Home' Technology Review : March April 2014 Contents 32
MIT TECHNOLOGY REVIEW
50 SMARTEST COMPANIES
Fired up the world’s largest solar
thermal power plant, in California.
377 megawatts: the plant’s pro-
duction when fully operational
Taking advantage of its retail
heft as it rethinks payment and
1 billion: Walmart.com page views
in first five days of holiday season
Its use of big data and sensors
could help revive manufacturing.
$1.5 billion: announced invest-
ment in the “industrial Internet”
Making breakthroughs in “neuro-
30 percent: 2013 revenue growth
Has helped many organizations
crowdsource data analysis; now
focusing on certain industries.
144,000: number of registrants for
Kaggle data-analysis competitions
when it comes to devel-
oping software, few com-
panies can match Google’s
prowess. It doesn’t just have the most
popular search engine. Chrome is the
most widely used Internet browser.
Gmail, Calendar, Spreadsheets, Docs,
and Presentations are legitimate alter-
natives to Microsoft Office. Picasa,
Google’s free photo management soft-
ware, might be as good as anything
from Apple. Android dominates the
phone and tablet landscape. Google
Maps is becoming the best navigation
program on any device.
And yet by one important mea-
sure, Google hasn’t been innovative
enough. The vast majority of its rev-
enue comes from ads—the ones in
search results and the ones that Google
pushes out to thousands of websites.
These were amazing innovations when
Google developed them back in 2001
and 2002. But Google’s many efforts
to develop additional ways to make
money haven’t gone very far.
Perhaps Google’s most public fail-
ures have been in consumer electron-
ics. Do you remember Google TV? The
Nexus One? The Nexus Q? If you do,
it’s probably not because you bought
one. Google acquired Motorola Mobil-
ity for $12.4 billion in 2012 in an effort
to finally build products that consum-
ers wanted to buy. But Motorola’s
market share fell on Google’s watch;
the deal soured so fast that Google is
now selling off most of Motorola to
Lenovo. In the end Google will have
spent about $3 billion to get a chunk
of Motorola patents.
Google’s problem is straightfor-
ward: its culture is rooted in building
software, giving it away, and improving
it over time—all with little in the way of
advertising or marketing. Selling stuff
requires the opposite—persuading cus-
tomers that the product for sale is fin-
ished and perfect in every way.
So why can’t Google just accept the
market’s judgment of its strengths and
weaknesses and stop wasting share-
holders’ money trying to expand the
revenue base? Because even though
there is every indication that Google’s
advertising business will keep grow-
ing for years to come, nothing guar-
antees that it will dominate forever.
Something could come along and do to
search ads what search ads did to TV
and newspaper ads.
That is why Google still hopes to
compete with the likes of Apple in con-
sumer electronics. And it’s not too late,
especially with Google’s $3.2 billion
purchase of Nest Labs in January.
Of course, acquisitions are rarely
magic bullets, as Google can attest. And
look at the business Nest is in: it makes
home thermostats and smoke alarms,
which, to be kind, have been on the
trailing edge of innovation. But that’s
what makes this purchase interesting.
Nest has transformed these moribund
categories with clever products that
learn their users’ preferences and feel
like things you would buy in an Apple
store, which in fact is one of the places
they are sold. Even though Nest’s ther-
mostat costs $250, market analysts esti-
mate that consumers have been buying
more than 50,000 units a month.
The company has struggled to move beyond advertising. Has it
finally found the missing piece?
2/5/14 1:02 PM
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