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Strategic moves we’d like to see I: Google buys Automattic (creators of WordPress)

29/08/2010

google not the power it was?

The latest issue of Fortune magazine lead with a provocative cover article “Is Google Over” . The premise of the piece is that Google has moved from being a growth stock to a mature company and is no longer an industry pacesetter. Have the creators of the first truly useful Internet search, the worlds best email software and whole lot of other incredible Internet tools lost their mojo?

Not declining just not growing as fast

Its not that Google is doing badly – they are not, they are still growing and still making truckloads of money. However when stacked up against some of the other giants and Internet innovators Google have not had a great 2010.  We are used to seeing a powerful Google moving into markets and making serious waves, we are used to competitors truly fearing them but for now it seems that other companies are making the running.

Apple’s iPad and iPhone4 have been huge successes; the app store is a phenomenon and although Android is catching up to IOS4 in terms of market share from the point of view of revenue there is no contest. Amazon’s cloud services like EC2, S3 and Mechanical Turk are going from strength to strength; the new Kindle is a huge hit, ebook sales are growing like crazy and its core online sales business is producing huge profits. Then there is Google’s primary headache – Facebook… Facebook are on a roll, hiring away key Google engineers, posting massive growth numbers in 2010 and steadily creeping toward capturing the no. 1 Internet traffic spot from Google.

Facebook wall all their data off out of reach of Google’s search engine & they are getting progressively more successful at competing with Google for the long-tail advertising spend.

Google’s performance in 2010 so far has been…

  • A slowing search market (including Bing now powering Yahoo’s searches).
  • A litany of failures in the social media space such as Wave, Buzz, and Orkut.
  • The reputation debacle over its joint announcement about ‘net neutrality’ with Verizon. My favorite headline from that imbroglio: “Google drops the ‘don’t’ from ‘don’t be evil’”.

Not gone. But does Google know where it is going?

Perhaps they hired away too many Microsoft engineers, perhaps that legendary difficult hiring process is good at finding optimizers rather than innovators or maybe they just have way too much money to spend. Whatever the reason Google seems to have lost direction, trying to compete with others rather than making the running themselves. Have they lost sight of their mission and is it now just about being the biggest kid on the block? How does beating Twitter tie in to Google’s stated aim of organizing the world’s information and making it universally accessible and useful?

Core to understanding Google is to realise that they are best when fulfilling that mission by operating as an infrastructure company – their massive investment in datacenters, power stations, and fiber optic connections means that when it comes to sheer computing power Google are easily able to out-muscle anyone. So the questions for Google should be what are the best ways to leverage their engineering talent and vast computing power?  Enter Automattic and their crown jewel – WordPress.

Wordpress Logo

Automattic don’t literally ’own’ WordPress as it is released under a free software licence however they definitely have de facto control of the platform much like Google does with Android or Canonical with Ubuntu and with this control are able to leverage this platform into all sorts of areas.

WordPress – taking over the Net 1 website at a time

The latest version of WordPress, 3.0, was downloaded 11 million times in just over a month. Almost 8% of the world’s top million websites are now built on top of Wordpress!  Over 85% of all blogs are WordPress based.

wordpress' share of all blogs

WordPress is easily the no.1 content management system on the web today and after raw HTML runs more websites than anything. Silveryeti runs on WordPress and it is hands down the most powerful and easy to use content management system.  Wordpress has so much going for it it would take a blog post just to list all its brilliant qualities: Installation is a breeze, it has tens of thousands of beautiful templates, it is open source, it is free, it is easy to extend and modify, it has a fantastic ecosystem of plug-in developers, and on…

So what would buying Automattic offer Google?

  • 35 million pageviews per month from WordPress. com.
  • Many further opportunities for adsense integration
  • Fantastic credibility in the Open Source community
  • Access to a vast ecosystem of developers creating plug-ins.
  • As yet there are no sales of premium plug-ins via a plug-in store akin to the android store – this is a big opportunity and could be a very solid source of revenue.

“Smart companies try to commoditize their products’ complements.” Joel Spolsky - one of the better strategic thinkers blogging about business and the Internet. See his strategy letter about just this principal.

Google indexes websites,  Wordpress makes it really easy for people to create websites and add content to them. WordPress alone is a huge win for Google but Automattic has another product easily as exciting – Buddypress.

Serious ammunition in the fight with Facebook – Buddypress

matt mullenweg and mark zuckerberg

The unstoppable openness meets the immovable closed system

Buddypress runs atop WordPress, its is a social media platform which allows anyone to create their own little niche Facebook. Although the latest version is much improved Buddypress has not had nearly as much investment as WordPress and has nowhere near its sophistication.  Google could potentially change that and up its power dramatically – and fast.

Buddypress (and a hosted buddypress.com) will allow the building of niche social networks some of which will no doubt be very successful – especially if there is an RSS type feed linking all social networks together, requiring just one log-in and just one entry of personal data. Each one of those networks then has the potential to take time and attention from Facebook. Social networks which are open to the web, inter-operable and fully searchable represent a huge win for Google.

Google Me, Google’s so-called “Facebook killer” might well be a flop along the lines of Orkut or Google Buzz. Google has already shown that while their engineering is excellent they struggle to compete in the social  space – their touch just seems clumsy.  If instead they focus on what they do best, engineering and providing a platform then there is a real opportunity to compete effectively with Facebook.

What about Blogger?

Blogger has not exactly thrived since Google bought it and it often seems like Google doesn’t know what to do with it.  It has suffered from under-investment and has been trounced by wordpress.com the hosted version of WordPress. Blogger is an inferior product to WordPress and this is shown by the growth of wordpress.com relative to Blogger:

wordpress.com vs blogger.com

The solution is simple – roll the blogger accounts into WordPress.com.

The marvelous Mr Mullenweg

Matt Mullenweg creator of WordPress

Those benefits alone would be massive but part of the key to the purchase would be Google reinvigorating its morale. The free software and open credentials Matt Mullenweg would deliver could make a huge difference.

“When you ‘open source’ something it’s a lot more work, you have to do it in the right way, you have to involve the community, you have to test the code a lot more thoroughly. But I feel like it’s just intrinsically good, and when you do something as a company that’s intrinsically good, that’s morally right, you get more excited in the morning when you wake up.”

Ah – a move from ‘don’t be evil’ to ‘ intrinsically good’. Go on Google make Matt an offer he cannot refuse.

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