Understanding Google: Exclusive look at a JupiterResearch report
JupiterResearch recently released a Concept Report entitled Understanding Google. Subtitle: Competing and Partnering with the Most Influential Company Online. It costs $750 to purchase this report, so I asked Jupiter's Michael Gartenberg if I could get it for free and blog about it - as I did almost 1 year ago with their report on RSS Readers. Happily Michael agreed and so I've been mulling over the Understanding Google report for the past few days.
The report is just 6 pages long, but a lot of useful information is packed in tightly. Among other things, Jupiter warns that Google's insularity and intense focus on organizing consumers' information may not scale. I'm allowed to selectively quote from the report, so let me start with the key finding:
"Competitors and partners should think of Google as a platform company that creates marketplaces, products, and services that support consumers’ efforts to organize their information. Google’s corporate insularity results in biases toward secrecy and its existing search technology, and weakens Google in supporting industry ecosystems based on its platform."
Page 2 is entitled 'Google’s Ad Network Revenue Surpasses Conventional Portal Metrics' and basically makes the point that although Google has great reach and daily usage, in terms of time spent per user it doesn't compare well to traditional portals AOL, MSN or Yahoo. Of all Google's products, Google Base and the Google Toolbar and Deskbar are most critical Jupiter attributes this to Google's laser focus on search, "which drives visitors to other sites rather than holding onto them with content and services." Nevertheless Google has what Jupiter calls "the most powerful ad network online", with $6 billion in advertising revenue in 2005 (nb: the report says 2006, but checking the data on Google's website reveals it is 2005 they're referring to). Compared to Yahoo's $4.6 billion, this makes Google the premier online advertising network. So despite the relatively small time spent per user, Google still comes out top in online advertising. More than anything, this points to the value of the distributed nature of Google's ad network - the ads don't just appear on Google's web properties, they are also displayed on millions of external websites and blogs. This is a portal circa 2005/6, not the old-style 'MyYahoo' portal - hence the heading Jupiter gave to page 2.
Page 3 is about Google's vision for organizing consumers' information. Jupiter is at pains to emphasize that this goal is focused on individual (consumer) information organization, rather than business or enterprise or communities. Jupiter goes on to say:
"Google builds platforms and marketplaces based on searching this information, and the way it builds them is colored by its intense inward focus. As it moves beyond information organization to information creation and storage (e.g., Blogger, Base, Gmail, Picasa), it’s not clear Google’s profitable scalability will hold up."
So while Google is a platform company and has the world-leading distributed ad network, if Google does have a kryptonite weakness it is its insularity and unwillingness to engage external people in its world. Jupiter calls this Google's "intense inward focus", which is a nice phrase because it conveys that it's as much a strength as it is weakness for Google. Jupiter thinks that scalability issues could impact on Google's platform. And I agree that when it comes to interacting and engaging the marketplace and ecosystem that it has built up and continues to expand, Google really needs to step up. I think it should start by opening itself up more to developers and bloggers. This is one thing that Microsoft is very successful at doing - just witness all the interest and excitement that Windows Live has generated over the past few months. And just personally, an invitation to the GooglePlex for a Search Champs-like event would be gratefully accepted ;-)
Page 3 gives a SWOT analysis of Google, which I won't outline here for fear of revealing too much of Jupiter's report. But I'll re-emphasize that Google's insularity and media company relationships are pinpointed as potential weaknesses. On the positive side both Google and Microsoft are identified as the leading Internet platforms, because both "tightly integrate an extremely sticky consumer platform implementation (i.e., Windows and search, respectively) with business-to-business marketplaces."
Page 3 is an excellent competitive analysis of Google compared to the other platform players - and is worth the $750 on its own, for vendors and competitors. Page 4 of the Jupiter report extends on that, by analyzing each Google product in terms of 'search affinity', 'habitual usage', 'platform potential, 'marketplace leverage' and 'net focus'. Jupiter concludes that of all Google's products, "Google Base and the Google Toolbar and Deskbar are most critical." Again there's a very fine analysis explaining why, of which I'll snip out this bit as summary:
"Both [of these] initiatives would deliver habitual use and raise user switching costs, potentially providing the user lock-in that would obviate Google’s need for a more conventional portal approach."
Jupiter ends the report by speculating on the impact of a "Google Money" product, which it thinks could be a killer product for Google.
Overall, I was very impressed by Jupiter's short but well-researched and well-analyzed report on Google. I think I understand Google better as a result of reading it and I'm just glad I didn't have to shell out $750 for the privilege! But I'm sure my review will lead a few more customers to Jupiter's door - which is the benefit of not being insular and sharing information. Google could learn a thing or two from that ;-)
Photo: Jason Shellen