Ensight - Jeremy Wright’s Personal Blog

A Note to All Google Illusionists

by Jeremy Wright on June 8th, 2006

It’s nice to see all of the disillusioned Office users who have switched people over to online apps coming out of the woodwork. Really. It’s also nice to see them working some logical magic on the current Google Office situation.

Cam’s post is a perfect example. I’m not going to point-by-point him, mainly because there’s so much magic going on that logic would fail to satisfy. So let me boil the situation down a bit to the core magic tricks being performed, and then show what’s actually going on behind the scenes. Hopefully the magicians don’t lynch me ;-)

Magic Tricks

Trick #1: The disappearing cost of software

This is a very simple trick. In it, Google places ads around software that people use to do business intensive tasks (or intensive tasks in general, since I doubt most people would put “budgeting” under their list of 10 top favorite pastimes). These users then *click* on these ads during work. And Google makes billions.

The Secret: No money in ads

The secret to this trick, and the reason nobody knows how it’s going to work is that there isn’t actually money in advertising. Now, that’s probably an odd thing for someone who runs a “new media” company to say, so let me clarify. There is no money in ads in applications. And, there is no money for Google in ads that aren’t on actual web pages.

Why? Simple. Google isn’t yet making any money on application ads. Not on Gmail. Not on Froogle. Not on Orkut. Not on Gtalk. Not on Reader. In fact, the only divisions making money are Search and AdSense/AdWords. Feel free to browse the S1 filings, as well as Google’s traffic analysis. Google isn’t making money with its application strategy. And if they’re not making money with things like Gmail (where people are reading instead of working), how exactly does the magic trick work where they make money while I’m doing formulas and writing letters?

To further complicate things, all of Googles ads are contextual. No offence, but if I’m writing about confidential data, I have an absolute zero comfort level with finding ads related to the confidential data I’m writing. It’s a visceral, emotional thing.

Trick #2: The disappearing features trick

In this trick, an illusionist shows what features they like to use, brings up an audience member and asks what they use and then extrapolates for what the entire population might use.

The Secret: You use more than you know

Once again, every user uses a different 10% of Office’s features. Cam’s trying to tell me he doesn’t need any of the advanced features of Word or Excel. Which to me means he’s never copied data back and forth (excel spreadsheet in word doc). Or that he’s never messed with the data types in his cells, or that he’s never done columns in his Word docs. These aren’t “advanced” features. They are things people who use this software do every day. Even for letters. Even for budgeting.

Hell, try and paste from Writely into Gmail for goodness sakes.

No, it’s not just “advanced” features. This is feature blindness. People accepting less features because they want to. This is why when you do studies of user behaviour you don’t just ask people what features they use, you track them on what features they actually use. And considering these illusionists refuse to do any tracking, saying that this software will work “for the majority” or for some Persona that hasn’t even been defined (besides “regular people who just do emails and lists) is rather odd.

If you’re going to track, track. If you’re going to define a Persona to build your argument on, do it. Otherwise it’s just all smoke and mirrors.

Trick #3: Retraining millions of users in a heartbeat

This trick is one of the best of all. It’s like David Copperfield making the Statue of Liberty disappear. It boggles the mind. In this trick, the illusionists gets tens of millions of users to switch overnight.

The secret: The switch will take time

The truth is that I believe the switch to online apps will happen. Sharing, lack of upgrades and all the features the illusionists talk about are real. And they rock. But not only do they need an actual business model, they also need to get users to transition.

When we look at the top 10 most quickly adopted software packages in history, Skype is high on the list. And y’know what? They still haven’t passed 20 million active users in 3 years. If Skype can’t do it (when people save real money using it right away and get more advanced features instead of less features), how can we expect tens or hundreds of millions of users to make the switch this cycle.

Because that’s what needs to happen for Microsoft to notice. If 50 million people don’t switch to non-Office apps in the next 24 months, Microsoft won’t feel it. And they’ll have 5 more years to build online software.

The Truth Behind the Magic

Yeah I know I’ve been ruffling features and ranting for 3 days on this. But it’s pent up blogging so give me a break. So let me break this right down to my top 10 premises:

1. Any major change needs to occur in the next 24 months to make a hoot of difference to Microsoft.
2. Ad supported software has never been proven to be profitable and won’t do so in the next 24 months.
3. Users will still use Office, because there are features the free tools don’t have.
4. Without an ad business model, subscription is the only way to go, and subscription is more expensive than outright ownership.
5. Microsoft was one of the first innovators in online office tools (Outlook Web Access is kickass compared to Gmail). And they can do it again if need be.
6. None of what Google is doing has yet hurt, nor will hurt, Microsoft’s bottom line in the next 3-5 years.
7. Until Google builds another billion dollar product, I refuse to believe they are capable of it.
8. Users need to be trained to move online. First by extending existing office tools with online apps (ie: Outlook Web Access, etc). Then by providing fully online services.
9. Google is a “closed” company. Users don’t trust “closed”.
10. Investors will demand that individual products and units get individal profit and loss statements, which will make products like Spreadsheet find a business model, changing this entire discussion.

And a bonus:

11. Once these shakeups occur, the debate will shift to a free vs pay debate. One that will ultimately kill Google because they’ve relied on free for too long. To build a business, users need to pay for what they value (and they will, how many times have you heard “I’d pay 20$ to get more Gmail storage space”?)

Conclusion

Sure I’ve got a thing for Google right now. Realistically I’ve been waiting for them to show some real balls for 5 years. And they haven’t. In spite of everyone’s claim that each product will change the world, the truth is that they haven’t. Gmail was great and forced some changes, mainly around storage space. Maps was great and forced some changes around interface. But show me a single Google product that is used by more than 100M users, or that is a billion dollar product since Search and AdSense/AdWords.

Google is good at Search and AdSense/AdWords. Scary good. I won’t argue that. But Google’s a public company now, and they feel too much like Yahoo in 1999. Very thin, but very wide, with no focus, and only hanging on by a single revenue stream. And if that revenue stream dries up they’re in serious trouble.

Yahoo overcame that obstacle. Google will face that inflection point if they don’t soon grow up. And if they don’t, it could well kill them. And that’s the only “killing” that’s actually happening in this story: Google poisoning itself slowly but surely with lack of direction, lack of quality, lack of accountability and lack of a business plan.

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