Next month, Google Reader will join a lengthy list of other Google products which have met the axe over the years, a list comprising dozens of services spanning the alphabet from Aardvark to Wave.
To many observers, the death of Reader came as no surprise. In fact, the only surprise was how long it took. But although there are millions of disappointed Reader users out there, the termination of the service opens opportunities for other companies, if they have the chutzpah to grab Google by the lemons and squeeze.
The opportunity is obvious. You have millions of users (though Google claims the number is in decline), actively using a service as a routine part of their Web experience, now eagerly seeking an alternative. Step up and provide that alternative, and you could see your user numbers shoot up, potentially giving your embryonic Web service a kickstart into critical mass.
The bad news is, you're already too late for this opportunity. The good news is, there will be others.
There are other Web-based Atom/RSS readers out there. Many immediately crashed after signups went through the roof following Google's pronouncement of Reader's impending demise - if you needed any proof of the potential user base, there it is. Some of the smarter ones, including Feedly and Digg, promptly announced they would faithfully duplicate Reader's API, allowing users to import their data and continue to use the service as if nothing had happened (apart from an abrupt UX overhaul). Those services may win, and win big, from Google's exit.
In a market where attracting users is the key to achieving critical mass, to crawling over the tipping point into profitability, this is manna from heaven. Of course, attracting users is only the first step. Retaining them is the second, especially if you're in a marketplace with several services competing to be identical, and doubly so if you're facing resource shortages and user complaints thanks to that very same sudden unplanned growth. But the fittest will survive, and thrive.
If you aspire to join that club of Reader beneficiaries, you're probably too late. Six months or a year ago was the time to start positioning for a Google exit. The writing was on the wall back then, after all. The good news is that other services are likely to go the same way.
Why Google kills products
Google does have a well-established record of terminating products, often with little warning. If you look at the lengthy list of products which have been discontinued or absorbed into others, compared to the current Google portfolio, you could be forgiven for concluding that the company is far more likely to quietly retire any particular service than it is to keep it alive.
In fact, outside of Google's core portfolio of money-making services (ie: advertising and Google Apps for Business), almost anything could be a candidate for the chopping block, at any time. If a service isn't making money, or doesn't fit Google's larger strategy, it'll face the same tough questions as Reader.
Reader didn't cut it because it failed on both counts. It wasn't making money, and it wasn't a good strategic fit. The money may have been the lesser of the two evils - although Reader was consuming resources, it was a fairly lightweight service with no dedicated staff, so its balance sheet was almost certainly a drop in the ocean compared to, say, funding autonomous cars or Google Glass. It's not unusual for Google services not to make money. The vast majority of Google's projects don't make money. Most Google services exist to either display advertising, or to attract users into an ecosystem where they'll use a related ad-supported product. Most fall into the latter category, and Reader was no different.
Why wasn't Reader able to carry its own weight through advertising? Google tried to add advertising to it once, but it failed to find a way to manage ad placement in the information-dense Reader. That seems odd. Given a predefined list of everything I like to read, you'd think Google would be able to identify particularly relevant advertising, using the same algorithms as it uses for Gmail.
And Reader would have had one key advantage over Gmail. Immediate content awareness, coupled with the deep penetration of Google Analytics and Adsense across the Web, means there's a very high chance that Google already knows the context of every page linked from my feeds. Google Reader should have been able to mine that information without doing any external indexing. If Google Reader could not be monetised, that sounds like an integration failure rather than a market failure.
No, the real reason is behaviour. Reader may have been actively sabotaging Google's revenue model.
For its many users, Reader was (still is, for now) a great way to consolidate the bulk of your daily Web browsing. Chances are you, like most users, tend to frequent a common set of Web sites. You'll have your news sites, some blogs, maybe some Webcomics, and social media sites. Most of those expose feeds of updates, and an RSS reader is the perfect vehicle to track those feeds in one place. You don't need to go back to sites to see if something new has been published since your last visit - you just wait for new items to appear in the feed.
