Nine startup dreams and industries Google crushed in 2009

If you’re an ambitious young tech entrepreneur with a compelling product hacked together and a slide-deck in hand, there’s always one giant elephant in the room.

That, of course, is Google.

The search giant has made a ton of product announcements this year, ranging from minor tweaks to major new applications. It even came out with a brand-new operating system. In doing so, Google left a lot of collateral damage. A lot of folks, from tiny startups with high-fallutin’ dreams to established industries, have found themselves in the path of the search behemoth.

Who did Google make cry this year? We’re looking back at some of the dreams that were deferred … we mean, destroyed!

google navigationThe navigation companies: TomTom, Garmin, and TeleNav charge for mobile applications that offer turn-by-turn directions, often for a sizable fee. The TomTom app, for example, normally costs $100, though there’s a holiday discount cutting the price to $49.99. Then Google decided to get into the market, and its app wasn’t just a little cheaper — it’s free. In its IPO filing, TeleNav even acknowledged that this was a major risk. The one piece of good news for competitors is that Google’s directions are currently limited to phones using its Android operating system, but how long will that last?

And let’s not forget TeleAtlas: But this is for a slightly different reason. Google used to rely on TeleAtlas for mapping data, but it decided this fall that it would go it alone. Now Google relies on public data, StreetView and user-generated content, controlling the entire process. Google’s user-generated map efforts have been so successful that the company has been able to create street maps in developing countries where no professional ones existed before, like in India and Vietnam.

The cloud OS startups: Jolicloud and Good OS wanted to take advantage of the increasing interest in netbooks (the cheap laptops that are used mainly to access the web). They created operating systems that were dubbed “cloud OSs,” to reflect a shift away from applications on your computer and towards applications that run in the Internet cloud. Then Google announced its own operating system, Chrome OS, which is launching next year on select netbooks. And while Jolicloud said the news “validates” the market, this is one area where I’m betting startups will have a particularly steep uphill climb. We’re fine using a website from a company we haven’t heard of, but trust and name recognition mean a lot more when it comes to something as crucial as an operating system.

The real-time search contenders: We profiled about a dozen startups including Topsy, Scoopler, CrowdEye and OneRiot, that were competing to be the top gun in the emerging space of sifting and sorting real-time data. Google was relatively quiet in the beginning of the year, with co-founder Larry Page admitting the company had fallen behind on indexing content on a per-second basis. That raised a whiff of unspoken hope that either it or its arch-rival Microsoft’s Bing might make an acquisition in the space. Or that a young and hungry player with quality filtering technology could start attracting large audiences looking for real-time content. But by October, it became clear that Google was hard at work behind the scenes when it signed a deal with Twitter for the full firehose of its data. Then in December, Google unveiled its work, showing real-time search results that streamed down the page, Friendfeed style.

So what of the real-time hopefuls? Scoopler is shifting its focus to discovery and surfacing unexpectedly interesting real-time content. OneRiot is busy building an ad system against its results and trending topics. Both it and Collecta are putting their heads down and focusing on distribution with application programming interfaces and developer partners. Twitter, while maintaining a search engine, signaled that it wouldn’t try to monopolize the space when it signed distribution deals with Google and Microsoft.

murdochRupert Murdoch: Okay, the Australian media kingpin is definitely not a startup. But we’re throwing him on the list anyway because the empire he spent more than half a century building is not so impenetrable in the Internet age. Fragmented audiences have meant weaker pricing power over advertising. He tried to kill the messenger, but Murdoch’s posturing and threat to remove News Corp. content from Google indexing only amounted to a few cosmetic concessions from the search giant. The company changed its first-click free program, which lets you read a page of walled content for free if you click through in Google search results. It now limits how much non-paying subscribers can access even more. Boo hoo.

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The Google Wave team: Wave was ballyhooed as a product that would change the way we communicate, merging the best-of-breed qualities from e-mail, chat and collaborative technologies like the wiki. Created by the team that developed Google Maps, Wave was like a startup in its own right. The team was given a lot more leeway and engineering resources than typical Google projects and was in Australia, far from headquarters. It sounded really cool in concept, and the buzz was insane, but then people actually tried to use it. Wave was clunky and confusing in practice.

Although its technical backbone was impressive, it was released before it had a well-designed user interface. Many users (including us) couldn’t even figure out why they needed to use it at all and gave up. That doesn’t bode well for the final product. So by overhyping Wave, failing to communicate how to use it, and inviting the public in too early, Google bungled its own dream here. To quote Nelson from The Simpsons, “Ha ha.”

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And now let’s look ahead, Conan O’Brien-style. In the year 2010….
Here are companies that need to watch out. Google has made moves that encroach on these startups, but it’s just too early to tell how bad the damage will be:

Bit.ly: The link shortening startup is still the kingpin in its space for now. It handles about 58 percent of shortened links that pass through Twitter, according to eminent retweet button maker Tweetmeme. But that’s down from above 80 percent earlier this fall as Google and Facebook launched their own link shorteners and custom-made ones took hold. Some of those custom-made shortened links might be Bit.ly-produced, though, since the company launched a professional service for publishers like The New York Times. This gives Bit.ly a solid revenue source even if Goo.gl or Fb.me eat into its market share. But Bit.ly needs more media companies to jump on the bandwagon. Will it work? Stay tuned….

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Milo.com: The shopping site sent consumers to local stores by pulling information about what was on the store shelves. The site attracted 1 million monthly users and some big-name investors to its site, but Google just announced that it’s gradually adding similar features to its Product Search. This is one case where we actually had a chance to interview the startup’s chief executive Jack Abraham about why his company won’t be crushed by Google. Basically, he said that when Google pits its search against a more focused startup, it usually loses — for example, Google Local search results versus Yelp.

Augmented reality browsers: Google stealthily launched an augmented reality product when it debuted Google Goggles earlier this month. It’s a visual search tool — meaning you can take a picture of the Eiffel Tower, and Google Goggles will recognize it and then search for it. Paired with GPS coordinates, that makes for a potentially powerful tool for navigating your physical surroundings. During the launch, the company showed off some basic augmented reality features. You can pan around, and Goggles will overlay the names of businesses onto buildings around you. Although Goggles is imperfect and is still in Google Labs, that’s the essence of what could be the killer augmented reality app.

Most of the augmented reality apps available on the market today tend to be more gimmicky than useful, like putting 3-D animations in your mobile phone’s viewfinder while looking around. Companies like Mobilizy, Tonchidot and Layar are trying to stay ahead of the game by encouraging developers to add layers of useful information to their augmented reality browsers. But if Goggles gets any better, they should watch out!

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