Googling Netscape

The Google stock is get­ting hurt in after hours trad­ing as the company’s earn­ings dis­ap­pointed Wall Street. It was to be expected but now is the time for exec­u­tives at Google to look at his­tory and, hope­fully, not repeat it. The his­tory I am talk­ing about, in par­tic­u­lar, is that of a com­pany that was in a sim­i­lar posi­tion about a decade ago: Netscape.

Before I go any fur­ther in this, I want to have a huge dis­claimer: I’m a pretty big fan of some Google prod­ucts. One can see Google ads run­ning on this site (I’m an AdSense user) and a por­tion of my traf­fic gets here thanks to Google’s search engine. i’m also a big user of the search engine, I have a Gmail account (although it is not my pri­mary email sys­tem) and I use Google Maps and Google News often. I’ve played with the search API in the past and, for the most part, I’ve been happy with my over­all Google expe­ri­ence. How­ever, I worry that the com­pany is head­ing in the wrong direc­tion and I want to ensure they remain a viable player as they have re-ignited invest­ments in the search space, which has ben­e­fited all users on the Inter­net. How­ever, I fear that, if they are not care­ful, they could suf­fer a fate sim­i­lar to that of Netscape, which pop­u­lar­ized web brows­ing and ended up being gob­bled up by AOL, where it is now a shadow of its for­mer self.

That said, let’s look at some of the dis­turb­ing similarities.

Mar­ket Shares are no guarantee

In the early days of the com­mer­cial Inter­net (let’s say 1996), Netscape was a very suc­cess­ful com­pany. It had beaten every Wall Street expec­ta­tion and com­pleted a stock offer­ing that had cap­tured the imag­i­na­tion of the gen­eral pub­lic. The Netscape man­age­ment graced the cov­ers of most mag­a­zines in Amer­ica and the lit­tle browser that could (then in ver­sion 2.0) had cap­tured an impres­sive 75+ per­cent of the mar­ket. Netscape had also intro­duced its own line of web servers, with a pro­pri­etary lan­guage called LiveWire, which allowed to cre­ate more dynamic appli­ca­tions. The com­pany was also offer­ing a web page devel­op­ment tool, and struck part­ner­ships with many com­pa­nies to inte­grate their audio and video com­po­nents with the browser.

Microsoft had come out with Win­dows 95, which included a browser (Inter­net Explorer) which they had licensed from an out­side source (NCSA, the place where Marc Andreesen had worked prior to Netscape and the browser was Mosaic, an early web browser Marc had been involved with). The world had mostly laughed at the piti­ful ver­sion 1.0 offer­ing from Red­mond. It was sim­ply a bad prod­uct, which did not get much redemp­tion with ver­sion 2.0.

Microsoft on the Offensive

The folks at Netscape were feel­ing pretty smug. After all, they dom­i­nated the browser mar­ket, had man­aged to get a way to sell server prod­ucts and com­ments about the upcom­ing irrel­e­vance of Microsoft started mak­ing the rounds. But the giant was awake and the clouds over Red­mond only cov­ered a flurry of activ­ity. By the time IE 3.0 was released, most peo­ple had writ­ten Microsoft off. If they couldn’t get as sim­ple a piece of code as a browser to catch up, how could they have a chance to survive.

Netscape had come out with ver­sion 3.0 and it was good, if a lit­tle bloated from the every­thing but the kitchen sink approach they were tak­ing. Netscape was now offer­ing an Inter­net suite that included a browser, a mail client, a news­reader client, an IRC client, some group­ware capa­bil­i­ties, etc, etc… There was no way Microsoft could catch up.

Netscape Nav­i­ga­tor 4 came out and it was good. It was run­ning Java applets, it could do DHTML, etc.. Basi­cally peo­ple liked it and didn’t see a rea­son to switch…

But Microsoft released IE 4.0 and it was bet­ter than peo­ple expected. it matched the Netscape browser fea­ture for fea­ture and threw in a few things. One of the peo­ple in charge of that devel­op­ment was a guy by the name of Yusuf Medhi, who now hap­pens to be the head of MSN.

While Microsoft had fired a major shot with that new browser, every­one expected that all that would change again when Netscape 5 would come out.

Netscape 5 never came out. In fact, Microsoft release IE 5.0 and started gain­ing mar­ket shares (steal­ing them from Netscape). Netscape seemed to be trapped in its own legacy and had prob­lem get­ting a new prod­uct out. Microsoft release IE 5.5 and Netscape was work­ing on a new rewrite of their product.

Finally, Netscape 6 came out, con­ve­niently skip­ping a ver­sion. Was it the answer to Microsoft that all had hoped? Not quite and by that point it was too late.

Netscape never recov­ered and now lives as a shadow of its for­mer self. Microsoft put out a 6.0 ver­sion of their browser, clean­ing up some of the last parts of the mar­kets they wanted and then went to sleep, in terms of browser, until the recent com­pet­i­tive threat of Fire­fox reared its head, eat­ing up some of their hard earned mar­ket shares.

