Google is a true dominant giant in the world today. They are developing driverless cars and they are looking at ways of using balloons to allow internet access for the world. It seems to many people that the company is a Nirvana for the most “out there” scientific projects that are out of touch with the normal world. Naturally, Google doesn’t see things that way and the head of the driverless car project, Chris Urmson was keen to refute those ideas.
We aren’t here to be a Willy Wonka chocolate factory. We’re here to explore hard problems that aren’t being pushed in other places and move them towards products and out into the world.
Unfortunately, Google’s ambitions have hit a setback with their Glass project. Glass is one of Google X’s experiments: smart glasses. For this project, they had to go back to the drawing board. The test version went on sale last week, but this had to be suspended and the project received a new manager.
This comes at the same time as Wall Street funking out about the relationship between Google’s increasingly high spending and their profit margins. Their Moonshot projects, for instance, also came under scrutiny. Indeed, although Google’s profits did rise by 20% last year, their development costs went up by 35% and their operating costs by 30%. Naturally, Google believes the Glass changes are par for the course and required before it can really be made available. However, the reality is that there was also a sense of reversal. Critics who believe Google is placing personal gain over privacy are having a field day over this.
Eric Schmidt, who was a Glass chairman, had stated that Glass 2.0 would soon be on sale. Yet, Google quickly replaced Schmidt with Tony Fadell, who, incidentally, used to work for Apple. Fadell also manages the Nest (smart home) element of Google. The first order of business for Fadell was to take Glass back off the market, without any mention of when, and if, it would be released again.
Clearly, the release of Glass wasn’t handled properly. It may have been backed by Sergey Brin, co-founder of Google with much enthusiasm, but it came to very little. Nevertheless, Google remains ambitious at the same time. Indeed, it seems that everybody agrees that the market of wearables is anything but dead and that it makes good business sense for Google to continue to invest in these products. At the same time, however, customers are very disappointed.
Glass suddenly feels like a very expensive Kickstarter project. It always sounds awesome at first, and some charismatic people do a fabulous job of selling the concept to you. You slap down some money, and eventually get a half-baked product that’s quickly abandoned by its makers.
Indeed, questions are now being raised about how Google decides to invest and how they manage their products. The belief behind Google X was always that the company had the opportunity to change the world by developing ambitious ideas that seem impossible to realize, through the work of engineers who love a good challenge. This is in stark contrast to Apple’s methods of working, under which Fadell was a key figure as well. It was his team that developed the iPod, but this was under the understanding that user experience is more important than technological development. It is for this reason that Apple works for years on their prototypes, in complete secrecy, before ever talking about a new product.
Perhaps a new model does indeed need to be created for Google’s most ambitious projects, above and beyond what is currently offered by Google X. Chief executive and co-founder Larry Page certainly seems to agree. He felt that Google’s investment approaches should be seen like those of Warren Buffett, the legendary investor: management teams should be able to run near independent businesses within the company itself. Wall Street also continues to be involved and is demanding greater disclosure. However, Page says this would not be possible, as it would release information to competitors that should still remain secret. For investors, however, it looks as if Google lacks a degree of discipline.
Interestingly, it does seem as if no internal agreement exists on the larger projects within Google. Some believe that the company will back anything that involves objects, like cars and glasses, to connect to the internet. After all, according to Mr Mahaney, this is how Google will get more data.
They’re the ultimate tax on the internet.
As always, Google disagrees. They feel they have come under fire needlessly, being accused of pushing advertisements to online users, when what they really want to do is solve world problems and make life a little easier. This could really have an impact on society and, therefore, businesses.
Of course, many people are now starting to compare Google to Microsoft, which also famously tried to go above and beyond its core monopoly. Indeed, both pro- and anti-Google advocates are making this same comparison. Microsoft famously spent billions of dollars on Bing and failed to achieve any results. Similarly, Google invested heavily in Google+ social networking, but found that they spent a lot of money trying to rival Facebook and essentially wasted it.
However, there is a big difference as well. Microsoft failed when it looked for markets that were outside of the realms of the PC. Google, on the other hand, continues to bid strongly on future developments. Companies who have traditionally not invested in growth, like Yahoo!, AOL and eBay, are the ones which have really lost money, after all.
No opinions have been received from investors at Google and, in reality, they can only go along with what happens anyway. Since a third stock class was created last year by Mr Brin and Mr Page, it is guaranteed that there will never be a dilution of majority control in the company either. It is felt that those who do not want to take big investment risks simply should not invest in Google.