Google 'Wasting' $16 Billion On Projects Headed Nowhere 408
hapworth writes "Google's engineering culture is 'wasting profits,' according to a new report published today that refers to $16 billion worth of Google projects that are going nowhere. According to the analysis, it's not that the ideas — such as the Kansas City Fiber Project, driverless cars, and other engineering efforts — are bad. Rather, it's Google's poor execution that is killing the company and adding billions of dollars worth of projects to its 'trash pile.'" On the obvious other hand, Google's done a lot of interesting things over the years that they've managed to make work well, and that strayed from their initial single-text-field search bar.
killed? (Score:5, Insightful)
Re:killed? (Score:5, Insightful)
Google is at risk of not becoming another Bell Labs.
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Re:killed? (Score:5, Funny)
But they could make (pinky to mouth) TRILLIONS!
Re:killed? (Score:5, Insightful)
I hate to have to point out the cynicism, but the GP is not faulting Google with what they're doing.
And I think the concluding sentence is better written that "Google is at risk of not becoming another Lucent Technologies," which is the mediocre company that Bell Labs turned into after it stopped doing first-class change-the-world fundamental research.
The point is that asshats don't want another Bell Labs. Bell Labs wasn't about quarterly profits. They invented transistors, lasers, information theory and UNIX. None of that stuff was profitable within two quarters, was it? So obviously it was useless and they shouldn't have wasted the money developing any of it.
Is the sarcasm clearer now?
Re: (Score:3, Interesting)
The difference is that Bell Labs did pure research. While Google may be doing pure research, it isn't evident based upon the projects that are publicly visible. Pure research is what yields the long term society–changing breakthroughs, whereas R&D on fantasy projects often have higher capital expenses with nothing to show for it even if the project succeeds.
Re:killed? (Score:5, Insightful)
The difference is that Bell Labs did pure research. While Google may be doing pure research, it isn't evident based upon the projects that are publicly visible. Pure research is what yields the long term society–changing breakthroughs, whereas R&D on fantasy projects often have higher capital expenses with nothing to show for it even if the project succeeds.
How do you differentiate between "pure research that yields long term society–changing breakthroughs" and "fantasy projects" before they've had a chance to prove themselves in the market for a decent length of time?
Re:killed? (Score:5, Funny)
By their names, duh.
Wave vs UNIX.
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Re:killed? (Score:5, Insightful)
While Google may be doing pure research, it isn't evident based upon the projects that are publicly visible.
What makes you think it would have been for Bell Labs? I have some confidence that you don't get to UNIX (or a self-driving car) without a lot of fundamental research. The fact that they don't put the engineers in Central Park so you can watch them work isn't any excuse to conclude they don't exist.
R&D on fantasy projects often have higher capital expenses with nothing to show for it even if the project succeeds.
Like the space program, am I right? Those goons at NASA never invented anything useful, and not one penny was ever handed to Neil Armstrong by a single man in the moon. I mean who needs satellites and GPS, fuel cells, more efficient solar panels or any of that other crap.
Re:killed? (Score:5, Interesting)
Bell Labs (aka Lucent Technologies) did pure research, and it did fantasy project R&D both. I worked there I'd know. You can't have one without another. Pure research is worthless (to shareholders) unless someone is looking at it and thinking about how to use it, and fantasy projects are worthless unless someone is trying to productize them. The company went down the shitter as these things lost funding, to borrow a term from a former Lucent CEO, in favor of the "near and clear". To be fair to that CEO, the company was headed down the shitter long before that quote, but every year there was less money for R&D and more wasted in marketing and sales, to find and get customers to buy products that were increasingly obsolete.
Both pure academia and fantasy R&D made the company a lot of money, both in the 5-10 year scope and the 20+ year scope. That these inventions didn't make the gazillion dollars (defined as 10^wallstreet wet dream) they were worth was no one's fault but the suits who only knew they ran a telephone company. Bell Labs was at the heart of some of the most significant electrical engineering and information theory advances in the past century. That they ultimately blew up and went nowhere can only be blamed on the monkey the company had on its back, otherwise known as it's oddly unenlightened management. Where there was an intersection between developments and telephones, they got rich, where the technology wasn't immediately helpful, the resources were squandered.
Google is trying NOT to do that. They definitely good do a better job at taking some of their inventions and making them into a product, or licensing the technology out, but Google is basically printing money, it's good to see them putting it to a good use. Any investor not happy with how google uses its resources is free to sell their shares, and stfu.
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Perhaps there is an unrealistic expectation here. It's difficult to be very forward-thinking and be good at managing the nuts and bolts of everyday operations. Look at Charles Babbage: he was by far one of the more forward thinking individuals ever; for the idea of a general-purpose computer was completely foreign to the vast majority of academics he talked to (Ada Lovelace being the exception).
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Exactly. Accountants never seems to understand that R&D is costly and often leads to dead-ends.
