Google almighty?

It seems difficult to disagree with John Batelle’s tech-maxim that “the only thing Google has failed to do, so far, is fail”. Since making the statement in 2009, Google has pioneered Google Googles, perfected Google Maps and leveraged its Gmail empire in the ongoing Cloud Battle. Add quarterly profit increases that have exceed 20% since its IPO in the pre-crunch days of 2004 to that and any attempt to disagree seems futile. Cut your losses.

However, Google is not flawless: Harrison Weber of The Next Web calculated that Google fails at around 36% of all its projects. If this is surprising, Weber’s claim that Google’s social media failures amount to a staggering 90% is almost incredible.

GConcept still relevant?

Part of the reason why Google hasn’t yet managed to crack the social web (except for YouTube, which was acquired – rather than developed internally – for a whopping $1.65 billion) lies in its very nature. If Facebook is a suave lounge or cozy café, Google is a reliable, uncomplicated GPS system. Google was founded as, and remains to this day, primarily a search engine – both in terms of the extra features and because the search engine is the default starting point. A search engine,(like most other engines) cannot be described as a social thing. Why? Searching in the age of information is a means to an end. Weaving through the web’s endless information is tiring, not the basis of a fun communal activity.

Many claim that it is only a question of time until searching the web will gain a social dimension. Google would then be at serious risk of loosing its monopoly to social media platforms. These seem keen on getting a share in the hugely profitable web search market, whilst their main businesses – virtually connecting people – can only keep growing. Faced with this, Google could soon feel like an aging rockstar, desperately trying to hide the wrinkles and ‘connect’ with the younger generation.

The social business

Companies making hardware or flower pots have it easy: the better their product, the more likely they are to win over the competition. Consumers tend to be flexible when it comes to picking most products, and don’t hesitate to switch to a new provider if they feel they can get a better deal. This is perhaps best demonstrated by Apple’s innovation being based on improving existing products (as discussed below).

This isn’t the case with Social Networks. People use Facebook to interact with friends and potential friends; the better the forum for this, the more users ‘like’ the service. Since social networks are essentially communities, it is crucial that members regularly contribute. Users will stick with the platform as long as this is ensured. Therefore, despite Facebook seemingly getting a weekly facelift, there is no great need to innovate so long it ensures that existing members keep posting in new groups and new members sign up.

Picking the right cherries

Google boasts some truly impressive and successful products. Google Apps, Gmail, Google Analytics or Cloud Storage are all thriving in terms of popularity. They share other also all cloud-based services, and therefore especially appealing to business users. Whey then is Google seemingly digressing from its current online-starlets and attempting to break into social media?

Google spent nearly $600 million on developing Google+. The service is criticized internally and will be lucky to ever surpass Myspace.com in terms of active users. This is not an extravagant sum for hi-tech, but it light of Google spending only $3 billion on R&D a year, it’s clear that Google means business. $600 million could buy 9 years of R&D at Salesforce, or 600 Ferrari Enzos. Could Google be better off sticking to what it does best then? Why is social media so important to Google?

It’s all about the money

Even if Facebook doesn’t become a major player in the online search market, it still manages to cash in on adverts. For the world’s largest add broker, this is annoying to say the least. Facebook is on track to exceed $2billion of advert revenue in 2011, or 28% of Google’s marketing revenues. Beyond that, Facebook’s user base is constantly growing, making it an increasingly attractive advertising market.

While it is only natural that Google’s trying to shave off some of these staggering profits, the intense focus on social media is puzzling. As current and potential profits are metaphorically in the clouds, the only explanation that comes to mind is that Google would like to dominate the internet. Increasing convergence would suggest that this is necessary, however, with Google+, Google runs the risk of starting a war it cannot win. It remains to be seen whether this surge into social networking will prove more damaging than valuable to the brand.

The Bottom Line

What are Google’s options in light of all this? This depends on what people want, or what people are told that they want, to quote the late Steve Jobs. First of all, users won’t necessarily switch to a more ‘social search’. Searching through the social media has some downsides, including the risk of being trapped in a bubble of highly targeted content. Add to that that Google is the number one search engine in all U.S. States - bar Iowa - , and its fairly certain that Google will continue to cash in on online adds, even if it falls short of Facebook’s profits.

If, however, online search does go 2.0, Google will have to seek other sources of revenue. The safest bet seems to be the cloud, or possibly a more specific social networking site, such as LinkedIn. Either way, Google failed to win the social media market back in 2004 when Facebook piped Myspace to become people’s favorite online procrastination, and is now paying the price for it. This is a yet another proof that in the IT market, right timing is king, and that missing out on key market developments sets anyone up for failure.