Simeon Simeonov is founder of Swoop.
The coverage of Google I/O 2013 developer conference has focused on Google’s plans for world domination through an increasingly more interrelated and stickier set of consumer services. What’s gone unnoticed is Google’s radical developer ecosystem management strategy. The company has made a fateful choice that may leave Google with an exposed flank at a critical time.
Consider the following: in 2012 95 percent of Google’s revenue (a cool $43 billion) came from advertising. Yet, at this year’s Google I/O conference the Google Ads track has only five sessions — a mere 2.5 percent of the conference topics. And the number of sessions related to search advertising, where the majority of Google’s ad revenue comes from? Zero.
Out of curiosity, I checked out the sessions for last year’s I/O conference. It didn’t even have an ads track. If this doesn’t seem surprising to you, think about Apple’s WWDC event not covering OS X and iOS; Microsoft’s Build event ignoring Windows, Office, and Xbox; or Oracle’s OpenWorld event without sessions on databases, middleware, and applications.
The lack of sessions on ads is clearly a strategic decision made at the very top. The unedited version of the pitch goes like this: “Dear developers, please help us grow market share where we don’t make much money: Android, Chrome OS, cloud, apps, social, etc. We are fighting on too many fronts and we can’t win without you. At the same time, please do not concern yourself about all the money we make through advertising. We got that covered. There is nothing for you there, except for maybe paying us to advertise your apps.”
This ballsy move may turn out to be brilliant. Google is fighting a five-front war with Amazon, Apple, Facebook, Microsoft and web publishers as a whole. By leveraging its tech cool and focusing developers on the key platform battles Google needs to win to extend its control of consumer services and advertising, the company may end up perfectly positioned for the long game. At the same time, Google is taking a big risk by closely and independently managing the advertising portion of its business.
Successful platform companies rely on strong and vibrant vendor ecosystems, whose combined revenues often far exceed the revenue of the platform companies. Microsoft did it by making Windows the dominant desktop OS but staying away from most types of infrastructure and apps for a long time. Oracle did it by creating products that required tons of customization and ongoing service & support. Apple did it by creating market-dominating devices with great developer tools while leaving the apps space wide open. These companies deeply understood the importance of bringing third party developers close to the very core of their revenue engines because developers, while they may be hard to win, tend to stick with what they know. They provide stability and support for platform companies when hard times come.
Some people on the Google Developer Relations team are trying to change things from the inside by associating organizational success metrics to the revenues of Google ecosystem partners. So far they have been unable to convince the powers that be that the financial success of Google partners is worth focusing on.
Google’s developer ecosystem positioning adds to the growing consensus that the company doesn’t like to share where it counts. Its moves to disintermediate publishers in a broad range of user tasks are another prime example. This fact is not lost on some of its large competitors as well as many of its publisher & advertising partners, who’d like to see more innovation and choice. Google may be helping publishers and agencies make billions but there is no deep allegiance there and no real stickiness. There are significant opportunities for startups and investors bold-enough to ignore the “we’ve got it covered” message from Google.
Simeon Simeonov is founder of Swoop, which extends search advertising to content, and Evidon, which brings transparency to online advertising. A lifetime ago his first startup built the first large web developer community. Sim tweets @simeons and blogs at blog.simeonov.com.