Fred Wilson writes:
If you invest in the Internet, you must watch Google and understand them. And so I do that a fair amount.
What I see today is a big company (yes, they are big now) trying to extend its reach beyond search and into every nook and cranny of opportunity on the Internet. And without a lot of rhyme or reason.
Google has recently launched some very attractive web services like Google Local and Google Maps. Their SMS service is a killer app for cell phones. It seems like they are launching a new web service every week. It’s so fast and furious that it is making my head spin.
But I don’t understand how all of these new web services have anything to do with their core business of targeting advertising via search and contextual advertising. Do these services create more inventory for them to sell? Do they generate more data that allows Google to increase the relevance of the advertising? In some cases, like Local and Maps, I see the logic. In many other cases, it just seems like a laboratory turning out cool stuff and seeing what sticks.
And while they crank out more and more new stuff, their two core products, Search and Adsense, seem to be suffering from a lack of innovation.
Google has an enormous franchise and is better positioned than any Internet company I can think of.
But size is the enemy of efficiency and innovation. And Google has become a very big company very quickly. They are in Starbucks and McDonalds company now. That’s great for them but its also great news for the little guy like Joe who can make a better cup of coffee or a better web service.