Google has a long and successful history of acquisitions, as also a long history of lack of direction and headless actions even in their youth days. It's probably just natural for a company with too much money to invest that way.
But when a company becomes big, they do have to branch out and try a bit of different things right? otherwise they are just relying on a few income source, and potentially miss the opportunity of the next big hit?
A long and success history of acquisitions doesn't mean Google has any advantage of taking a poorly performing acquisition (Fitbit) and stacking it into a failing division of theirs (Wear OS). Google would be better off starting over. But Google wants data and Fitbit comes with data for cheap, IMO.
Alternatively, you could view this as a recognition that Wear OS has failed along with a plan to move to Fitbit as a software platform. If they can combine Fitbit's software and community with better hardware, they might actually have a good product here.
Or they could just end up with Wear OS on worse hardware and a disaster.
How valuable is the brand these days? It's certainly already declining, and many people consider their products inferior quality. I am currently wearing a fitbit and have already had to deal with it not working twice today, and it's not even noon.
Maybe it's because I'm not a marketing guy, but when has buying the less-than-best company at anything ever resulted in turning it around to earn more marketshare? Especially when that brand is already known for lower quality.
If you buy the first loser, you're just paying more to lose. Also according to this Fitbit is #5 in terms of devices sold (which make them look much worse when you consider how cheap some of their products are), and they have been steadily declining for years. They went from 45% just 5 years ago to 6% this year. That is horrible. Unless Google has an ulterior motive, like primarily using FitBit as a source of data for targeted ads, this is a bad acquisition.
Might be because the big names are from their first decade, and in the last decade they focussed more on integrating companies, or are still working on making aquisations a success.
Google Maps and Earth started from an aquisation. Youtube was right out bought by them. Google Groups, Picassa, Blogger, Google Docs are more, though a bit less successfull.
What long and successful history? The only one that I can think of that was a definite success is Android.
Their only notable hardware acquisitions that I can think of were Motorola which was a disaster, Nest which is barely muddling along, and the semi-acquisition of HTC’s hardware team that made the Pixel. While the Pixel may be a great phone, it isn’t taking the world by storm
I agree Google Maps has improved, but I’m not convinced it was directly because of acquiring Waze. Waze UX has dropped so much since acquisition that its almost to the painful point. I also find it’s “user submitted” data (cops, construction, pot holes) has dropped a lot so I feel a lot of folks who were submitting quality data have either left or just stopped submitting as the UX has gotten so bad.
Keyhole is another acquisition in the mapping space that I feel has degraded since being acquired by Google. I was a paying customer of Keyhole and loved it, since becoming free under Google, it’s basically stagnated and some of the features I used are now gone.
> I agree Google Maps has improved, but I’m not convinced it was directly because of acquiring Waze.
They often include Waze reported events in Google Maps now. That was the part that I was referring to. I'm not sure if Google Maps reported issues feed back into Waze as well, but I would expect them to.
I hate to be a cold hard capitalist. But how has improving Google Maps helped its profitability? Would a competitor have taken market share away from Google Maps if they hadn’t acquired Waze? But more importantly, would it have decreased as revenue?
By keeping its competitors utterly uncompetitive. There remains no good alternative to Google's maps for consumers. Waze would have jumpstarted a competitor's mapping efforts.
For stupid acquisitions, look no further than everything Andy Rubin bought, from Motorola to robotics companies.
Apple Maps is so bad that people go out of their way to install another map app even though the OS does not let them properly use the other app as a default.
Nokia Maps pre-existed Waze and wouldn't have benefited from purchasing it.
> a majority of iOS users are in fact using Apple Maps.
That does not contradict the fact that many people install Google Maps. Reread my comments.
> Btw, you can trigger Google Maps with Siri by creating a simple shortcut and when you search for a place on google.
That does not make it work in all apps.
The app is crippled in iOS, yet people still go out of their way to use it to avoid the dumpster fire that is Apple Maps, many years after Apple Maps launched. If Apple Maps existed on Android, it would have barely any users at all, even though Apple Maps would have access to exactly the same APIs as Google Maps on Android. I'm sure Apple would like to have the traffic data that Android users could provide, but they understand that they can't get that data if nobody uses their app.
