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Google, the internet darling of what could be termed the “web 2.0” era is searching for its mojo in the era of the social web, now largely defined by companies like Facebook, Twitter and Ning.
Although the search giant is recording massive profits, it now seems somewhat of a bumbling giant in the guise of an old technology company like Microsoft rather than the sexy new game-changer of its early years.
Microsoft didn’t “get the internet”, key to Google’s DNA. Now it seems that Google doesn’t “get social“. Although the company runs one of the most successful social sites on the planet, YouTube, the search engine is being remembered for its struggling Twitter play, Google Buzz, or that high-profile collaborative whatisname (a thingymajig that did lots of stuff) which no-one really ever got to grips with, Google Wave.
The internet is a tough crowd and web businesses go in and out of fashion faster than most trendy restaurants. It’s a place full of “gurus” that are quick to pronounce on the death of yesterday’s hot performer.
Danny Sullivan, editor-in-chief of respected technology blog SearchEngineLand.com, says Google’s biggest challenges now are to “prove that they’ve got their Mojo back and that nobody needs to fear them”.
“You have investors and others saying ‘Gosh, Facebook seems to be doing so well. Why aren’t you the hot new thing?'” Sullivan says.
“And nobody’s made a movie about Google yet,” he adds in a reference to “The Social Network,” the Oscar-nominated film about the birth of Facebook.
Sullivan reckons “social networking in particular is seen as hot and Google is seen as a company that ought to be doing something there”.
While more profitable than ever — with nearly US$30-billion in revenue last year — Google is under pressure from new rivals such as Facebook and Twitter for the attention of Web surfers, advertising dollars and engineering talent.
In naming co-founder Larry Page, 37, to be chief executive, analysts said Google is seeking to return to its startup roots and ensure its place amid a constantly evolving internet landscape.
Outgoing CEO Eric Schmidt, 55, was brought in to run Google in 2001, when it was battling other, now defunct search engines, and Page and fellow co-founder Sergey Brin were just a few years removed from Stanford University.
Schmidt, who has jokingly referred to himself as the “adult supervision” at Google, is widely credited with helping build the company into the technology titan it is today alongside the likes of Apple and Microsoft.
And while Schmidt is expected to remain an influential voice at Google as executive chairman, the Mountain View, California-based company is turning to Page to stay ahead of its competitors over the next decade.
BGC Partners analyst Colin Gillis said Google experienced tremendous growth under Schmidt, becoming a search and advertising powerhouse, but the company has also arguably had a number of missteps and missed opportunities.
“A case can also be made that the company has not built any new material revenue streams, was late to building for the mobile market, has no effective social solutions, overbuilt its headcount and placed itself in the crosshairs of government regulators,” Gillis says.
Sullivan adds that the major issue for Google is “they are engendering a lot of fear in various places: people wondering about privacy, whether they’re favoring themselves… governments investigating them for anti-trust claims.”
The social question
Wedbush Securities social media analyst Lou Kerner dismissed claims Google does not have a social strategy and said the company is well-placed in the booming mobile telephone market with its Android mobile operating system.
“Facebook is the world’s biggest social network and Google is not going to come up with another social network,” he says.
But they already have a massive social presence. YouTube is the third biggest website in the world and massively social… Email is still the primary social communication media and Google is the fastest growing email provider in the world.
“And they’ve got the largest blogging platform in the world so they are already a massive player in social,” he adds.
In a conference call with financial analysts after the surprise announcement that Page would replace Schmidt in April, co-founder Brin indicated the company would be putting more effort into the social arena.
“We’ve touched just one percent of the capabilities that could be deployed in that realm,” says Brin, who will be in charge of strategic projects and new products in the new management structure.
BGC’s Gillis says Google has had scant success with products it has developed on its own, such as Google Buzz, Google Wave and Google TV but acquisitions such as Android, YouTube and DoubleClick have flourished.
Gillis says he will be looking to see whether Page, the CEO, “can better increase the integration of Google’s technology with business models to generate new revenue.”
Wedbush’s Kerner thinks the new management structure could prove more nimble than the troika of Schmidt, Page and Brin, which has been in place for the last decade.
“What I do think Facebook has shown Google is that they’re moving too slow,” Kerner says. “Facebook is moving at the speed of light and Google isn’t.
“Having three people running the company, making the decisions, was slowing it down,” he adds.