But Google really likes casual browsing. If you visit dilbert.com five times waiting for a new comic to appear, that's five times the ad impressions for Google. If you wait for the comic to appear in Reader, then visit the site only once, Google would get just the single impression. But actually it's worse than that, because many sites (including Dilbert) expose their full content through their RSS feeds, but without ads. If you read today's comic in Reader, Google will absorb the cost but deliver ZERO ad impressions. Ouch. It feels as if Google only just worked this out - Reader wasn't the only casualty. Google is removing its RSS add-on for Chrome, too. And of course that's not good for the content providers either, many get no ad revenue from feeds either.
With that in mind, the financial model for Reader, even if Google had managed to put ads in it, just wasn't going to work.
Fitting the ecosystem
Reader's revenue woes may have been forgivable, if it was pulling its weight in the Google ecosystem. But it wasn't.
Google wants to own your online experience, and has invested heavily into covering all the bases. You can spend a lot of time on the Web and never leave Google at all. From e-mail to social networking, video and images, blogging, news, video chat...for many Internet users, Google IS the internet, just as AOL once was. Not all of those components make money, but they all work to keep you within the Google family.
Google likes products which bring users into the embrace of its ecosystem, and keep them there. Products which don't fit into the ecosystem are likely to get the chop or to be evolved into something which does fit better, even if that means losing functionality along the way, or opening the door to potential start-up competitors.
Reader didn't fit. Apart from the bare minimum of sharing facilities (which are duplicated in Google+ anyway), Reader wasn't doing enough to increase the overall stickiness of the Google ecosystem. It was ringfencing them away from the others, possibly even to their detriment ? you could get an RSS feed of your Gmail messages, for example.
Reader was, in short, a great RSS reader with a loyal following, but it was a complete mismatch for Google. Its demise was almost inevitable. These things happen. Google will continue to innovate, and continue to shutter services which don't work out.
The basic facts remain the same:
For users, it's tough luck. You're using an unpaid (not free ? you're paying with your eyeballs) cloud service and, as has been discussed at length, those can and will go away without notice.
For businesses, it's high risk. If you build business processes around cloud services, even ones you pay for, make sure you have an exit strategy for both the data AND the process.
For start-ups, it's an opportunity. Google, Amazon, Yahoo, Microsoft, Apple, Facebook and the rest are so large that they have to focus on products with huge traction, especially since they are beholden to investors fixated on quarterly gratification. The rapid pace of innovation is followed by an almost equally rapid attrition of experiments which fail. And the carcasses of those services are ripe for exploitation.
Next in line
So what's next? iGoogle for sure ? we know the homepage dashboard service, which at its peak boasted over seven million users, will be terminated on 1 November. Along with Reader, that's a chunk of aggregation real-estate up for grabs. The social networks may well target this space aggressively ? Facebook would love to be your starting point for broader Web browsing ? and other players will likely emerge to woo those users.
Picasa could also be a candidate. Picasa, a service for uploading and sharing images, has been largely absorbed into Google+ (Picasa now just redirects there, with an option ? for now ? to go back to the old site). But some features have not, especially the ability to embed images and slideshows into external sites. Again, that's a bad strategic fit for Google, a resource drain with no upside, no advertising and no ecosystem benefit. At some point, the non-Google+ features of Picasa will be terminated, and services like Flickr and Imgur (a start-up which has shot to dominance in the online image sharing space) will stand to gain, as may opportunistic start-ups.
Most location services are being absorbed into Google Maps, with the pieces that don't fit falling away. This is not new, and location-based start-ups don't need any encouragement ? it's an active space already.
Custom search tools, especially those with separate search APIs, are also gradually falling away or being integrated into the core Google Search facility. Code Search is no more. Image Search is already integrated. Blog Search and Patent Search are among those with definite cut-off dates for their APIs.
Google Groups may survive for now, despite being a thoroughly unstrategic dinosaur, because it lends itself well to display advertising, but I wouldn't want to bet on it.
Google, like other trailblazers, is making all this up as it goes along. For all its experience in Web advertising, and its mountain of user data, the company still takes gambles, makes mistakes, and backtracks without warning.
Consider the row over its Maps API, which became so popular with location-based services that Google seized the opportunity to monitise API calls, only to see partners leaving the service in droves. Faced with an exodus, Google slashed its prices eight-fold and relaxed its API terms to keep users on its platform. Maps, it was abundantly clear, was very much central to the Google strategy.
The rest? They're open for exploitation. Go get 'em.
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