But that's also how you discover innovations like Bell Labs used to do, and Google is doing now. The alternative is to count pennies & become like Microsoft. They just copied ideas from other companies like Atari, Commodore, Apple, Netscape/Mozilla, Google, Opera, rather than innovate new ideas.
Re:killed? (Score:5, Informative)
No, Microsoft has the same issue really. Microsoft Research does really cool, impresive things that rarely get translated into new products. They do a lot of really neat stuff with Operating systems and programing languages.
Re:killed? (Score:5, Informative)
Absolutely. They do really fundamental stuff actually. Including things like topological quantum computing. Not going to yield a product this decade or next, but at the cutting edge of the interface between physics and mathematics.
(http://stationq.ucsb.edu/research.html)
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They also do some interesting graphics-related research. Off the top of my head, I remember some work on procedural texture generation and progressive mesh simplification.
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Re:killed? (Score:4, Informative)
Are they really?
I'm sure I recall when they floated originally that they specifically stated they would not be paying dividends.. and their own FAQ [google.com] says:
So I would suggest that any investors hoping to make a profit in this way would be rather foolish to invest in Google..
Re:killed? (Score:5, Interesting)
There's a very big difference... one that most people in our industry miss. Bell Labs could spend it's money on such things because it had a monopoly behind it... AT&T. As an aside, most of the open source culture tends to forget this part of history as well.
That nice stable cash-flow allowed it the freedom to spend on such things.
Then came the thought of monopoly was evil. Vertical integration is absolutely evil... or so they say. ATT was broken up. As soon as Bell Labs lost that monopoly association and became Lucent... it essentially died.
Both Google and Microsoft got a certain level of defacto monopoly... or at least to a level of very comfortable cashflow so they could be in the same position as ATT was back in the day. They can and so spend lavishly on R&D because they have a service to back their spending.
I'm not saying I'm for monopolies or such vertical integration. Well I am less averse to them than most people. Just saying that the 'good ole days' came with a price. The money and stability came from somewhere.
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Re:killed? (Score:5, Insightful)
That line of reasoning leads to catastrophic economic consequences. If large companies continue to innovate, they stay relevant and you get a consistent stream of innovation. If they sleepily milk the cash cow for dividends until some disruptive innovation makes them irrelevant, you suddenly have corporate titans who are desperate to staunch the bleeding, who make idiotic decisions backed by billions of dollars in accumulated assets.
Name any company on the downswing. SCO, Yahoo, Microsoft, the RIAA, any of them. They fail to innovate, they start to lose market share and then they go out and sue everybody. They lobby for protectionist laws to prohibit the innovation that takes profits that would otherwise go to the dinosaurs. Then billions of dollars and thousands of lives become dedicated to a complete and utter waste of human existence known as corporate litigation and lobbying. I don't know if you're aware of this, but lawyers start off as people. It is the process of litigating that turns them into soulless corporate vampires, because no one can countenance such an enormous waste of resources as spending ten thousand hours researching an argument against the invalidation of a series of patents that clearly should never have been granted, and it causes them to lose their humanity. No one can sue a single mother for millions of dollars without abandoning any semblance of a conscience. It is impossible to go to Washington, DC to buy protectionist legislation and come back as anything other than a cynical, emotionally bankrupt husk.
Yet these are what major corporations who fail to fund research and development produce. They produce soulless vampires who spread themselves throughout the world, sucking the life out of their victims, those who did the right thing and produced products people actually want.
That is not an acceptable outcome. Major corporations cannot be encouraged to die slowly. The must either die quickly or not at all. The argument that the pattern of neglect that leads to a slow, expensive, litigious decline is what ought to happen is not something anyone should be willing to accept.
Is it a risky project or a vanity project? (Score:5, Insightful)
But Bell Labs was never meant to be profitable.
Bell Labs was sort of a sop to the Federal Trade Commission and monopoly laws. AT&T could have it’s national phone monopoly, but it had to contribute to the betterment of society via basic research. Which Bell Labs did fabulously.
That being said – of all the examples you mentioned – how much profit did AT&T make from these? Mind you, they are all wonderful and I am glad that we, as a society have them. But it’s very hard for corporations to turn basic research into profits. Myself, I always think about Xerox Palo Alto Research Center and how they did the ground work for the modern computer but could not execute on it.
The question that I think the writer is asking is that Google is spending a lot money that belongs to investors on long term high risk speculative projects. And the line between high risk / high return projects and vanity projects to buff the founder’s image is fine.
Re:Is it a risky project or a vanity project? (Score:5, Insightful)
That being said – of all the examples you mentioned – how much profit did AT&T make from these?
Can you see how having a closet full of transistor-based network switching equipment could be an advantage to them over an entire office building full of vacuum tubes? Or worse, human operators switching phone calls instead of a UNIX-based phone switch? Or how lasers (and thus fiber optics) may have been useful to them? Or information theory, i.e. data compression?
