May

11

Decline and Fall of the Google Empire: Revisited

Filed Under B2B, Big Data, Blog, Financial services, healthcare, Industry Analysis, internet, mobile content, news media, online advertising, Publishing, Search, semantic web, social media, STM, Uncategorized, Workflow | Leave a Comment

I have been waiting to write this post for four months. Ever since I wrote a piece with this title in January 2011 friends and colleagues have been asking “And now…?”, and this has intensified since Google’s results announcement in January 2012. 25% revenue growth? Breaking $10 billion revenue in a single quarter? In anyone elses’ results statement this would have been sparkling news in a recession. Google’s shares dropped 10% on the news. And then the analysis. Cost-per-click – Google’s revenue from advertizers – fell 8% in the quarter, and the same amount in the previous quarter. This is a company still totally dependent on advertising. Imagine a newspaper company whose yield from classifieds fell 8% per quarter to see the wonderful way in which “velocity”, as Larry Page describes growth, disguises performance.

When I last wrote on this subject I was trying to describe an advertising-based search company that was trying to kick the habit and migrate elsewhere. Clearly Android, now on 250 million handsets, is the most obvious escape hatch. Analysts forecast that 2012 will see Android account for 12% of gross revenues, which demonstrates that migration is slow and old habits die hard. So if my grandchildren do not grow up thinking of Google as a phone company, as I suggested in the original blog, what will they think of the mature Google, shuffling along in the carpet-slippers of 10% growth? Well, they could imagine it as an operating system – Chrome is still growing strongly and Chrome OS has not been fully exploited. Or they could think of it as a social network environment: Google+ is now up to 90 million members, still a fraction of Facebook, but up from 40 million the previous quarter. Indeed, social networking may be a “must win”, or at least a “must compete strongly” environment for Google if the search-advertising market is to be prolonged long enough for these other options to emerge from under the strategy umbrella. With Google taking the axe to so many of its product development fields directly related to search, this requirement is exacerbated.

However, what really gets me writing this evening is the strong suspicion that Google themselves think that the answer is elsewhere. An interview with Ben Fried, the Google CIO, in the Wall Street Journal yesterday has him saying that the Cloud is reaching a tipping point (http://blogs.wsj.com/cio/2012/05/10/google-cio-ben-fried-says-cloud-tipping-point-is-at-hand/?mod=google_news_blog). Google clearly feel that Cloud computing, in the age of ubiquitous broadband (whenever that happens), will be their route to a business base in individual and small business sectors. As Google has used the Cloud to take costs out of its own core business, which given the comments above it has needed to do, so it can use its global data centre coverage to do the same for others. In this world, where we can fondly imagine two remotely sited workers watching each other’s real time edits on a document in Google Docs, small development teams can access a wide range of tools and pursue the sort of “fail fast”, constantly re-iterating, development strategies beloved of major corporates.

But this is a place where the competition is established, hot and strong, and despite Google’s history as a solutions developer, Apple and Microsoft go back further. iCloud, dependent on a syncing environment rather than the broadband, moves all the files to the Cloud, with users retaining copies and, as Steve Jobs is always quoted as saying, demoting “the PC to be just a device”. There is a different philosophy of Cloud here, but one that seems more based on now than when. And then again there is Amazon, inspired, as was Google, by the long struggle to use the Cloud to solve its own back office issues, now offering AWS as a solution in the very markets that Google thinks should be its own.

So it cannot be just the Cloud that Google see as their exit-from advertising-dependence platform. But the Cloud and Big Data? This article’s timing is much influenced by the announcement of Google BigQuery, which, although semi-publicly trialled since December last year, was formally launched on 1 May (http://www.zdnet.com/blog/big-data/googles-bigquery-goes-public/405). Since it covers databases of up to two terabytes (seems big to me!), this has been described as a business intelligence tool by some commentators who expected larger database environments from the inventor of MapReduce (working in pedabytes), who kicked off this Big Data thing to begin with and are clearly working here as elsewhere from the “solve our own problems, then generalize to solve yours” standpoint indicated above. But here is a real irony: if you are working in a Big Data context much of what you will be looking for is indexed on Google, but not searchable in a Google Cloud context. Again, contrast Amazon, where they have now begun adding public databases to their Cloud offering, searchable in their EC2 (Electric Compute Cloud) context. Here are some of the first offerings:

In all, Google now face a struggle. As they move to a new service environment, we need to remember that they created the original company not by inventing search but improving it. Page ranking was a big step forward in its day and created a meteoric growth company. From this they built an Empire, now maturing. Edward Gibbon, commenting upon the fall of Rome and the rise of its rivals, marked a certain point of no return. “If all the barbarian conquerors had been annihilated in the same hour, their total destruction would not have restored the empire of the West: and if Rome still survived, she survived the loss of freedom, of virtue, and of honour.”

