Analysts: Google spreading itself too thin

Non-search services could distract the company from its search engine business

As Google Inc. enters its second decade of existence with no apparent rivals for the search-king throne, industry observers warn that the company's biggest enemy may be itself.

Ruling the search engine market year in and year out is no easy feat, and Google is continually improving its search technology to better index Web sites, analyze queries and deliver relevant results.

However, instead of focusing exclusively on this search market, where Google generates most of its revenue via advertising, the company plays in multiple other markets.

As such, it has to devote effort and resources to maintaining a host of non-search services that could potentially distract the company and affect the quality of its core search engines.

And while Google dominates the search market, there is no shortage of competitors constantly trying to create a better mousetrap and capture Google's search users.

Some, like Hakia Inc. and Microsoft Corp.'s recently acquired Powerset unit, are betting on their semantic search engines, which don't use conventional keyword technology like Google's and instead attempt to understand the meaning of Web pages.

Others like Inc. and Wikia Inc., developer of Wikia Search, maintain that they will provide a better search engine by involving people in the process of building their indexes and ranking their results. Google has avoided that approach in favor of relying on automated processes.

Meanwhile, Yahoo Inc., perennially the distant second in the search market, recently launched Search Monkey, a project to let external developers create applications to enhance its Web search results and make them more appealing and useful than Google's.

Still other search engines like Ixquick and Clusty hope to attract users by offering them more privacy than Google and not keeping records of things like their IP addresses and query terms.

And there are specialists in specific search segments, like Blinkx, which focuses on video search, an area of increased interest as online video's popularity rises globally. Others are going after what's called the "deep Web," documents that are difficult for conventional Web crawlers to find and index.

In all cases, the strategy is the same: Identify a perceived Google shortcoming and try to improve on it. While Google retains a broad dominance in search, it's a market with very little lock-in favoring incumbents. It's very easy for people to switch search engines: There is no software to install or uninstall, no stored data to move from one place to another.

Since Google's ad revenue is in direct proportion to the popularity of its search engine, any significant drop in usage would materially impact Google's finances. "Google's fortunes could change dramatically overnight," said industry analyst Rob Enderle at Enderle Group.

Google's list of non-search endeavors is long, and Google often shows signs of struggling to provide proper maintenance and development for these services.

For example, in June, Internet consumer advocacy group reported that Google was one of the world's top five networks responsible for hosting "badware" sites, mostly due to scammers and online criminals abusing the company's Blogger blog hosting and publishing service.

At the time, Robert Hansen, CEO of, a Web security consultancy, told IDG News Service, "The security community has known about Google's problems for at least a year or two now, and unfortunately Google has not responded with anything other than hand-waving."

This year, security vendor MessageLabs Ltd. reported that spammers were abusing Google's Picasa Web Album photo management site and its Docs suite of hosted software in schemes to lure people to spam and malware sites.

"Google has been very slow at reacting to this type of abuse after being alerted," said Matt Sergeant, a senior antispam technologist at MessageLabs.

Other companies that provide free hosting services for photos, documents and the like tend to be much more responsive. "Most of them deal with these abuses in a much more timely manner," Sergeant said. "It appears there isn't enough effort being put into addressing these problems by Google."

Asked to comment, a Google spokesman e-mailed: "We expect spammers to use every means possible to try to send spam. That's why we have a very robust spam-fighting effort at Google. We disable these accounts immediately and will continue to do so."

Enderle isn't sold on Google's spin. "They are ultimately responsible, and it does tarnish their brand, makes it increasingly so people don't trust them," he said. "Microsoft had a similar problem with security coming into this decade, and they got one hell of a wake-up call. Google is probably looking at a future in which they get a similar wake-up call."

In addition to dealing with spam abuse, Google is on the receiving end, on a daily basis, of thousands of complaints, requests and questions from the users of these and the many other consumer online services it provides. That includes Gmail as well as its GTalk instant messenger, Calendar, Reader RSS manager, Orkut social network, Knol online encyclopedia, Checkout online payment system, Notebook online bookmark, Lively virtual world, iGoogle personal home and new Chrome browser.

In addition, Google has a separate unit called Enterprise that provides products for businesses, such as the high-profile Google Search Appliance enterprise search device and the Google Apps suite of hosted collaboration and communication applications.

Google also has a long and ever-increasing list of APIs for many of its consumer and enterprise services. The thousands of external developers who use them are very demanding and always looking for improvements in these programming tools.

Of course, Google also serves its very important search advertising customers, which it has historically supported via automated, self-service online systems. But Google wants to increase its brand advertising, and this requires more personal attention for big-name advertisers. Google also has initiatives for offline advertising, including radio, TV, print publications and billboards.

Cutting across all these areas are mobile initiatives, including the ambitious Android mobile platform, to bring Google's services and ads to cell phones.

Whether each of these endeavors is worthwhile to pursue is up for debate on a case-by-case basis, but the number of areas in which Google plays is staggering, even for a company with almost 20,000 employees.

"Google is so distracted by the number of things they're trying to do that they're not focused on assuring the quality of any of them. The end result is they're building a foundation for failure," Enderle said.

Google wouldn't be the first large company to get sidetracked by too many side projects — it has happened to vendors like Microsoft and Intel Corp. in the past, Enderle said.

"It's a common mistake: trying to do too many things at once and forgetting what your core business is," he said.

Also of concern is that for all of its hyperactivity in launching new services and projects, Google has delivered some real stinkers and missed the boat entirely on important trends, said Greg Sterling, an analyst at Sterling Market Intelligence.

For example, Google Video was a disappointment, and the company wound up spending $1.65 billion to buy YouTube, the start-up that rose quickly to lead the video-sharing market, he said.

Google also failed to capitalize on the growth of social networking, devoting little attention to Orkut while MySpace, Facebook and others grew rapidly, Sterling noted.

Other products arrive with much fanfare and end up being underwhelming, such as the combination of Checkout and Google Base, which pundits predicted could have become an e-commerce threat to eBay Inc. — something that never happened.

Other services are acquired and then languish in obscurity for long periods, some never to be seen again.

"Google doesn't do everything well. They're not infallible. Some products are hits, others are misses," Sterling said. "The company is doing a lot of things to branch out defensively and offensively, but it's definitely not the company it was two years ago. It's become a big entity, more bureaucratic."

It thus remains to be seen whether 10 years from now, Google will still be at the top of the search heap while maintaining a bulky menu of side projects.

Copyright © 2008 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon