Here’s Google’s problem.
At its heart, Google is an infrastructure company and not a consumer products company.
The soul of Google lies in engineering and technical innovation that can solve amazing problems and then put it out there into the world. Search exploded because Google’s (or Brin and Page’s) technical wizardry solved the biggest problem the digital world was facing then — discovery.
Search wasn’t a consumer product. It became a consumer infrastructure, a necessity that was as much a part of the Internet as routers and TCP / IP protocol was. Imagine discovery, instead, neatly packaged as an app or device only to be used if you pay. We wouldn’t have had the same Internet today.
That Google layered advertising on top came later. It was borne out of the question:
“Now how do we leverage the power we have over the discovery process of millions of consumers to make money?”
Ever since, Google’s approach has been to take complex problems and solve them and put it out into the world. This is a reason they attack things as building blocks. Break down the problem and keep solving it incrementally. At each stage they put out the solution into the world and adapt it further.
Gmail was no different. Maps, again, is an infrastructure product today. It‘s found its way into Uber and a million other apps. It’s a necessary infrastructure for mobility.
That Google layered advertising on top came later. It was borne out of the question: “Now how do we leverage this power we have over the discovery process of millions of consumers to make money?”
So, while Google has constantly innovated (or out-innovated) Apple in areas where they are solving infrastructural issues, they’ve struggled as a consumer products company. Look at their many, many attempts at social media or messaging. Or the disaster that was Google glass.
The problem for Google is that if you aren’t a consumer products company, your options are limited in how you make money. Solutions cannot always be sold — products can be. Google cannot keep finding leverage by making their solutions fundamental infrastructure because it may not work for cases where others are also building similar solutions (but packaging them into better consumer products).
Think about Amazon Echo. Google had a head-start with more data and better AI capabilities and yet, Amazon came up with a consumer-first way to get a speaking assistant into homes. That Google can be smarter or even better is a sign that they solve the problem better but cannot think about how to use it to build value for consumers.
Today, Apple can command insane premiums on its products because it has always been a consumer products company. They don’t release experimental features and small solutions. They always package the solution into clear consumer use cases and then apply design and marketing on top to build something bigger. They innovate as much on thinking about how to train and how to adapt to user behavior as solving a basic problem.
AI will be like electricity or Internet in the decades to come. It’s what you build on top that matters.
Today, we are seeing Google trying to make this transition. In the new world, they realize that they need to become a consumer products company, especially now that the hardware + software play is a necessity. You cannot be an infrastructure company in hardware because it is already a low-margin, hard business but also there is zero incentive to be one unless you have a B2B play.
But you can see the ethos is still strong. Sundar Pitchai still talks about Google being an AI-first company. This is great but it is still infrastructure thinking.
AI will be like electricity or Internet in the decades to come. It’s what you build on top that matters. Google cannot build a large business by being known for the ‘AI’ (it may work in the short term) but rather on what is their value proposition to the life of the consumer? Can they make the shift in their thinking remains to be seen.