How Rightmove will beat Google
In what increasingly appears to be a quest for global domination, Google has recently announced a foray into providing satellite navigation services and is also rumoured to be eyeing the UK property market.
The news stories of Google’s latest product launches saw the share prices of leading companies in these sectors tumble; SatNav firm TomTom lost a third of its market value overnight, while property website RightMove suffered an initial 13% slide in value.
The message from the financial markets seems to be clear - if Google move on to your patch using their “free” services model, you’re as good as dead.
OK, Google is a massively successful company - in the space of a decade they’ve grown from nothing to become arguably the most powerful online business in the world - but should their competitors really just roll over and give up?
Of course not.
Google do enjoy great success, but they are not the great innovators or invincible combatants they are commonly believed to be. To illustrate the point, take a look at how some of their ventures outside natural web search have fared:
The Great Successes…
Now a key part of its service offering, providing people with other people’s news stories was a great idea, although the content creators do seem to be cottoning on to the fact that they’re getting the thin end of the wedge.
Perhaps not a revolution, but it certainly did a lot of evolve an email market dominated by the stagnating Hotmail and Yahoo! Mail services. One of the most popular email services around.
Advertising and pay-per-click is how Google managed to make money out of its search dominance. Not originally developed by Google; they acquired Applied Semantics ($102 million) and later DoubleClick ($3.1 billion).
Google Maps / Earth are popular free services. Free for the end user that is, not Google, who bought the technology in a number of acquisitions, notably Keyhole Inc.
If knowledge is power, then with Google Analytics residing on 40% of the 10,000 most popular websites in the world, Google’s power is unrivalled. Analytics was the result of another acquisition; Urchin Software. Development of the service has been aided by the subsequent purchase of Measure Map and Trendalyzer.
Maybe, Just about…
Google’s revolutionary browser hasn’t made a huge impact on Internet Explorer or Firefox, but it’s doing OK. Much touted “sandbox” tab functionality originates from the acquisition of security firm GreenBorder.
The answer to big rivals’ Micrsoft’s Office suite; very little impact, borderline failure. Component parts (word processor, spreadsheet, presentation software) bought in purchases of Upstartle. 2Web Technologies and Tonic Systems.
Android is an open source mobile operating system, primarily competing against Apple’s iPhone platform; not yet widespread but growing steadily. Acquired with Google’s purchase of Android Inc.
Flops and duds…
Knol is Google’s own version of Wikipedia. Little exaggeration to say it has disappeared without a trace. Developed as an internal Google project.
Photo album software and web album; lost the battle to Yahoo’s Flickr. Acquired in 2004, Picasa was one of Google’s earlier purchases.
Created to compete with YouTube. When it didn’t really catch on, Google decided it would be easier to just buy YouTube for $1.65 billion.
Lively was Google’s answer to the much-hyped “virtual world” application Second Life. Launched in July 2008, closed January 2009 due to lack of interest.
Orkut was a social networking service designed to compete against MySpace and, latterly, Facebook. Only ever really took off in Brazil, leading to hosting being moved from California to Brazil in 2008.
Verdict
So, there isn’t much in Google’s record to suggest companies like TomTom or Rightmove have much to fear; the majority of its successes have come where it has been able to innovate (or at least buy innovative companies) and build on its core search product.
Taking a look at Rightmove, here is a website that is already being extremely successful in its niche. They have a well-established, highly functional, popular website (comfortably ranked in the top 100 sites in the UK).
A free alternative might appeal to estate agents, but this isn’t a concern for homeseekers. As far as they are concerned, the service they are getting is already free, so searching for property on Google Maps will probably hold little appeal.
Rightmove are also strongly branded with consumers and estate agents. Google is one of the most powerful brands in the world, but they aren’t known or trusted for property. How would Google fare if they launched a range of soup to compete against Heinz? What do geeks know about cream of tomato?