So how much profit did AT&T make from them? How about all their profit? I am not aware of anything AT&T currently does that doesn't depend on every single one of those things. And certainly anything related to the original, AT&T-as-telecommunications-company role does.
The question that I think the writer is asking is that Google is spending a lot money that belongs to investors on long term high risk speculative projects.
That money doesn't belong to investors. It belongs to Google. Google, in turn, belongs to investors -- but that isn't the same thing at all. You can't buy a hundred shares of Google and then walk into the bank and withdraw that proportion of the cash from Google's bank account, because it's not "your" money. The people the shareholders elect to run Google get to decide how that money is spent, and if you disagree with the holders of the majority of voting shares (i.e. Larry Page and Sergey Brin) how the company should be run, you're free to invest in something else.
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Bell Labs made pre-split AT&T lots of money, by raising the reported costs and thus allowing more money to be returned to shareholders as increased dividends rather than to customers as decreased rates (if the legal limit of profits was 5% of operating expenses, one million dollars to Bell Labs sheltered 20 million dollars of otherwise "excess" profits). They also made money by improving customer service and/or availability rates, since service failures were punished by major fines to whichever operati
Re:killed? (Score:5, Interesting)
You missed his sarcasm. For a long time, Bell Labs did a whole ton of shit that seemed to make absolutely no business sense -- a friend of mine is writing a book on just one employee's work there, which involved things that no modern man in a suit would approve. When they started paying attention to those guys in suits, their value and impact were tremendously diminished.
That said, my problem with Google's approach has nothing to do with whether they are or or not aimed towards making money, it's that Google tends to pull the plug on projects after spending lots of effort (and money) but before they've been seen through. Projects are started, some are brought to market, and most of those are killed quickly without a chance to be refined. Hell, sometimes slashdot runs an article on Google killing a project, and most of us are like "Oh, that sounded cool. I never knew it existed until now."
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I have no interest in driver-less cars, but at least they have an R&D dept and are trying things.
don't they also have their hands in solar power and wind farms?
as for management killing a company, that isn't anything new.
lots of prior art.
Re:killed? (Score:5, Insightful)
I think it may be more of a case of:
"These people are doing something new, and it scares us, with our conservative, slow progress, get money now priorities!"
Re:killed? (Score:5, Informative)
I think it may be more of a case of: "These people are doing something new, and it scares us, with our conservative, slow progress, get money now priorities!"
Nah, the way I read the article is not that they are faulting Google for trying things out. They are faulting the execution of things, pulling the plug before shit even becomes realized. In R&D (even commercial ones), it makes no sense to spend hundreds of millions, billions, on stuff that gets killed prematurely. To dole that kind of money, people need to look beyond two-quarter time lapses. And if they can't (or aren't willing to), then they shouldn't dole that kind of moolah.
The corollary of this is that if you are going big on R&D, you need to look at it long term, you need to abandon the idea that you'll reap the dividends within a year or two.
Re:killed? (Score:5, Interesting)
I DO want a driverless car. I'd much rather spend my commute reading than driving. Unfortunately as a one income family I won't have the income to buy a driverless car even if/when they come out on the market.
Heck- my current ancient car doesn't even have door handles anymore. The satelite radio I installed works great though! :) - out of three of the speakers at least.
I like that google is maintaining a pioneering spirit. Yes, they could sit on cash cows instead- but instead they are innovating- not to make the world a better place because they only care about money- but things like driverless cars WILL make the world better, safer, and more googlicious.
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The radar in the driverless car would be an awesome safety feature to add to any car. I heard an interview on NPR where they said their car could see what people couldn't--- the radar picks up reflections off the pavement, and can "see through" the trucks they're following.
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So there's this thing called "mass transit"...
Re:killed? (Score:5, Insightful)
You keep saying this like it's true...
Re:killed? (Score:5, Funny)
So there's this thing called "mass transit"...
Yeah. There's also a thing called winning lottery tickets.
Unfortunately I don't have access to either.
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I used to live in Pittsburg, California. If I called a taxi, I could guarantee at least an hour wait before it got there, if it ever did. Busses to my neighborhood ran every 40 - 50 minutes but only from 6-9 am and 3-7pm. The l
Re:killed? (Score:4, Informative)
In any but a few US cities taking a train or a bus anywhere is impractical at best, impossible at worst, and even compared to a pricey self-driving car taking a taxi everywhere would be extremely expensive. As an example:
I live 20 minutes of Boston. Boston itself has, by American standards, enviable public transportation. Within the city or in its immediate suburbs you can get nearly anywhere via public transport. Even 20 miles north of the city though the nearest commuter train station to my house is nearly 5 miles away. There is no bus or rail line between me and that station. My wife and I, when we want to got into Boston, actually drive the ten miles into Cambridge to get directly on the subway rather than driving 5 miles to the commuter station, then taking the commuter train in. An extra five miles in the car is considerably more convenient (since we have to drive anyway) than the commuter rail. Worse, I work even further north of the city. There's no public transport at all less than 10 miles from my work. And this is an area that takes public transportation relatively seriously.