Is this where Google now is, and can its still youthful originators recreate it?

 

 

Mar

28

Abundance and Scarcity

Filed Under B2B, Big Data, Blog, Financial services, healthcare, Industry Analysis, internet, online advertising, Publishing, semantic web, social media, Uncategorized, Workflow | 1 Comment

I sat down to write a glowing note on the Digital Science conference at London’s glorious Royal Institution last night. “Inventing the Future” was a huge success and underlined the creative quality of the debate on the digital future in this city. As I stared ruminatively at my blank screen, an alert crossed it: Emap have decided to split themselves into three parts, to be called (no, I am not kidding) Top Right Group (something to do with graphs?) for the whole outfit, i2i Events for the (you guessed it!) events division, 4C Group for the information division (“Fore-see”, geddit?), and, triumphantly, EMAP Publishing for the magazines. Given that they did not waste any of that expensive rebranding budget on the magazines we can guess that this lot are for sale first (though a rumour today also gives that honour to the CAP automotive data unit). The best guess is that everything is for sale, and some reports are already citing advisory appointments in a variety of places.

Meanwhile, the philosophers of the night before had been talking of the very nature of the digital, networked society. Their threnody was “Open”. JP Rangaswami, Chief Scientist at Salesforce.com (I have heard this man twice in a week and would be happy to go again for more tomorrow) set the tone. We have to realize that the network has turned our media picture on its head. Now we have to understand the ways in which consumers are re-using and reshaping content. The social networks are ways of amplifying and diminishing those responses, filtering and distilling them. The publisher’s role is to get out of the way – this is not a push world anymore, but act as a distributor and reproducer of excellence without doing harm or trying to outbid the creativity of endusers. Stian Westlake of NESTA, looking at this from a policy viewpoint, saw the need to rebalance the investment, to innovate in areas of strength like the UK financial services markets, and to make education fit the requirement of a networked economy. As JP said, re-quoting Stewart Brand “information wants to be free”. We have it in abundance, while we have scarce resources for shaping and forming it as users want it, and enabling them to do that in their own contexts.

It turns out, of course, that some of the data we want is held by government. The third speaker was Professor Nigel Shadbolt, Professor of AI at Southampton, Director of the new Open data Institute, and Sir Tim Berners Lee’s vice-gerent and apostolic delegate to the UK government’s Open Data programme here on earth. He mercifully skated across the difficulties of getting governments to do what they have said they will do, while pointing out that despite the fad of Big Data, linked data was now a vital component at all levels, big and small, in delivering the liberating effect of making compatible data available for remixing. With these three speakers we were in the magic territory of platform publishing. Here it was unthinkable not to promulgate your APIs. Here was a collaborative world of licensing and data sharing. Here was a vision of many of the things we shall be doing to to create a data-driven world in the networks for the net benefit of all of us.

And then I read the EMAP announcement, and it brings home the way in which the present and the future are pulling apart radically at the moment. No one looked at the EMAP holdings through the eyes of customers, buyers, or users. Channel and format, the classifications of the past, are the only way that current managers can see their businesses. So we divide into three channels what needed to be seen as a platform environment, created by ripping out all the formats and making all of the data neutral and remixable in any context. So the building and construction marketplace at EMAP, which has magazines, data and events (events – the greatest source of data yet discovered on earth), becomes a way of shaping and customizing content for users large and small, directed by them and driven by their requirements. But the advisors cannot understand anything but ongoing businesses, the strategy has no place in the IM, the McGraw-Hill failure to do this at Dodds and Sweets is not encouraging, so we divide the stuff into parcels that can be sold, and sell it off at small portion of its worth, while blaming the technology that could save it for “disrupting” it to death.

Maybe this is right. Maybe the old world has to be purged before the new one takes over. Maybe we have to go through the waste of redundancies, the dissipation of content, the loss of continuity with users/readers/customers before they are able to show us once again what we really should be doing. But now, when we know so much about “inventing the future” this seems a very rum way of proceeding. Incidentally, last night’s conference host, Digital Science, is a very exciting Macmillan start-up whose business it is to invest in software developed by users in science research to support their work. Truly then a new player with more than a whiff of the zeitgeist of this conference in its nostrils. Those of us with long memories remember an older Macmillan, however. One that owned the Healthcare and nursing magazine market, and lapped up the jobs advertising cream in the days when users (or the NHS), could not use the web as an advertising environment. So Macmillan sold its magazine division before the advertising crash – to EMAP. It is people, decisions and the choices made by users that change things. It is hardly new to note that lack of a tide table can create serious risk of drowning, but it could be true.

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