You can also guarantee Google’s offering won’t be as feature-rich as Rightmove’s - they just won’t work as hard on it. Rightmove’s very existence depends on the quality of service they can offer; to Google it will just be another experiment.
On past evidence, Rightmove & TomTom’s biggest fear should be that Google will buy them out, not out-compete them.
If you can’t beat ‘em, buy ‘em…
Google enjoys a reputation as an innovator and creator of brilliant new solutions, but the reality is very different. A large part of Google’s approach is hoovering up enough start-ups to allow them to spit out new products on a regular basis. Throw it against the wall and see if it sticks.
The list of Google acquisitions is fairly extensive, with technology being repurposed or rebranded into exciting new products, e.g. Google Voice, Google Wave.
The company’s unique “20% innovation time” policy has produced some great ideas (Google News, gMail) but it could be argued these are only a fairly small percentage of Google’s product output. Google News and gMail are also seven and five years old respectively - what have they done lately?
Funnily enough, buying other products and rebranding them is exactly what fellow tech giant Microsoft were famous for doing (see: History of Internet Explorer) and one of the reasons the Seattle company became so unpopular.
Google has the aura of an irresistable internet force, just like Microsoft was an ‘unstoppable juggernaut’ in the software industry - one that only anti-trust hearings and the Competition Commission could tame.
However, even before they get embroiled in anti-trust lawsuits, it’s clear that not every Google venture or project is destined for unmitigated success anyway - particularly those falling outside their core search specialism. Maybe Google should stick to sorting out their search offering and leave the soup to Heinz.
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December 9th, 2009 at 10:08 am
This article misses a pivotal point. Rightmove model: charge estate agents to be on their site. However, estate agents simply pass on that cost to the house seller. I could wax lyrical about the resultant cost per lead, but lets just say it ain’t great. So if there was a viable alternative to selling via estate agent then the Rightmove business model starts to be eroded. And there are alternatives - http://www.tepilo.com is becoming increasingly popular for instance. Exposure is the critical issue - and google maps will give that. Rightmove have nowhere to turn - they cant start accepting listings from individual homeowners because that cuts out their core client base. In searching for a house “location location location” is the cry. So a geographic information system (i.e. a map) is the way people want to look for a house. It’s not about soup, and homeseekers will go whereever the homes are advertised in the most easily digested fashion. Lastly - Rightmove is an excellent business and a great website, but it’s built on the falacy that people need an estate agent to sell their home. And poor foundations have a habit of crumbling……….
December 9th, 2009 at 2:39 pm
Every service has to be paid for somehow - even those of Google. Whether it is by paid subscription or advertising, the cost is always passed on. Estate agents might bitch about Rightmove’s fees, just as homeowners bitch about estate agent fees, but a job is being done and needs to be paid for somewhere.
The question of whether estate agents are necessary or useful in the house buying/selling process is another argument altogether, but it’s worth noting that non estate agent options have been around for years, but haven’t managed to gain much traction - suggesting there is a demand for what is being offered. A major reason for this is that although avoiding hefty fees is very tempting for the seller, the buyer only really sees the asking price, wants a big range to choose from and to have the ability to browse professional photos and descriptions.
Estate agents and Rightmove are currently where most people turn when looking to buy a house - they have the biggest share of eyeballs. You can stick your house on a site like Tepilo (which has negligible traffic, mostly coming from another Sarah Beeny site, and isn’t showing strong growth) and watch it sit there for months or years. Sure, it’s free (bringing us back to the questions “What is the business model? How is this service paying for itself?”) but not much use if you need to sell your house.
Personally, I have my doubts whether Google is the company to drive fundamental change within the property industry, but you never know. The Google solution might blow everything else out of the water - the next generation might not even understand the concept of an estate agent - but I wouldn’t hold my breath.
I don’t claim to know much about the dynamics of the UK property market (that’s one thing Google and I have in common), so it’s really just idle speculation based on their past exploits. I would still argue though, that Google taking over, or even having a major impact, is certainly far from a foregone conclusion, which is the main point of the article.