> Apple Maps is so bad that people go out of their way to install another map app
That used to be the case, but they’ve rapidly improved while Google Maps on iOS has mostly stagnated. There’s feature in Apple Maps on iOS 13 that I find useful that nobody else has even.
YouTube is hemorraging red ink, if it wasn't suppprted by the rest of Alphabet it would quickly become unsustainable. Kinda hard to call that a "successful" acquisition.
If its not profitable. Revenue without profit is meaningless without it being part of some larger platform play. Besides that, how much is YouTube benefiting from getting to take advantage of below market access to Google’s infrastructure?
Citation please. Everything I've seen is a mix of "breaking even", "still unprofitable", and "adding billions to their bottom line". I.e. nobody really knows because Google doesn't break out YouTube financials.
In any case, I still think calling the largest, most successful video serving site on the web "not successful" is laughable.
I guess it depends on how you define success. If I made a company was used by the entire world at some point, I'd probably be pretty proud and consider it a success even if it failed.
My second point would be to say, is a business only successful if it always makes profits? How many years does it need to be in business to be a success? If I made a company that has a good run for 20 years then tanked, was it a success. Does it need to be run by my grandkids before it's a success?
Uber has never made a profit. If I had a business that everyone used selling dollar bills for 95 cents would you consider it successful? That’s basically what Uber is doing.
Except that Uber is not doing that at all. They do make a gross profit on each ride. Its more like asking if you were successful if you were generating a lot of revenue by selling people dollar bills for $1.15/each, but losing money because of very high operations costs. The answer would be "it depends".
Yes and WeWork was profitable when you use their made up metric "Community Adjusted Ebitda".
Isn't that true for every money losing company? They make money as long as you ignore expenses?
The usual retort is "our addressable market that we have only started to penetrate will allow us to have a large enough marginal profit to cover our fixed cost".
But isn't that also in the pitch deck of every startup looking for funding? "There are x number of dog owners in the world. The total addressable market is ten gajillion if we capture 10% of that we will be worth $some_outrageous_number"
There is a lot of truth to that, and that is a big part of what makes it so difficult to filter out the companies that are criticized legitimately from the ones that are criticized wrongly.
I've been around long enough to recognize that the criticisms often look virtually identical for both cases, so you really have to do a lot of the legwork yourself.
The one thing that I'm confident of with Uber is that they take in more from me as a customer than they pay the driver. Is it enough more to build a sustainable business? Considering the volumes and margin, one would hope so, and frankly I find it hard to understand how their spending is so high. But I've never tried to do the math...
Deepmind Health was a pure-data play, like most Google acquisitions; including Fitbit - which might initially suggest it is a way to sell gadgets or a platform but reverse is true ie. it is a strategy albeit not a cohesive one, to acquihire and/or gain foothold in a sector, especially where it does not have a dominant presence, in order to integrate a disparate portfolio of existing services.
As someone stated below, YouTube is still not profitable. Waze is really not adding to their bottom line, and DoubleClick was to increase their advertising reach. It’s really not analogous to their hardware acquisitions.
Google isn't in it for just the money. They want to control our thinking as well, and given the kind of censorship that is happening on YouTube, if it is operating at a loss, they may not mind because it has other less tangible benefits.
Gas stations make hardly any profit on gasoline. The margins on snacks, on the other hand...
Youtube or other platforms may not make strong profits themselves, but contribute strategically or operationally to the overall Alphabet bottom line.
So the discussion here is not 'Is Youtube making a profit' but 'Does Youtube contribute, directly or indirectly, to the overall Google/Alphabet enterprise strategy?'. In that case, it is entirely possible for major acquisitions to not appear to be 'for the money' but are still essential in driving shareholder value.
Google has never released Youtube numbers, so I can't say that. I will tell you that youtube is the dominant video platform on the internet. You do realize Youtube shows ads? and those ads are part of google's ad revenue? But the numbers have been inferred "YouTube probably generates $16 billion to $25 billion in annual revenue"[1]
Waze drives all of their google maps traffic data. Again, industry's best.
Doubleclick is the basis for ALL non text advertising at google.