So what went wrong? The answer is com­plex but I believe that a mix of Hubris (we can beat Microsoft, we have a huge mar­ket share) com­bined with some sloppy releases, the devel­op­ment of a bit of a mono­cul­ture (we set the agenda, the indus­try will fol­low), an unwill­ing­ness to deal with mas­sive com­pet­i­tive threats, a loss of focus on core assets, and a media world that loves to take down the com­pa­nies they’ve built up all added up.

How does this apply to Google?

For starters, it is clear that mas­sive mar­ket shares are no guar­an­tee of suc­cess. Google cur­rently holds around 60 per­cent of the search mar­ket, which is good but is also a rea­son for con­cern as it is more likely that this share will go down than it is that it will go up.

More wor­ri­some, how­ever, is the devel­op­ment of the Google mono­cul­ture. Much of what is going on at Google is hap­pen­ing with lit­tle involve­ment and input from the com­mu­nity. This is where Microsoft gen­er­ally starts strik­ing. Say what you want about the Red­mond giant, they know how to lis­ten and how to take bru­tal feed­back and turn it into decent prod­uct. Microsoft is not known for great prod­ucts but it is known for decent ones. Last week, Microsoft orga­nized Search Champs, gath­er­ing a bunch of smart peo­ple from the indus­try in a room and hav­ing them talk to them. I was there and was sur­prised by how focused they are on win­ning this one. It is the kind of focus I have not seen come from them since the browser wars.

If it wants to sur­vive, Google needs to do some­thing sim­i­lar. Throw­ing a prod­uct out to the world with the world beta on it is not a feed­back loop. Sit­ting down with users, devel­op­ers, thought lead­ers is. The feed­back is not always good but it helps improve the prod­uct, which is how one wins this war. Fur­ther­more, the good­will gen­er­ated by get­ting peo­ple invested in its prod­ucts and their suc­cess allows a com­pany to develop a strong fol­low­ing from a small group of ded­i­cated users, who then serves as advo­cates in the mar­ket­place. They can have an impact in chang­ing opin­ion and not involv­ing them can be dangerous.

Of those peo­ple, devel­op­ers tend to be the more finicky. Alas, the suc­cess of many plat­forms on the Inter­net depends on devel­op­ers. As devel­op­ers go, so tend the mar­ket­place because devel­op­ers tend to be early adopters. Devel­op­ers were the first peo­ple to switch from Yahoo to Altavista. They were the first group to switch from Altavista to Google. Where will they go next? Is it guar­an­teed that they will stay with Google (how­ever, here is an inter­est­ing case, as devel­op­ers tend to have a bias against Microsoft. The corol­lary of this is that Microsoft has to offer some­thing that is rad­i­cally bet­ter in order to make gains in the devel­oper world). A good way for Google to mend some of the rift with the devel­op­ment com­mu­nity would be to sup­port RSS along with ATOM as a syn­di­ca­tion for­mat. At the cur­rent time, Google is the only major search engine with­out native RSS support.

Another area to watch out for is the loss of focus. Could some­one at Google please explain to me how the Google pack, Google WiFi, Google IM or the Google web accel­er­a­tor fit Google’s mis­sion (to orga­nize the world’s infor­ma­tion). How does own­ing a radio adver­tis­ing busi­ness (some­thing they acquired recently) fit in that model? It seems that Google is try­ing to do a lot of things in a lot of areas. I’m sure they’re all inter­est­ing things but what does that do to the core search assets on which the busi­ness was build (or is it that search is just a side busi­ness and Google’s mis­sion is really about adver­tis­ing?) There has been much dis­cus­sion in the search world about the rel­e­vancy of results in the Google search engine suf­fer­ing from some level of degra­da­tion. As always, expec­ta­tions are high and any decrease (or lack of improve­ment) in the qual­ity of the search index will be seen as a loss of focus.

Fol­low­ing the Netscape sloppy release, Google also has to worry about bet­ter test­ing before putting prod­ucts out. Its recent stum­bles with the release of Google News­Reader and Google Ana­lyt­ics showed the world prod­ucts that were not fully ready for mar­ket release. The mar­ket accep­tance for the word beta goes only so far and Google may suf­fer some rep­u­ta­tional dam­age if it con­tin­ues along a curve or release first and fix it later (this, how­ever, is not nec­es­sar­ily a stand­alone cause for fail­ure, as we’ve learned from the release of many Microsoft prod­ucts that needed their own round of stabilization)

Last but not least is the burn­ing glare of the media world and of Wall Street. As can be seen now that lofty (and, one could add, unre­al­is­tic) expec­ta­tions could not be met, pun­ish­ment (in the form of a declin­ing stock price) is com­ing. Sim­i­larly, the press is get­ting more crit­i­cal. This is part of a nor­mal cycle: a com­pany is hyped up and then taken down. These are just fads (ask your friends at Yahoo!, who have man­aged to go through the whole cycle and are start­ing to go back through a build-up phase now).

And, as a post­cript, take the advice of pun­dits like myself with a grain of salt. There are lessons to be learned but I can’t guar­an­tee that these are the right ones to learn. How­ever, what is cer­tain is that Google needs to remain a viable player in search if for no other rea­son than to keep com­pa­nies like Microsoft hon­est. As we’ve seen in the browser wars, once a com­pany wins, it tends to slow down on the inno­va­tion front and search is still so young a field that it needs major progress on the inno­va­tion front.