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They keep promising that they'll set up rail around here, but it keeps getting killed, between the hippies worried about environmental impact and the business types concerned about cost.
Driverless cars fits Google (Score:5, Insightful)
At one time the challenge was mechanical - mechanical gearshifts and brakes were just too hard to control. Since the first Prius, that is a solved problem. Now a car can easily be operated by an automated platform, the problem is to guide it safely.
Once that is solved, there are many new opportunities. Optimum guidance; optimum traffic patterning, looking for people who would like to share your journey all become objects of research.
If Google cracks driverless cars, it will change the developed world. It will affect town planning, investment patterns, and the way people live. And of course it will transform the car industry beyond recognition.
This is one area where Google could leverage its core technology to become so huge it could buy Apple to provide in-car entertainment.
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Plus, there IS a direct link to Google's core businesses. Google pays people to drive cars around the world taking photographs for Street View, and collecting WiFi data for geolocation services. To keep that information up-to-date, they have to keep driving those cars around. If they can figure out how to automate those cars, they can reduce the cost of acquiring that data: no driver to pay, no human limits on the hours driven... Yes, the whole program will cost a lot, and it would take forever to recoup th
Background check (Score:5, Informative)
When I saw this conclusion, I looked up the background of the authors:
Mary Jander: BA, English and Business
Kim Davis: PhD, Philosophy
Nicole Ferraro: B.A. / M.A., Media Studies and Creative Writing
Clearly this bunch is qualified to tell the founders of the worlds fastest ever growing company which technology is not going to pan out 30 years from now. To their credit I was expecting to find the resumees of 3 MBA's. At least these guys are not soulless, merely clueless (about tech anyway)
Re:Background check (Score:4, Insightful)
When I saw this conclusion, I looked up the background of the authors: Mary Jander: BA, English and Business Kim Davis: PhD, Philosophy Nicole Ferraro: B.A. / M.A., Media Studies and Creative Writing
Clearly this bunch is qualified to tell the founders of the worlds fastest ever growing company which technology is not going to pan out 30 years from now. To their credit I was expecting to find the resumees of 3 MBA's. At least these guys are not soulless, merely clueless (about tech anyway)
You are engaging in ad-hominen attacks right there dude. Understand that some of the comments have merit. The thing is, Google pulls the plug on stuff prematurely. Unless we are all missing some in-depth Google wisdom, you can't do that with R&D prematurely, specially if throw millions and millions at it. Now, this is purely an armchair opinion that I'm posting here, I'm no Google insider. But things seems to be either half-cooked (Google+) or killed quickly after spending millions because it is not going fast enough within the next two quarters.
As it has been mentioned by others here, it's not about blaming Google for doing R&D and trying things out. It's about execution and seeing things through to the end.
Re:killed? (Score:5, Insightful)
My Dad worked at Bell Labs Homdel, NJ. He knew exactly when it was over. They used to encourage home projects. You could take as many electrical components home from inventory as you wanted. The assumption was that while working on your projects you would learn. One day they put someone in charge of monitoring the components and he knew it was over since the bean counters were in charge.
Re:killed? (Score:5, Insightful)
I can't help but think an MBA made the conclusion that they are "wasting" profits.
Google has been successful because they take risks. All MBAs want to do is minimize risk. For every 99 failed projects at Google, 1 makes up for that and reaps profits that make the 100 projects operate at a 50% profit margin as a whole.
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And this scares other companies, because they'll have to do the same to remain competitive, but they don't want to, because it interrupts the status quo, and their ability to put decent chunks of that money spent on "wasted R&D" into their pockets.
Googles MO it a risk, but, I suspect so long as too many others aren't taking the same risk, it's pretty likely to pay off well.
Re:killed? (Score:4, Insightful)
^
This.
More than likely, a lot of the projects that Google is working on are not things that will pay off immediately, but in the end, will pay off. They are at least trying to establish the path that other companies *should* take once the technology becomes cheaper/more viable, instead of just sitting on their cash saying "know what we should do with our money? Put more money on top of it." like most companies would.
Or, perhaps they are just "investing" for their "retirement". The sad truth could be that they don't plan on being successful in any of these futuristic endeavors, they just plan on establishing the path that companies *should* take, and building a huge IP landmine field for those that will become successful in the future...
If/when they start declining in relavance (like yahoo), they'll have many more patents to sue the world with as their ship is sinking. That is the retirement pay off at the end...
How is this a waste? (Score:3, Insightful)
I fail to see how projects that are not yet complete can be considered 'going nowhere' -- especially ones such as driverless cars which was only recently announced.