I'm starting to get the picture you really just want to argue your point, without any actual facts. Google has a verifiable history of successful acquisitions. Just apparently non that you "like"
What? A giant front page ad, one to two pre-roll ads (with accompanying banner ad in the sidebar), semitransparent text ads on the bottom of the video, and another video ad every 4-10 minutes in the video.
Personally I think they are great at finding interesting and relevant ads, which is why I don't block the ads. Howerver I hear the experience varies.
YT does not show ads if you have adblock. Adblock cannot actually block them, but google detects it and chooses to not show them (the idea is that if you have adblock, ads are unlikely to be worth showing to you)
Just an FYI - Google Maps doesn't get traffic or user data from Waze. Maps gets it's data from Android and people who have Google Maps open on their phones.
Can't you just log on to the appropriate USA government website and download the submitted and audited accounts?
Isn't USA supposed to be a bastion of capitalism, and isn't a central feature of capitalism that it optimises the distribution of resources, that optimisation being predicated on readily available information -- the system doesn't optimise at all without information flow.
Please don't tell me Google don't have public accounts???
There shouldn't be any mystery here, you should just be able to read it off the P&L sheets?
Looking on Pixel sometimes I think that Google is not interested to have phone that is taking the world. I think it is more interested in taking word of OS of phones and have phone that is part but not taking world. If Googles tries to take world of phones, then other companies like Samsung will start developing their phone OS which Google do not wants. So I think that the current state of the market of phones and phone OS-es is the one that Google see is optimal for them.
I don't think Samsung, or anyone else trying to develop their own phone OS is any kind of threat to Google. If Microsoft can't make that work with their last phone OS, which was a genuinely interesting, innovative and high quality product, nobody can.
On the other hand their are millions of “Android” phones being sold each year in China with no Google Services. Not to mention the low end Amazon Fire tablets based on Android.
I think by working with a cell phone carrier in the US and bundling enough must have apps a manufacturer could get away with having a non Google certified Android phone. Especially if they could use Nokia’s Here for maps.
Samsung has good hardware and very good brand for phones which Microsoft has not. I personally thing that if Samsung decides it can become much bigger threat to Android than Microsoft.
OK, but the OS isn't hardware. Being good at one really doesn't say anything about ability with the other. The only reason Apple is an exception is they've literally been bet-the-company all in on both for every single one of 43 years.
Also, at the time who had a better reputation on phone hardware than Nokia? The MS/Nokia phones were also very well reviewed for the hardware too. It didn't matter, the software platform was too late to the party. There simply wasn't, and still isn't a significant market for a third OS platform.
Google Maps, Google Earth, Youtube, Google Ads, all started from aquisitions, to name the big services. They have many more small services and features coming from aquisitions.
Google ads - where they did advertising on their own site was homegrown. DoubleClick helped them expand to other sites. None of their hardware acquisitions have been successful. Android hadn’t developed a piece of hardware when it was acquired AFAIK.
To be fair I don't think they are trying to make Pixel world-wide popular. If they did, they would sell it to more places (can't buy it here in Slovenia).
It's not about them trying, they don't have the competence that it takes to sell phones worldwide. It takes years to build relationships with the carriers -- where most phones are sold.
If we consider parent's home country a "peripheral market", then it took iPhone months to reach it.
Don't forget that Nexus One launched almost 10 year ago. There was plenty of time to build the supply chain.
the Motorola acquisition wasn't a disaster. It's just that many didn't understand Google' intent with Motorola. Google tried to take a stake in Nortel's patent bid, as the wireless patent war started heating up in 2011, but it eventually bailed out. Google instead went after Moto's patent portfolio. It bought the entire company, which came with $3B free cash and tax credit, and stripped off unnecessary assets it didn't need to Arris and Lenovo. All in all, Google ended up paying less than $4B for what they had previously valued at $5B.
> All in all, Google ended up paying less than $4B for what they had previously valued at $5B.
A month ago WeWork was valued several times higher than it is today. It doesn't matter if you got a good deal on paper - what matters is if you got a good deal.
Sure, they got a good deal. Moto's wireless patents were second only (or maybe third) to Qualcomm's in term of quality and they generated a steady stream of licensing revenues before and after the acquisition. Unlike WeWork's unproven business model, the wireless industry's successful revenue generating licensing practices were in place for a decade and Moto's patents were worth quite a bit.
