info tech, why not go after some with more exciting potential? Especially Digg and del.icio.us, since they are directly related to their search technology expertise.
Google's current string of acquisitions and product developments seem to follow a penchant for coolness. If Google wants to make cool products and great earnings, then they should have bought Apple Computer and promoted Steve Jobs to CEO of Google. Here is a CEO with a long track record of finding under-served markets and creating cool products to fill them. Better yet, lots of customers want to buy them.
Trying to duplicate the magnitude of Google's search engine success in a totally different sector of info tech is really hard work -- usually demanding very different skills. So far, the founders of Google have not shown the needed versatility or skill to achieve this goal, but they are burning through lots of cash. I wish them luck on their next great product, but I wouldn't bet on it.