Re:How is this a waste? (Score:5, Insightful)
Also how is this different from Xerox Parc, Bell Labs and IBM Research (or even Microsoft Research) where staff are given the freedom to innovate and experiment with technologies with no immediate marketability. Without such basic research, which corporate America has been languishing in their support of over the past decade or two, we wouldn't have the transistor, laser or so many other key pieces of our modern world.
Google should be commended for being a good corporate citizen and giving back to science and society. Or as another commenter said, where should the money go, executive raises and dividends for shareholders?
Re:How is this a waste? (Score:4, Insightful)
"Or as another commenter said, where should the money go, executive raises and dividends for shareholders?"
Unfortunately, that is exactly what a lot of people on Wall Street want. They find a goose that lays golden eggs and then kill hoping to extract the golden eggs that are not laid yet. The future be damned!
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That's pretty much where it should go, at least when shareholders get their wish. They want money. They don't care whether the company creates software, hardware or rubber boots, or anything at all for that matter, what matters is whether they get as much money as they could possibly squeeze from the company.
Yes, that bleeds a company dry over time. But why would shareholders care? If the company folds, dump it and move on to the next.
But shareholders don't get their way. Shareholders don't buy shares in a company and then go to the shareholder's meeting and micromanage executive decisions. They see company x which sits on cash cows and company y which makes bold investments in pure research without a clear outcome. They have a choice as to which company they want to invest in. If they want a company that sits on cash cows, they invest in company x.
Everybody knows what Google does, everyone knows about the 20% time policy. If an invest
Its called risk and research. (Score:5, Insightful)
Re:Its called risk and research. (Score:5, Insightful)
You fund 1,000 projects, in the hope that 1 of them will return more then the other 999 consume.
Except is that really happening? Google is still a one hit wonder, with 96% of their revenue generated by search and advertising.
Re:Its called risk and research. (Score:5, Informative)
The relevent quote: "We generated 96% of our revenues in 2011 from our advertisers."
Also you can find this statistic in any of their SEC quarterly filings. This number is of course down from 99% a few years ago, but with the addition of thousands of projects in the same time period I don't think any are earning large returns.
Re:Its called risk and research. (Score:5, Insightful)
Re:Its called risk and research. (Score:4, Funny)
No kidding, I saw a $1.5B bill on the sidewalk the other day, but I had an armful of groceries and figured, "why bother?"
Re:Its called risk and research. (Score:5, Informative)
Agreed, this is R&D - it is what companies should be doing!
Looking for some examples of waste? Let us consider the billions that are now being spent in the patent wars, what have become so expensive that they must be seriously undermining companies R&D budgets.
Steve Jobs famously said that he would spend every dollar that Apple has in the bank - now $100 billion - to destroy Android because Google had the temerity to compete with Apple in mobile.
Though I'm not literally expecting them to spend $100 billion on this, Apple has shown that there is almost no limit to what they will spend in trying to destroy Android via patents. Case in point, a month ago it was widely reported that Apple spent $100 million in legal fees just on its U.S. lawsuit against HTC. Remember? The lawsuit that succeeded in blocking HTC from using click-to-email in the U.S. So now HTC will remove that functionality for devices sold in the U.S.
And now people are complaining that Google spends too much on R&D. Well, don't worry. Much of that is already being diverted to legal fees and patent acquisition.
Money for lawyers (Score:3)
In all fairness (Score:3)
> Steve Jobs famously said that he would spend every dollar that Apple has in the bank - now $100
> billion - to destroy Android because Google had the temerity to compete with Apple in mobile.
In all fairness, Steve Jobs wasn't scared of competition and didn't feel entitled to monopoly; he did, however, feel that Apple had invested quite a bit of skill and effort into making the first smartphone with broad consumer appeal and that Android/Samsung/etc. were brazenly copying it. He felt the same way abo
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Whilst I agree with you, the problem that Google has is that some of their projects are so poorly defined and then poorly executed that it's patently obvious that they're going to be a disaster before they even launch.
Google TV is one example. A device with a remote control with that many buttons and a non-exi
Re:Its called risk and research. (Score:5, Insightful)
Re:Its called risk and research. (Score:5, Insightful)
I used to work for a company that did many things "badly" and nothing great. I remember once when a co-worker asked what type of company we were- were we a "software" company, a "web-hosting company" or an "insurance company". (yes, in a weird way we did all three... badly)
The CEO's response was "We're a solutions company... we provide solutions."
I still hate that answer. What company ISN'T a solutions company. That is just a chicken-out answer for- "I dunno- whatever will make us money is what we'll try to do".
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What's wrong with that answer, really?
Simplest approximation is its a cop out, The long form is "I donno either, but I'm pompous and you're too lowly for me to admit it to you, you peasant"...
