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March 21, 2006

Google Finance Shows that Google is No Longer An Innovator

posted by MR WAVETHEORY at 3/21/2006 01:08:00 AM
The last two major product launches from Google have been Google Maps and Google Finance. While Google Maps redefined mapping and I am a fan of the product, Google Finance is merely a cheap knock off of Yahoo Finance done in Flash. While everyone is blogging about Google Finance, I believe the relevant question for investors is this:

Have Google's new product launches created new revenue streams for the company?

The answer is firmly no. In fact, Google Maps does not generate significant revenue and judging from Google Finance, the product will not either. In fact, what is incredible is that Google has taken its serendipidous approach to product management (that was perfectly fine for a 10 person startup) and now hope to make it work for a $100 billion company. Frankly, I don't know any $100 billion companies that run product like Google. I believe it is because the ones that did (including Excite, Lycos, @Home) have all perished because the strategy simply didn't scale. In fact, several well-respected tech executives who have visited Google have said to me, "Google is run like a zoo. There is no adult supervision." While conventional wisdom should usually be taken with a grain of salt, it should be taken seriously when some of the smartest folks in the tech industry are uttering those words.

Google's Product Management Strategy Is Flawed

A successful product management strategy is based on the creation of a well-defined set of functions that serve the unmet needs of users while creating value for the entrepreneur. Google's product strategy has been firmly focused on serving the unmet needs of users. With Google Maps, Google created a new way of visualizing data. With Google Finance, it is hoping to do the same. But in both cases, Google failed to create value for itself and for shareholders.

Google's New Product Launches Have Largely Been Business Failures

Good product management marries technical superiority with a keen understanding of what customers are and are not willing to pay for. Google's search product was not good product management. It was a technology looking for a business model that ended up finding one due to sheer luck. Google's new product launches have largely been failures because it has been unlucky this time around. Investors need to be mindful that while it is better to be lucky than smart, a product strategy based on knocking off existing products of competitors will not be successful in the long run particularly when there is no business model attached to these products.

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Anonymous sufiy said...

It has happen, after desperate news about Mars goog delivered something substantial: goog finance. It is bad news for yahoo business, but I will keep loyalty just of convenience AS an USER (switching cost zero!) I still have puts on yhoo. It is bad news for goog:
1. They are unable to deliver something new in their core business model, they have chosen worst possible way of diworsification: to eat the same pizza on the others turf and three elephants YHOO, MSN and GOOG will start to break china in the shop. No way to charge for any premium content by anybody of them. No way to use advertising (only dumpiest posters from yhoo) can sustain it.
2. All latest moves maybe showing GRAND idea for expansion of business and business model at goog: we will take something from everybody substantial enough and will come to the great business: word processor from MSN and content business from YHOO. I can not remember any company who benefited from price war lately, customers (USERS) definitely but not companies, will goog be able to compete with everybody and deliver anticipated growth? I seriously doubt it.
3. The biggest problem of goog – they have too much money for their ability to invest wisely, all their latest moves are not for building core business (fight the click fraud) and market place but for distraction and heating competition in existing markets. Margins will be squeezed further: content business is not for free: you have to buy good content, you have to invest in content people and monetisation will not come overnight: all this means that all this additional expenses will eat from profits from core business now. Have analysts with BUY anticipated all of this: increasing CAPEX (not only funny things, but serious like storage cost), options expense and now content business start up cost?

Good luck to every body,

9:38 AM  
Anonymous jason lefkowitz said...

The crashing irony of Google Finance, of course, is that Google's Corporate Philosophy page as originally posted said:

"Google does not do horoscopes, financial advice or chat."

Then the VCs came, and now they do 2 of those 3, and the sentence has been removed from the page and replaced with a lame excuse.

Funny how having a bag of money land on you can change your philosophy. I wonder how long it'll be until Google Horoscopes shows up...

9:39 AM  
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