With apologies to Apple and Microsoft, Google is the most important company in computing. Their rise over the past decade has been meteoric: from a struggling start-up operating out of a small office in downtown Palo Alto, California to today representing the present and future of computing. To call this ascension improbable is a gross understatement. After all, this is a company Yahoo! declined to purchase for a song, yet today could buy and sell Yahoo! many times over without breaking a sweat. It begs the question: how did it happen?
1. Weak market leadership. The past decade was not nice to Microsoft. While they made a myriad of mistakes covering virtually every major product line, their essential mistake was clinging to a desktop computing paradigm while the rest of the world was moving toward the cloud. The hubris of their past success led them to believe they could simply overwhelm the market as they had in the past. They were wrong.
The other major influence that made this decade a good time for Google was the rebirth of Apple. It was as if the 1990’s never happened as Steve Jobs led Apple to its greatest heights. Combining a well-designed digital media player with a business model that was palatable to record companies and performers, Jobs corralled the Wild West that was digital music (remember Napster?) and created the beachhead from which the iTunes-powered digital media empire was able to grow. Apple accelerated digital convergence, hurtling a variety of electronics categories and types of media solely into the province of computing. Still, for all their success as an evolving electronics and media company, Apple remained a relatively small niche provider as a computer company. The combination of their power and influence over digital technologies despite having relatively low market share in core computing meant they were greatly expanding their industry even while the “PC” remained the pertinent computing platform.
Put the Microsoft and Apple factors together and you have an evolving digital market looking for a new leader. Out of that cluttered and unclear marketplace rose Google.
2. Search needed a facelift. Google certainly wasn’t first to search: the dustbin of Internet search history is littered with a variety of companies that were once dominant before Google was even a glint in Sergey and Larry’s eyes. However, Google rose to prominence at a moment when search was glutted with a variety of mediocre and undifferentiated products. All of the major search providers were attempting to be THE single portal that people would use to interact with the Internet. Unfortunately for them, that model was already extinct. So when Google came out with the innovative search solution of having a page that simply allowed people to search - with none of the junk, clutter, and crap that marked the offerings of the existing leaders - it was a revelation, a point of differentiation that made Google immediately relevant and gave them the core product identity that served as the backbone of their ascension.
3. Search became the Internet. Early Internet users grew up in walled gardens. The earliest adopters used services like Prodigy and CompuServe; most mainstream Internet users got started with America Online (AOL). All of those services were intentionally captive, places where you could “do anything” without actually going out to the wild world of the Internet. This mindset was prevalent even into the early 21st century as reflected by the “portal-like” search products. Increasingly, however, people wanted to explore the totality of what is out there. They didn’t want to be spoon-fed one simple perspective, they wanted to explore everything that was out there for themselves. How do you find the things you are interested in? With search, of course! This en masse migration of user behaviour onto search coincided perfectly with Google’s emergence and their clean and simple interface that put the focus solely on helping people get where they want to go. Talk about timing!
4. A real business model. The history of the Internet is marked by good ideas and interesting services that have no idea how they can practically make a profit - let alone the ability to actually make one. Google’s AdWords was an ideal way to monetize the increasingly popular service without being intrusive and alienating users. To the contrary, the model of smartly inserting paid advertisements in what was becoming a Google trademark of subtle and even assistive design worked perfectly. Just a few years after launching the service Google was raking in billions of dollars in revenue a year. It was this ability to make money from their popular core service that ultimately catapulted them to the pinnacle of computing.
5. An unlikely IPO. After an unprecedented spate of dot.com IPO’s in the 1990’s featuring significantly more broken and failed companies than actual successes, the ‘aughts saw Internet start-ups pursuing an exit strategy of getting purchased by larger companies as opposed to becoming public companies on their own. Google was one of a relatively few exceptions. As hot as Google was at the time, a lot of people questioned how a company that only did search - which was essentially Google’s only business at the time - could be successful as a public company. These questions were exacerbated by the goofy and idiosyncratic method Google took toward the offering itself, culminating in a unique “Dutch auction”-style IPO at what seemed to many observers a significantly overvalued share price. Yet, because they were a notable success, they were making money, and they were one of the only Internet-related IPO’s to get excited about, the process proved a springboard that took Google from being an important player to the absolute stratosphere.
6. More than just search. Like many of the Internet successes of the decade, Google took a “bottom up” approach to expanding beyond their core business of search. While Google had far more failures - Orkut, Froogle, Google Video - than successes - Gmail, YouTube and Google Maps - Google continued steadily diversifying their software services to approximately cover every imaginable Internet service. Some things they built and some things they bought, but as the decade wore on there was a steady and regularly growing diversity of software services they were involved with. This even evolved to include their own web browser, and own operating system - the very windows through which people use the computer. Like Microsoft before them, their ambition seemed to be all things to all people, with the end goal of Google hegemony.
7. “Do no evil”. Perhaps the most controversial part of Google’s ascension is the relationship between their high-minded principles and how they actually do business. Their “Do no evil” mission statement was first endearing, then quickly ironic and even eventually insulting to thinking observers as they spent millions on Washington lobbyists and began steamrolling other companies, much like Microsoft had in the decades before them. The self-congratulatory tone the Google founders took in establishing this maxim has proven to be a lightning rod, both for continued attention and various doses of compliment and criticism. At the same time, Google also invested significantly in creating a unique and widely-publicized culture. Built around “capturing” their employees on campus to work long hours, thanks to all of the comforts and conveniences, Google’s audacious spending on perks of every colour led to their shooting to the top of many “best places to work” lists. Clearly this contributed to the speed and trajectory of their rise.
8. More than just software. As the decade came to a close, Google announced their intention to achieve some form of hegemony over all of digital technology with their first consumer hardware product, the Nexus One “Superphone.” While this product will not challenge the Apple iPhone and other established industry leaders such as Research in Motion and Motorola, both the very existence of the product and its extremely high level of quality serve as a beachhead into this highly competitive space and a sign of things to come. While it is unclear if Google will ultimately be able to compete in consumer computing devices or not is unknown; the very fact they are attempting to can leave no doubt as to their ambition, not to mention how far they have climbed. Less than 10 years ago Google was a handful of people working out of a small office on glamorous University Avenue. Today they are kings of the Internet, well diversified into software services of all kinds, and are even releasing consumer computing devices that objectively could be competitive with the market leaders - right from day one. The Age of Microsoft is over; the Age of Google has formally begun.
In Part 3, The Decade to Come, we will explore why Google will continue to reign into the foreseeable future. Part 1 may be found here.