The medium answer is the company is dying and they'll never say no to a customer, because a couple months of revenues is more important than losing it all in a court case in a couple years, because the company will be bankrupt or cease operations long before the court case, and close down even sooner if they don't close that sale. Been there, lived thru i
Re:Its called risk and research. (Score:5, Insightful)
Throughout history - diversification is the key to survival.
If you don't diversify, if someone attacks your core market, you die.
Look at Kodak as a prime example of what happens when you choose one thing and focus on it.
Re:Its called risk and research. (Score:5, Insightful)
And you've noticed how much shit Google catches when they kill dead-dick experimental services that only four people use, yeah?
The people complaining about services being shutdown are users/consumers of Google. The people complaining about Google wasting money are investors. While there will be overlap between the 2 group, this complaining is solely from the viewpoint of an investor.
Shareholders want to buy... (Score:5, Insightful)
... into an innovative company, and then don't want them to innovate. They want their nice safe already-innovated to profit like a not-quite-so-safe innovator. Paradoxical, yes - but seems the norm.
Just waiting for a shareholder initiative to kill the 20% developer personal research time off. To soon be followed by demands of a new CEO that will outsource and reduce staff to improve sagging profits.
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They should think about how that strategy would have worked with buggy whip manufacturers.
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We need to quit calling them "shareholders" as the bunch you refer to are simply there to game the system and they're "sharesellers". A shareholder holds onto the purchase of shares for the purposes of dividends and long-term returns on their investments in question. Most "shareholders" hold on to the shares they buy for days or weeks and then sell it once they "turn a profit".
Re:Shareholders want to buy... (Score:4, Informative)
Just waiting for a shareholder initiative to kill the 20% developer personal research time off. To soon be followed by demands of a new CEO that will outsource and reduce staff to improve sagging profits.
Any such attempt would almost certainly be doomed to failure as Sergey and Larry have the vast majority of share votes. Google's IPO issued dual-class shares. The ones anyone can buy are class A shares, which get 1 vote each. Class B shares are only held by Google insiders and get 10 votes per share.
Between the two of them, they have a little over 31% of the stock and about 80% of the votes.
Re:Shareholders want to buy... (Score:5, Informative)
Just waiting for a shareholder initiative to kill the 20% developer personal research time off.
Last week, I just happened to pay a personal visit to some Google employees in Moutain View who are friends of mine. The 20% is already gone.
Re:Shareholders want to buy... (Score:4, Informative)
Due to the way Google did their IPO, the shareholders don't really have a whole lot of influence. Sergey and Larry combined have somewhere around 80% of the votes because their 31% of the stock is all class B shares, which get 10 votes per share. The stock any random can buy is class A shares, which only get 1 vote.
Without their agreement, or at least one of them, any attempt to make Google do something is an exercise in futility.
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The interesting thing is that I'm pretty sure the employees own a large fraction of the company, maybe even a majority.
I'm fairly sure having 80% of the votes could be considered a majority.
That's the joy of dual-class stock. Class B stock gets 10 votes per share and is only available to insiders. Everyone else is limited to class A shares, with only 1 vote.
Due to that, Sergey and Larry's 31% ownership turns into about 80% of the votes.
Unless at least one of them is onboard with you, any demand will be met with laughter.
No such thing as wasted projects (Score:4, Interesting)
Finding that something doesn't work doesn't equate to wasted money/time.
I believe Edison said something similar about how many times his lightbulb failed.
Re:No such thing as wasted projects (Score:5, Informative)
I have not failed. I've just found 10,000 ways that won't work.
-Thomas Edison
Google Is as Dumb as the Farmers! (Score:5, Insightful)
Even failed projects are better than no projects (Score:2)
If they never fail, they probably aren't trying as hard as they should. If Google just sticks to funding proven projects inside search and advertising, somebody is going to eat their lunch.
It isn't like Bell Labs or Xerox PARC are the major sources of cutting edge software ideas anymore.
$16 Billion wage bill (Score:2)
Attack of the Beancounter (Score:5, Insightful)
Re:Attack of the Beancounter (Score:4, Insightful)
Who needs "search"? Gopher fills that niche.
Searching for hoses (Score:5, Insightful)
Now, whether this is the Chrome browser, Google+, Google Docs, self driving cars, whatever- they have no idea if any of them will be worthwhile. But, they have some of the smartest people in the world tinkering around to try to find out. And if they spend $16 Billion to find a hose worth $100 Billion, or more, then they come out ahead. But, that's the thing about exploration- you don't know what you're going to find.
Re:Searching for hoses (Score:4, Funny)
So he was saying that the internet really is a series of tubes?
Re: (Score:3)
My God, it's full of fail... (Score:5, Informative)
...TFA, that is. I can't believe I just wasted five minutes of my life looking for something of value in it.