Now let's not forget why Google bought Moto's patents. Just before Google's acquisition, a consortium led by Apple bought Nortel's old, lesser patents for $4.5B. Ever heard of Apple's patent troll outfit Rockstar (or Mobilestar)? They tried to run a patent extortion ring against Android OEMs in the famed Eastern District of Texas with Apple behind the curtain. That is, until Google and Samsung's countersuit convinced the courts that the patent troll's litigation strategy "was consistent with Apple's particular business interest." They quickly dropped their sham lawsuits when the courts agreed to transfer venue to Apple's backyard.
Needlessly to say, Moto's patents in the wrong hands would have been a devastating blow far more than $4B to Google's business.
Still, the folks at M-CAM decided to put the Motorola Mobility patent portfolio to the test by using a variety of scoring techniques, and believes that the portfolio isn't all that valuable, both in the aggregate and at the specific level. It basically found that about 48% of the patents are probably worthless. At the specific level, the company looked at the 18 patents that Motorola Mobility had asserted against Apple, suggesting that these particular patents may be the "stars" of the bunch -- but, again, found that nine of those patents were "impaired," and were unlikely to be very strong or valuable.
I'm guessing that they evaluated the patents before Motorola got preliminary injunction against Apple.
IIRC, fewer than 2-3% of all patents actually survive and are upheld in patent trials, so they are not probably wrong when they say 48% of Moto's patents are worthless, but that isn't saying much. Take for instance, Apple's design and utility patents asserted against Samsung in Germany. All, 100%, of their patent and claims were invalidated, and declared worthless. I guess Moto's 48% is far better than 100% worthless. The key questions re: Moto's patents were their applicability, not their validity. Moto had filed lawsuits against Apple and Microsoft before Google bought it -- the court had to address Moto's appropriate FRAND licensing fee for SEPs (802 wireless standards and H.264 video encoding standards) and proper court jurisdiction.
IMHO, there is no reason to believe that Moto acquisition was a waste of money and, considering Android's popularity and success of Android today, despite threats from Apple's patent trolling (and even Microsoft), Google's strategy patent strategy worked well.
Wrong. Apple also sued Samsung for Android core features, but no infringement was found.
Microsoft was a tiny iceberg and exemplified what could have happened to Android. Samsung was reportedly paying close to $1B for a couple of years, until MS bought Nokia.
Google effectively neutered Apple's patent trolling operation by threatening to expose the troll's true motive, and prevented potential threat from Moto patent portfolio by preemptively purchasing it -- on the cheap.
I haven't had a chance to really think this all the way through, but I have a few thoughts. Google seems to have more trouble absorbing companies that have many more parallels with what they're already doing. Makes sense. At the time Google acquired Android, they weren't really invested in mobile operating systems as far as I know. So Android was a pretty easy integration. The same was true for Motorola and I suppose to a lesser extent HTC. Those two companies were building hardware which Google wasn't as involved in at the time. Those companies were also doing the lowest level stuff i.e., hardware and operating systems. But Fitbit, Dropcam, and Nest are different. They have parallel efforts all the way down. They have their own hardware, operating system, authentication, and they have a non-trivial customer base. Bringing these all under one roof seems a lot more difficult. Even logging into Nest with your Google account took quite a few years. Google also has Android, ChromeOS, and Fuschia. I can't imagine that they now want Fitbit OS to deal with. Or maybe this is just a trivial detail to them i.e., they could just rewrite Fitbit OS over the weekend.
Motorola was sold at a loss and estimates are that Google barely sells 1-2 million Pixels a year - about the same number that Apple sells in a day or two.
According to information that came out during the Oracle lawsuit, Android had only made Google $23B in profit over its entire lifetime. While nothing to sneeze at, considering the number of Android phones sold during the time period, it's not that much.
As the owner of a Nest (pre-Google acquisition), I can only say that it's not been a positive experience for me.
Condescending emails about how many 'leafs' I've earned every few months and forcing me to login to the device over Google instead of my Nest account is what I'm faced with now.
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