Google: Profiting from failure

Writer Nicholas Carr has done it again.

In a recent post on Google ("The Omnigoogle"), Carr explains more clearly than I've ever seen why Google does what it does (invests in satellites, free Wi-Fi, open-source software, etc.), and why failure is all part of the plan.

Indeed, it wasn't Carr's comparison of why Google is much like Microsoft (Google controls the online economy, while Microsoft controls the desktop economy) that I found most interesting, but rather his explanation of why Google can fail so routinely in its product launches...and have that failure feed into its top-line revenue:

Because the marginal cost of producing and distributing a new copy of a purely digital product is close to zero, Google not only has the desire to give away informational products; it has the economic leeway to actually do it. Those two facts--the vast breadth of Google's complements, and the company's ability to push the price of those complements toward zero--are what really set the company apart from other firms.

Google faces far less risk in product development than the usual business does. It routinely introduces half-finished products and services as online "betas" because it knows that, even if the offerings fail to win a big share of the market, they will still tend to produce attractive returns by generating advertising revenue and producing valuable data on customer behavior. For most companies, a failed launch of a new product is very costly. For Google, in general, it's not. Failure is cheap.

Shrewd on Google's part, and insightful on Carr's for figuring it out. It's also cause for concern for those of us in businesses that have far less wiggle room for failure. Most companies can't afford to fail more than once, if that. Google can afford to fail again and again and again, making it a fierce competitor, indeed.

From Android to Froogle, Google's products regularly fail to make a prolonged impact on the industry. At the same time, however, news that Google is launching a product in one's market is sure to turn venture capitalists frigid on investment, just as Microsoft's attention to a market does. Google, then, has extraordinary power to fail and yet still cause competitors to fail.

Powerful...and scary.

[gagahput3ra]

Did i just read "the failure of Android"? Really? From when did Google called Android "iPhone killer" like all the media does? The thing about Android is just a media overhype with Google's average delivery. It's not yet a failure from my point of view.

[consultpeter]

Your print application is worthless. Who wants to print all that junk on the page plus additional pages other than the subject article? Have tried to cut and paste but you have somehow also screwed that up as even this small piece ends up on about 3 pages with tons of spacing. I just want to print the article, nothing else!!!

[jenguevin]

You're right! It looks like this problem sprang up after our redesign. We're working to get it fixed now. Thanks for pointing out the problem.

Jennifer Guevin
Assistant managing editor
CNET News

[clamenza]

Why doesn't Google suffer much if any cost to its reputation despite the numerous failures? You can probably count on one finger its successful product launches apart from the search engine. Even those "successes" like gmail and docs did not or have not developed into category killers. So why do people still clamor for new products like Chrome?

[kflak]

insighfull? did the press just figure out that everything Google does is about displaying adds? gmail was originally a way to get customers to create logins so they would know more about them, they did not pour tons a dollars into google checkout to actually make money as a payment service, it was all about getting more information about their users so they can better target advertising to them, everything Google does comes back to free and easy access to Google and learning more about users so they can better monitize the advertising they show useser,