Don't Underestimate Google's Ability To Shake Up Established Markets

from the complementary-goods dept

Wed, Nov 28th 2007 1:11pm — Timothy Lee

The generally-reliable Wall Street Journal is reporting that Google is planning to introduce a free network storage product. In response, over at ZDNet, Larry Dignan suggests that Google is late to the party and worries that they'll turn customers off with annoying ads cluttering up their desktop. This gives Google too little credit. In the first place, virtually every successful product Google has launched has entered an already crowded market. Most obviously, there were already plenty of search engines when Google was founded. More recently, GMail and Google Maps were both launched in what were thought to be relatively mature markets, but Google nevertheless found ways to shake up those markets by producing extremely polished offerings that had features missing from existing products. It may very well do the same thing in the storage market. By the same token, it would be shocking if Google tried to shove intrusive desktop ads down users' throats. Google has always been careful not to let its efforts to generate revenue interfere with the usefulness of its products. For example, it offers POP and IMAP features for GMail, despite the fact that it doesn't have any way to directly monetize users who check their mail that way. Google does that because it knows that almost every POP or IMAP user will check their mail on the web some of the time, and it will get the chance to display ads to users at that point. By the same token, I expect that Google will find non-intrusive ways to present ads in some parts of the GDrive product, while offering other parts of the product ad-free. The most obvious way to do this is to follow the GMail model: ad-free access from the desktop alongside an ad-supported web-based interface. As Mike pointed out earlier today, one of the secrets to Google's success is to recognize the power of complementary goods. Google understands that if it can get a lot of users using its products, it will eventually find a way to monetize those eyeballs. And more importantly, it understands that it's short-sighted to generate revenue in a way that alienates customers and thereby reduces long-term traffic growth.

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Filed Under: complementary goods, established markets, gdrive, online storage
Companies: google

17 Comments

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Anonymous Coward, 28 Nov 2007 @ 1:43pm

GOOG has a very mixed record on new products (despite the fanboyism in the blog world).

Froogle

Google Finance

Orkut

Picasa

dMarc

They nailed search. They really nailed monetizing search. Maps is a strong product. gMail is a strong product. Outside of those hits, it's a very mixed bag.
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Chuck Norris' Enemy (deceased), 28 Nov 2007 @ 1:51pm

Turns to gold
Google tends to have the Midas touch when it comes to taking existing offerings and making them better, and free. If I was in an established technical market and Google was looking to enter, I would be worried.
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Anonymous Coward, 28 Nov 2007 @ 1:53pm

This is a poorly written article (You Tim, not the Wall Street Journal.) Your snippy comment "the usually reliable Wall Street Journal" doesn't start off all that well. Then you talk about Larry Dignan writing about something, but he doesn't write for the Wall Street Journal. The Journal article is pretty positive about Google. Point to one reference in the Journal article that speaks ill of Google.

So, either this is a bad article, you have an axe to grind with the Journal or Techdirt has an agenda so far gone that it borders on unbelievable.

Which one is it?
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Anonymous Coward, 28 Nov 2007 @ 1:57pm

The Dignan sentence links to ZD Net, not WSJ. If you are going to troll by reading only the first two sentences, is it too much to ask that you at least have the facts straight?
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Tim, 28 Nov 2007 @ 2:09pm

Re:
You're forgetting how strong Sketchup is. Revolutionized 3D modeling....and free.
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Tim Lee, 28 Nov 2007 @ 2:13pm

Re:
When I said "the usually reliable Wall Street Journal" I didn't mean it sarcastically. I meant that the Jouranl is "usually reliable"--i.e. that when they report a rumor it almost always turns out to be true. I guess you interpreted "usually reliable" as sarcasm, but it wasn't intended that way.
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Anonymous Coward, 28 Nov 2007 @ 2:17pm

Re: Re:
sketchup was a buy, not a build.

How exactly are defining "Revolutionized 3D modeling"?

It's a good program. But there are a lot of good 3D programs.
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Anonymous Coward, 28 Nov 2007 @ 2:18pm

But you lead with the Journal and then your entire article talks about how Dignan has it wrong?

Wouldn't you say thats misleading if someone doesn't know Dignan didn't write the Wall Street Journal article?
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Tim Lee, 28 Nov 2007 @ 2:20pm

Re:
I hear Orkut is a big hit in Latin America. Google News is quite popular, although they haven't monetized that for legal reasons. And their calendar and news readers are both quite popular, as is Google Talk (although that's largely thanks to GMail's coattails).

Certainly, their batting average is a lot less than 1.000, but they've had three smash hits in less than a decade and a significant number of more modest successes. Microsoft or Yahoo would kill for that kind of track record.
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Tim Lee, 28 Nov 2007 @ 3:00pm

Re:
That's a good point I hadn't thought of. We've edited the post slightly to clarify that Dignan isn't with the WSJ.
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Shun, 28 Nov 2007 @ 3:16pm

I've already said too much
I was going to joke that "Google already has all of my data anyway, may as well make them take care of it for me, as well."

I realized that it wasn't a joke.

Anyway, I wish them luck. They have the server farms, the technology, etc.

Doesn't Gmail already have this feature? Unlimited storage, I mean. I wonder what would happen if I uploaded the nightly cvs of the kernel to my gmail every 24 hours?
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Anonymous Coward, 28 Nov 2007 @ 3:23pm

Re:
One of my jobs is working for a photography studio, and let me tell you. Picasa rocks. Its a simple design that anyone can understand for sharing pictures over the net, even allows trusted users access only. We use it daily for moving pictures from one computer/site to another, and its default image viewer isn't a slouch either for simply thumbing through photos. I agree its probably not as useful for someone who takes a few pictures with their camera phone, but its hella useful if you work in a digital photography shop and often edit photos from both the office and from home.
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Kyle, 28 Nov 2007 @ 4:10pm

Picasa
I agree with the above post. Picasa is an excellent photo organization tool, with many positive features which bring it value. The online photo album feature added more recently opens the door for Google to begin monetizing that traffic. Stack Picasa up against some of the paid photo album programs, and it's right on par (Firehand Ember, for example).
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nyit, 28 Nov 2007 @ 6:08pm

King of Online Storage and Online Backup services
Many people have blindly believed Google will dominate the Internet industry. which is not really the case. In fact, out of the search market, Google has not been successful. This doesn't hurt for Google to get a lot of media exposure. Taking for example, GDrive was rumored for years... but the real online storage king is always a small innovator, not a big behemoth like Google. I recommend everybody to try DriveHQ Online Storage and Online Backup service (www.drivehq.com). I feel the usability, the group and sub-group file sharing, the advanced folder synchronization features are really killer apps. Even if Google launches its online storage service, it will be too late to catch up.
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Javarod, 28 Nov 2007 @ 7:56pm

Hmmm, everyone's talking up the storage side of this, but ifn Google ties it to their other products, it'll likely represent a product like .Mac or similar but without the price tag or limitations, and this could be interesting to see.
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Anonymous Coward, 29 Nov 2007 @ 12:33pm

FWIW, Yahoo! Mail kicks gMail's butt in terms of numbers of users.
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buckykat, 29 Nov 2007 @ 8:22pm

Re:
ya, but gmail kicks yahoo mail's butt in terms of not being full of spam and annoying to use.
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