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Google's Growth Engine Sputters

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For the last 10 years Google has been on an upward trajectory making gobs of money and astounding us all with there seemingly endless fount of innovation. For a time, there seemed to be a new product announcement every week. Google has always been very savvy about exploiting the news cycle, and keeping the brand in the public eye, but no company can grow forever and a couple of recent news stories suggest that Google's era of non-stop growth is finally over.

Cutting Employees

On January 14th, Google reported in the company blog that it was cutting 100 full time recruiters, which according to the NYT, represents 25 percent of the recruiting force. The Google blog post explains the company only took this step after "wind[ing] down almost all our contracts with external contractors and vendors providing recruiting services for Google."

This is significant for a couple of reasons. First of all, it marks the first time ever that Google has cut full time staff for any reason. Secondly, Google is cutting the people who hire employees and admits they are doing so because they are hiring fewer people.

Eliminating Products

Like all companies when times get tough, Google began taking a hard look at its products, most of which are free. If the revenue doesn't support the product and the company is no longer flush with cash, it's time to cut the laggards and that's exactly what Google has done, announcing last week it was shuttering several services including Google Notebook, Jaiku, a Twitter-like micro blogging tool and Google Catalog search.

Meanwhile, Zoho announced yesterday it was filling in the gap left by Google Notebook by updating its own Zoho Notebook tool adding a feature for importing Google Notebooks. This is a smart move by Zoho to take advantage of a gap left by Google when it abandoned this tool.

Making Tough Choices in Tough Times

You don't have to be an economist to connect the dots here. In this economy, no company is immune to the market conditions. As other companies cut back, it's entirely likely that advertising revenue goes down as customers cut budgets to deal with their own internal crises.

Companies can only grow for so long, and when you look at the bloodbath on Wall Street last fall that cut Google's value significantly (along with everyone's), it only makes sense that they are taking steps to reign in costs. Nothing lasts forever, and even a company as powerful as Google has to succumb at some point.

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Techwriter10
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TechCrunch reports today that Google is taking another step that suggests the good times are over, making it tougher for businesses to use the free ad supported version of Google Apps.

The article says that Google has lowered the number of users that can use a free account in order to force businesses to buy the ad free subscription. This of course, will guarantee a revenue a revenue stream (assuming the businesses continue to use Google Apps) rather than relying on of the more volatile ad business.

For details, see the TechCrunch Article:

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