A good friend of mine posted a very interesting question to my ramblings on Google's hubris. His question is:
"why does it even matter that google hasn't succeeded in social networking in spite of trying? should an aircraft manufacturer also make cars and succeed at it? should a tv network also make tvs or dvrs? some great companies have found it difficult to break into other related ideas. coke used to own a wine business that went nowhere. is there really a danger that google will become irrelevant if it doesn't do social networking?"
I think it matters a lot that Google makes its presence felt in the social networking space. Lets look at an analogy. Think of Microsoft getting into web browsers in mid-90s. Why did it matter to a O/S company to make browsers? It did because at that time Bill slowly realized that the future of IT industry is shifting from desktops to the Internet. Microsoft had to succeed in not only beating Netscape but also in bettering it (although I prefer Firefox to both). It cunningly reverse-engineered Navigator and bundled it in Office. Had Microsoft not gotten into browsers, it would have lost a great opportunity to make its presence felt in the Internet industry. Wonder how the tech world would have been now. Now that cloud computing is here to stay, it only makes MSFT's moves valid.
Google currently is the top dog when it comes to search. And it makes all its money thanks to its efficient search algorithms (thru Adwords and Adsense programs). But the way I see it, the net is growing into an animal the type of which we haven't seen before. For this animal, search will become a menial task. Don't get me wrong, people will still search and search hard for the net is so easy to get lost. We need a janitor who takes us where we want to go. But that's the role of the janitor, it stops there. Social networks offer the higher end services (if not now, in the future) and will make people stay more in their sites and engage users through various apps. Naturally, advertising dollars will shift to places where people hang more. How people navigate will matter less and where people will navigate to will matter more. Hence, its crazily important that a pure web company like Google has a strong presence in social networks, or it will risk becoming a more menial search service provider (not that its inherently bad or anything). This is exactly why Google is scrambling hard with its botched attempts like Orkut, Wave, Buzz and now something else.
If Coke fails in making wine it hardly matters because wine-making is not Coke's forte. But if Coke fails in expanding into other beverages (like filtered water, flavored water, juices, coke variants like coke zero, healthy beverages etc), it will not grow. Now being stagnant is the enemy of Wall St. Already Coke's market is stagnant. It has two basic choices, expand into new markets (China, India, Latin America) and/or move into new product lines. That's why Coke purchased Vitamin water. For Google, geographical expansion is not as important as paradigm expansion. The net's paradigm is shifting through social networks. Google China can take a hit from Baidu but FB has already gained traction across geographies. It does not matter if Apple is not into creating social networks for a business because Apple is not a net company, its a product company. But Google is a pure-play net company who's raison d'etre is the net. So if the net is moving into social networks, it only makes sense for this net company to have a strong presence in the same.
Had Sun gotten into consumer market (since it had some of the best technology/IP/brainpower) and focused on areas that Dell, HP focused on, it would still have existed today. Sun made halfhearted attempts, failed and paid a big price. If Google misses the social networking boat, I believe, that something similar will happen. For Google, the growth will come from controlling as much of the net as possible and its impossible to do this without a strong presence in social media. With FB and Twitter expanding the way there are, its hard to miss their power in Web 2.0.
I could be totally wrong in all this analysis but I sincerely believe in it. My belief only strengthens when I read/hear more about Google's perseverance in making a mark in social media. For a net company, it has to succeed in this space, or it can remain being an usher.
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