How to Understand the Rise of Google

Wednesday May 15th 2013 by Mike Elgan
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Google I/O starts today. Here’s why Google’s developer conference is technology’s Main Event.

Apple and Google are Silicon Valley’s dominant superpowers, the Athens and Sparta of technology.

Two or three years ago, people might have said that Apple was on the rise and Google was in decline. Today, people say Google is on the rise and Apple is in decline.

Pundits and press are generally confused about why this is true. They say it’s because Apple used to make better stuff, but now Google does. But that’s wrong.

The best way to understand the main difference between these two Silicon Valley giants is to divide the consumer electronics world into products and services.

Apple and Google both make products and services. Products include hardware and software, and services include things like, say, iTunes or Gmail. But that’s where the similarity ends.

Apple is a product company. Their services exist to support their products.

Google is a services company. Their products exist to support their services.

The shifting fortunes of these two companies is less about which company is succeeding and failing and more about which model is succeeding or failing.

Right now, the product model is on the ropes, and the services model is on the rise. Here’s why.

The Commoditization of Products

Two years ago, Apple was the company that could do (almost) no wrong. Having transformed and re-energized the smartphone industry by shipping the iPhone in 2007, Apple shipped the iPad in 2010. In the year 2011, Apple seemed to be an unstoppable freight train of innovation.

The only thing that mattered back then were multi-touch user interfaces, smartphones, tablets, app stores, ultra-elegant hardware design and engineering—in other words, products.

Apple somehow did all these things far better than any other company could even hope to. In the tablet space, especially, Apple was perfectly untouchable. It was an incredible moment for Apple. But such moments never last.

Technology innovation always follows a predictable pattern. New innovations and new ideas enable the most successful companies to be fundamentally different from their competitors. And when they’re both different and better, as Apple was two years ago, they rule.

But what’s innovative and differentiating today becomes a commodity tomorrow. A commodity is a non-differentiated product, one where the quality of the product is a given.

In the past two years, all Apple’s innovative product differentiators have slouched toward commoditization.

The iPhone 5 is a design and engineering marvel, but it landed with a thud. People buy it, but the lack of excitement over the device is palpable.

It used to be that Apple had the only best phone. Now there are many best phones, depending on user preference. In other words, excellence in handset design and engineering is no longer a strong differentiator for Apple.

The same goes for Apple’s other differentiators. Apple’s multi-touch user interface is still more elegant. But that elegance is counterbalanced by an entire industry full of alternative multi-touch user interfaces, not just Google's Android, but also versions of Android tweaked by rival handset makers and a new generation of non-Android upstarts all coming online this year.

The number and quality of apps in Apple’s App Store started as a differentiator at first. The Apple app store is still probably better than Google’s Play store, but not by much anymore. Apps are no longer a differentiator.

The product aspects of mobile technology—hardware and software—have been largely commoditized.

Services, on the other hand, not so much.

Why Google Is Now at the Center of the Industry

As an experiment, I have put away my MacBook Pro, iPad and iPhone for the month of May and am instead using only Google hardware. In addition, I’m using only Google software and Google services.

This experiment has been amazingly easy so far. It has been easy in part because I was already a heavy user of core Google services like Google+, Gmail, Contacts, Calendar, YouTube, Chrome, Maps, Search and others. Since beginning my Google experiment, I’ve become an even heavier user of Docs, Now, Keep, Drive and others.

And it’s taught me something devastating about the difference between Apple and Google: I could live without Apple. But I would not be willing to live without Google.

I can get great products from multiple sources—Apple, Google, Samsung, HTC and a world of software startups. But I can get the best services only from Google.

The most significant of these differentiators, which the larger world will be slowly discovering over the next year, is Google Now.

Google Now is at the center of the great technology shift that’s happening right now, involving big data (Google Knowledge Base), speech recognition, text-to-speech, virtual assistant technology and wearable computing.

Yes, Apple has Siri. But Google Now is vastly superior—like the iPhone was superior to everything else in 2008.

Another killer differentiator is Google+.

Misguided critics will dismiss this idea. But that’s because they think Google+ is just Facebook with half the users.

The pre-visionary Google created stuff in a scattershot fashion, which resulted in a very wide range of disconnected services.

The visionary version of Google is integrating a few dozen strategic properties into one Super Google, a.k.a. Google+.

Google+, according to executives, is not the alternative to Facebook. It’s the future of Google.

Google+ has social networking as just one component. It’s also got Gmail, YouTube, Picasa, Search, Profiles, Hangouts, Maps, Latitude, Local, and many other existing properties, plus a ton of Google+ specific features like Events, Communities, Hangouts and others.

And Google is rapidly rolling out the ability for other companies to also integrate with Google+. In fact, much of Google’s developer conference, called Google I/O and taking place this week in San Francisco, will be about getting everybody to plug into the Google+ system.

In short, to use Google in the future is to use Google+. More to the point, the integration of all these services together will accelerate and magnify everything that’s useful and powerful about Google’s many services. The sheer gravitational pull of Google+ will make Google the sun in the technology solar system around which all others orbit.

Apple has nothing like this. Nobody does.

Where Consumer Technology is Going

By the end of Google I/O, I believe the new direction for consumer technology will be clear. With the commoditization of products, the new focus of differentiation is on services.

In other words, the world is shifting in Google’s direction. When consumers choose products, they will increasingly choose them based on how well they connect to the services that really matter.

People might choose Android not because Android phones are better products, but because they do a better job of connecting to services. Likewise, people might choose Apple for the same reason—because they judge that Apple products do a better job connecting them to services.

It’s all about services. And that’s the house that Google built.

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