As far as I can tell, TFA thinks that Google should only spend money on things that have a guaranteed short-term return. Because, I suppose, we don't have nearly enough companies already doing exactly that.
If a company is willing to step up and fund this kind of blue-sky research, I'm more than happy to use their products, let them suck on my personal information, and even go long on their stock. In fact, the moment I see announcements from Google saying "yeah, blue-sky research is a bad idea" will be the moment I sell it all.
if yo think that bad... in Perspective (Score:3)
There is another place where massive amounts of money changes hands, devaluation happens and absolutely no additional products are produced.
The Wold Stock market,
It's like skiing... (Score:5, Insightful)
"If you don't fall down, you're not really trying."
I once sat with a colleague who was dissing Apple because "Steve Jobs has made so many mistakes." He was partially right...Apple had tried lots of things that didn't quite work. But wow, talk about not seeing the forest for the trees...this was less than 6 months ago, and Apple computer is absolutely rocking. So what if they made mistakes? That's how they had successes as well. I would find it hard to imagine that nothing was learned from the Newton that didn't go into the iPhone and iPad...and nothing needs to be said about what incredible successes THOSE two devices are.
This sounds like the exact same thing. Google has been so successful that people are fearful of the privacy implications...and, right on cue, Google not only kicks off a benevolent, altruistic redesign of their privacy policy but does everything they can to get people to READ it for once. By doing that, they are working to shift the culture from a world where people expect privacy but do nothing to secure it for themselves to setting a standard for everyone else and trying to get people to start measuring others by it. It's a subtle but incredibly important thing to do for a company whose business model revolves around the collection, analsysis and presentation of information to and from others, and if they succeed it will have a major impact on competitors like Facebook, Yahoo, Microsoft (yes, Microsoft, who are throwing money at Bing like the second coming was around the corner) and others, to Google's advantage.
And if the investors think for a second, they will realize that nearly all of Google's revenue now comes from things which could have failed, which were just ideas that an engineer came up with in their alloted 20% time for innovation.
Same thing was said about Amazon... (Score:4, Interesting)
... when they were building out their third party platform and transaction risk management programs.
Bezos pretty much told the inverters to pound sand, and as a result, Amazon is THE platform, not just THE store.
The companies that invest in actually building things, and not just in short term profit are the ones that win again and agin.
Yet the investors just want to make a buck today; the trading houses just want their short term microtrading algorithms to work without having to actually know anything about what is of true value and worth. If they continue to get their way, the US will be finished as a technological innovator.
"At press time, Google had not responded to Intern (Score:5, Insightful)
> At press time, Google had not responded to Internet Evolution's request for comment on this report.
Wise decision. One should avoid talking to idiots.
"You're doing it wrong" (Score:5, Funny)
Shape up Google, you're doing it wrong!
The problem is execution. (Score:4, Informative)
There is nothing wrong with spending lots of research but it seems like Google likes to have lots of half-assed projects and but fails to find a way to take it to the next level.
Google should be able to treat its pet projects more like a venture capitalist would. Start up companies are held accountable by the investors even if they will remain unprofitable for years. When things get difficult, they have no choice put to persevere and do whatever it takes to fight for their idea and find a way to make it into a profitable business.
With the current Google model, when things get difficult, it seems easier for engineers to work on something more interesting .
Written from the perspective of a corporate raider (Score:5, Insightful)
Opinions like this are written from the perspective of a buyout company which is solely interested in maximizing share price.
Say you've got a company worth 10 million dollars. You have 1 million shares, each worth 10 dollars. Corporate raider [wikipedia.org] comes in, strips out all "non-performing" assets like R&D, internal HR, IT, offshores programming, closes and consolidates stores. Voila! Now you've got a company (for a short period of time) that's worth 20 million since it has no drains on its "profit centers". Sell the company. Profit!
Private equity companies operate along similar lines. They'll buy a company take it private, "optimize" it, and resell it. As if they're any better business managers than the actual manager. In general, they're not. What they are good at is the leveraged buyout, field strip, and resell.
These types of activities result in healthy profits for the takeover artists, and jobs lost for the actual workers.
It's like harvesting the organs of a person while they're still alive in order to minimize the drains on ingested food. After you're done, they're going to be in very tough shape for any kind of long term existence. But by golly, food isn't being wasted on any of those useless organs.
Google is doing what companies used to do. They're going to become even more of a juggernaut.
This, on the other hand, is the way private equity execs dream of doing it. [bloomberg.com]
Scale (Score:5, Interesting)
Just to put that in perspective, the entire DARPA [darpa.mil] research budget for 2011 was 3.28 billion [google.com]. This is the organization that develops a lot of the "Gee whiz" technology oft discussed right here on Slashdot. For a single company to devote more money to R&D than DARPA is just mind-blowing.
DARPA has of course done amazing things in its history, and if Google can even approach the same magnitude of results it will change the technology world. Whether it can achieve something that impressive is an open question.
