I’m sharing these thoughts mostly as a response after reading Ben Brooks’ article regarding this subject. I suggest you go and read both, as it will definitely frame what follows in the proper context.
Ben Brooks, on Android:
“I have no concrete reasons why, it just seems to me that they have yet to figure out what will keep them alive. Android could have been a great source of money for them, but then they decided that the Android platform would not be a direct profit center, instead they would profit off of mobile search and in-app advertising – using Android to help drive those revenue sources.”
Judging from Androids current leading market share in unit sales, couldn’t you say using Android to drive those revenue streams is a good business decision? Sure, there’s lots of other ways Android could be profitable, but there’s nothing wrong with sticking to your strengths either. I don’t agree with the thought that Google needs to be anything other than a search and ad company to remain successful.
“Long-term sustainable success – the success that puts your company in the Fortune 500 – is only done two ways: being innovative while executing well, or by having something that few others have (rare goods). The latter consists of oil companies, diamond companies and so on – companies that have goods that for one reason or another the general population desires. The rest are in the former category: innovative and executing well.”
I would argue that search itself is a valuable good. Nobody would deny the importance or desirability of search on the internet and Google has the lion’s share of that market. I’d wager that it would probably still be incredibly successful if it didn’t even have anything else but search. I am probably right; Without having done the research, I could probably correctly claim that most of Googles profits come from search and advertising.
But what about innovating and executing? It’s hard to truly know.
I don’t think there is something inherently wrong with merely acquiring new products of ideas. One could claim that Google is great at acquiring ideas and integrating them into their business model. Perhaps they are good at executing acquisitions.
Google’s primary interests, and what pays their bills, is search and ads. If you don’t think Google is successfully creating innovative products and services, that doesn’t mean they aren’t successfully innovating and executing on new ideas related to search and ads. Almost every product or service they release, whether acquired or created in-house, serve to to improve how Google mines data. Be it Gmail, Google Earth, Android and Google TV all harness the powers of Googles ability to gather and sort information. In turn, they themselves feed the search and ad machine that is Google’s cash cow. Some of these innovations we might not even see; who’s to say how many improvements they bring to their search algorithms each and every day.
Perhaps instead of questioning Google’s innovation and execution on consumer services and products, we might instead judge their innovation and execution on the company’s real business interests: search and advertisements.
In comparison, what would we say of the innovation and execution of other companies interested in search and ads?
I don’t think Fred Wilson’s argument are necessarily false. I just think they’re ignoring how Google became successful in the first place.