Friday, March 24, 2006

37signals' Tenuous Front-Runner Status

Web applications company 37signals is blowing their lead. They sell their products as if they are some great value added product. Not really. In the long run, they are mostly selling bandwidth to help their customers connect with employees and customers. Basecamp, Backpack, et al are commodity products -- relatively easy for any competent web application shop to replicate. Just think what would happen if Microsoft, Google, or Yahoo began to offer a collaborative to-do list, or project collaboration and management software --37signals' profit margins would get crushed. Since they still have "first mover" status, they should exploit it more: Sell this product to other web hosting companies, sell it as a standalone product to be run on company-based web servers, establish an affiliate program.

In general, I think people would rather not pay recurring fees for project collaboration or information organizer software, once someone else offers a similar product for a one-time fee, 37signals honeymoon will be over.

Monday, March 20, 2006

Google Search Needs Improvement

As I've mentioned in a previous post, I believe Google's search services still has lots of potential for improvement. One of my pet peeves is Google's lack of automation of newspaper archive searches. Searching for articles in newspapers usually requires one to actually visit the newspaper site, find the search box, then type in the keyword(s) according to their search syntax. Instead, I should be able to type in a newspaper's name followed by a string of keywords and operators, then have Google submit the search and return the results.

Danny Sullivan at Search Engine Watch has a post with more ideas about how to improve Google, twenty-five to be exact, including some non-search related improvements. It's worth a read.

Google Flies Too Close To Sun Microsystems

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:, 37 signals (not only Ruby on Rails, but their very good applications Basecamp and Backpack), -- 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, 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.