Interestingly, the current DARPA director, Regina Dugan, has announced she is leaving the Pentagon to work for Google [cnet.com]. So perhaps I am not the only one to notice the parallels ... Dr. Dugan is one of a very small handful of people with experience managing multi-billion-dollar research budgets.
Effing Beancounters (Score:3)
Knowing the cost of everything and the value of nothing fits comfortably into the school of craven greed that nearly created a global depression.
Authors didn't even read their own writing (Score:5, Informative)
And then at the end:
Yeah, they did say back at the beginning of the project that they were going to provide fiber to the home. Why is it a twist this the project ended up being about fiber to the home?
Yes, they are wasting *short* term profits (Score:3)
But it's for the long-term health of their company.
There are too many business majors out there running things who don't seem to grasp the simple difference between long-term and short-term gains so they do things that piss off their customers for a short-term profit and end up paying for it later. And frankly, why wouldn't they? The whole reward/incentive scheme in business is completely set up to encourage this. You get a bonus for an idea that results in a profit, and the focus is always entirely on the next quarter--so why would you come up with an idea that's going to increase profits in 10 years when you may be working somewhere else. Hell, for that matter, why wouldn't you come up with an idea that is less profitable over 20 years but more profitable for the next 2 years? You get paid more if you do.
Google--I think, rightly--feels that it is strongly to their disadvantage to be a company that just does one thing, which is ultimately what they are. Companies that just do one thing tend to do fantastically well--until they die horrible, terrible deaths. Look at Blockbuster. Look at the print industry. Look at Circuit City and now Best Buy.
For Google, these current billions are pocket change. Sixteen billion dollars over the next ten year is just 1.6 billion a year. They can find that in their couch cushions--for now. But if they wait until their luck starts to change to figure out how to diversify, they may not be able to spare the cash to do it and they might end up going the way of buggy whip makers and everyone else who just did one thing. All of these things are gambles, but they're calculated gambles. It's ok if they have a 99% chance of going nowhere, if the payout for the ones that do go somewhere is way more than 100 times what you put into it--at least that's ok if you're a company like Google with obscene amounts of cash-on-hand and a desperate need to diversify.
43.3Billion Dollars in Cash (Score:3)
Google is currently holding 43.3 Billion dollars in cash. They make 95% of their profits from search and ads because search and ads are insanely profitable. It's doubtful that any other Google project could bite into that percentage of revenue over the any near term timeframe.
And that $16B number is suspect.
$12.5B is the acquisition of Motorola. So being honest, the entirety of this guy's complaint about Google's "failed projects" is that Google shouldn't have bought Motorola. Which, by itself, can't be a failed project since it happened last August and Google's interest in Android is clear.
And this... (Score:3)
Noblesse Oblige as they say...
Re:This is what happens when you have investors (Score:4, Insightful)
Re:This is what happens when you have investors (Score:5, Interesting)
The definition of investor has gone from "someone who places a portion of their wealth into a company in the belief that what the company is doing has inherent value and worth and will make money over time" to "someone who buys the privilege of gorging at a cannibalistic feast."
Re:This is what happens when you have investors (Score:5, Insightful)
Re:This is what happens when you have investors (Score:4, Insightful)
Those people are speculators, not investors.
Unfortunately the legal system and day-to-day economics do not make a distinction between the two. Mod points to you if I had them.
Re:This is what happens when you have investors (Score:5, Insightful)
It used to be that way, get with the times.
Investing used to be risky. You risked a bit of your money on the chance of getting a ton of revenue out of it. High risk, high gain. Nothing wrong with that, if your risk is high, your profit margin should be high as well, so people actually dare to risk something and push us further on the pursuit of better technology and new, exciting inventions.
That's no longer the case. Investing today means putting your money into an innovative company whose creator already took all the risk and managed to come out on top. Mostly because they had a new and clever idea and dared to follow it. You pretty much offer them the choice between taking your money or watching you use that money to build a competitor instead. Either's fine by you, and either will allow you to come out on top, but pumping money in their existing venture needs less effort from your side.
Then you simply milk them dry, throw them away and move on to the next guys that had a nifty idea, risked it and succeeded.
Re: (Score:3)
Uh, because they know that ads cannot be the income source forever? They need to find the next big thing and be there first or someone else will eventually beat them at their own game and then they'll go poof.
Yet another problem with being driven by quarterly profits instead of long term viability.
Re:What, Pray Tell (Score:4, Insightful)
Look around at Google's investment relations pages, read their mission statement, review their bylaws. Seriously, if you're not going to do your due diligence before investing in a company you can't blame anyone but yourself. Their information explicitly says they have no plans to pay dividends. They explicitly say they take risks and maintain a long term focus. They explicitly say they believe building value for the users it he way to build value for the shareholders. They don't say they are out to maximize profit, or short term shareholder value.