Google Sculpting its Own Structure Amidst Problems
Rita is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As a company grows it becomes bulky, loaded with products and services that were developed along the growth path. But not all of those offerings stay relevant throughout the company’s life. This is the case with Google (NASDAQ: GOOG). Since its incorporation in 1998, Google has introduced innumerable products and services and with the passage of time few of them have lost their relevance in today’s world. Few of the offerings are proving to be a burden more than a growth driver and that is why Google has decided to do away with them.
Redefining the offerings scope
Since the time Larry Page joined the company as the CEO, Google has seen several changes, particularly in terms of the business focus of the company. Larry has a vision to have a more product-focused management structure for Google and he has been taking steps to make this happen. Last year, the company pulled down the curtains on its services such as Flip and Aardvark and soon after that it also decided to close down Google Labs, Google Buzz, Gears, Wave, Knol and few others.
And now, from a recent blog by Max Ibel, a Director at Google, it was understood that the company has decided to close down three more of its old business offerings – Google Apps for Teams, Google Listen and Google Video for Business. Launched in 2008, Google Apps for Teams was an edition of the Cloud-based offerings from Google which helped organizations to use their components (like documents, calendar and others) without converting their email systems to Gmail. This turned out to be a flop, as users did not find proper use for this. Google Listen, which used to allow users to search for and listen to podcasts, has been replaced by several apps available on Google Play. And finally, Google Video for Business is also going to be shunted since the same functions can now be done through Google Drive, rendering the earlier one useless.
Google has been making a lot changes to its offerings in order to focus better on those products which hundreds and thousands of users use several times daily. By doing away with the offerings that aren’t generating desired results, the company is looking at becoming more agile and flexible. Now the company can put cash from these products into projects which deserve more R&D such as the smartphone and tablet space or the recently announced Google Fiber project. After all, Google’s business environment is highly competitive and innovation is the only thing that will keep Google going and growing.
The company also recently brought a lot of changes in the policies related to the Google Play Android App Market. Unlike Apple (NASDAQ: AAPL), the company had developed a self-sustaining market where the developers and the users had all the power, and the users will make the good apps stay and drive the bad apps away. But, because of the lack of control from Google, a lot of aspects of abuse have crept into the market, and that is why Google has finally decided to intervene. Apple has always maintained a tight control over which apps to keep and which ones to remove and thus maintained quality and good user experience at all times. Google is about to take up this path it seems.
Speed-breakers
Google has been functioning well and has been making progress along the planned growth path. However, the company might need to shift its gear one level down as it hits a few speed-breakers on its highway to success.
Recently Google delayed the launch of the Nexus Q indefinitely as a measure to improve the offering and then provide something truly amazing to the users. This was something absolutely not expected from the Android maker, specially just a few days ahead of the expected shipment of the devices. The Nexus Q was a key product showcased in the I/O and a lot of discussion was going on involving it. In the home entertainment sector, where Microsoft’s (NASDAQ: MSFT) Xbox 360 and Apple TV are already ruling, Google cannot afford steps such as these. Priced at $299, it was three times costlier than the Apple TV and that was probably a point of concern for the company. Google wants to make sure they deliver something worth $299 and thus don’t end up losing the race. Though postponing the launch was a relatively better choice than rolling out a product that had high chances of becoming a flop, a move such as this is like a black spot on Google’s reputation and giving out free Nexus Q preview gadgets to customers who had pre-ordered it will not clean up the slate. The company needs to quickly find a way to solve this issue.
This is not all. There is more to the company’s bad phase. In 2004, Google started the digitization of books through tie-ups with public and university libraries such as libraries of the University of Michigan, Harvard University, Stanford University, Oxford University and the New York Public Library. With over 20 million e-books under its belt, out of which excerpts can be seen for more than 4 million, the company is now being sued by authors and they claim that the court should ask Google to pay $750 for each book digitized till date, the ground being that the copying and distribution of the books is “not fair” as per the copyright act.
However, Google believes that Google Books reflect fair use by allowing users to identify books and thus helps the process of buying such books. The litigation is not new to the company and actually started a long time back. Last year Google had tried to settle this issue by offering to pay settlement compensation worth $125 million, but this was rejected by a federal judge and the authors were granted class action status. As a blast from the past, the lawsuit is back to give the company a hard time if it actually makes Apple pay $15 billion for all the 20 million e-books.
Concluding thoughts
Failures are pillars of success and all companies go through rough patches from time to time, Google being no exception. The company is doing great as clearly understood from the recently ended quarter. Google needs to slow down slightly, solve these small issues and then again pick up the pace and do what it does best – succeed. The company and its offerings have huge potential and no one can deny that. With the improved Nexus Q, Google Glass and many other new products to come, Google's future is looking bright. According to BBC Future, there is also a work in progress to send an Android powered smartphone to space through a satellite and into orbit. Strand-1 is the name of the satellite team which hopes to accomplish this task. With this recent twist, now it seems like even sky is not a limit for Google anymore.
analyse360degree has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
