Dave Michels
Dave Michels is a Principal Analyst at TalkingPointz. His unique perspective on unified communications comes from a career involving telecommunications...
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Dave Michels | November 07, 2011 |


Google's Netflix Moment--Or Cake Moment?

Google's Netflix Moment--Or Cake Moment? Unlike the banks or even Netflix itself, Google isn't too concerned about the Reader backlash. The competition is weak, and the Google+ upside is clear and understood.

Unlike the banks or even Netflix itself, Google isn't too concerned about the Reader backlash. The competition is weak, and the Google+ upside is clear and understood.

Kodak spent millions to ensure its name was associated with special times: "a Kodak moment." Netflix lost millions and created a term that describes when a provider is out of touch with its customers. Since the Netflix debacle, I've heard the term "a Netflix moment" used with the banks regarding debit card charges and now with Google regarding its updates to Google Reader. But the Google situation is a bit different.

Google didn't really have a Netflix Moment; there is no evidence of regret or concern about the complaints stemming from its Reader upgrade. With real products, new releases don’t impact prior models. If you owned a '67 Ford Mustang with a 320 hp V8, the fact that Ford released the '71 version with an oversized hood had no effect on the ‘67. The proud owner of the ‘67 may even derive more pride and satisfaction from the product. But using an older version of a hosted service post-upgrade is not an option. When the cloud "upgrades," there generally isn't a choice.

Last week Google offered subscribers two updates: Gmail and Reader. The Gmail update is, for a limited time, optional and generally well received. The Reader update was mandatory, and not well received. The Internet as been full of complaints. Mashable reported "the company is facing the righteous fury.... Since the changes were announced earlier this month, more than 10,000...signed a petition to Google created by Washington, D.C.-based grad student Brett Keller." Reader's "enhancements" committed the cardinal sin of upgrades by taking away features. Sharing and commenting are gone, as was the outbound RSS feed of shared items that each user generated. Google explained the changes are actually an upgrade to facilitate the use of Google+.

Automatic updates are a feature of the cloud--whether you want them or not. Google offered no warning (there were news stories, but no emails or in-app warnings), and no option to schedule the change to minimize the disruption. It was simply forced upon users. Google offered no apology either.

Who petitions a business service to change? If you don't like it, go somewhere else. In a normal world customers vote with their wallet. That's what happened at Netflix. But Google isn't a normal business. First off, with most of Google’s services, the wallet and the customer are independent of each other. That is, people who use and enjoy Gmail, Reader, and other apps are subscribers, not customers. The customer, or wallet, is the sponsor who is paying for the ads on the screen. Google knows it has more Wallet Attraction with a more robust Google +. Besides, it is no fun voting with the wallet when the the service in question is free.

The other problem is, voting with the wallet requires an alternative--unless one is willing to simply quit. Google Reader was not the only or first web-based RSS aggregator; there were several. Bloglines launched in 2003 and was recognized by TIME in its Top Web Sites 2004 listing. But Google is a formidable competitor, it's generally free, and integrates multiple services. Google's competitors need to out-innovate Google, without charging for the service. That can be tricky. That's why so many of these competitive options disappear--remember when firms used to charge for things like email?

Google itself may be an innovative company, but it kills competitive innovation. Reader subscribers looking for an alternative found few. See: Alternatives to Google Reader? Don't Bother, You're Not Going Anywhere... Google as a competitor sends shivers down the spine. Remember commerical screen savers and photo software? That was before Picasa. Remember WebOS (HP or Palm)? That was before Android. Google offers some great services, but most companies with alternative solutions can't compete with free. Google Voice is not only free itself, but offers free domestic long distance.

Unlike the banks or even Netflix itself, Google isn't too concerned about the Reader backlash. The competition is weak, and the Google+ upside is clear and understood. Reader users will stop complaining and try to make the most of Google+. It's not like Reader users can demand their money back, and Google+ does offer some powerful features.

The issue really is what seems to be an increasing arrogance regarding customer satisfaction. The web is radically changing the customer/vendor relationship. The past month was filled with eulogies about Apple's commitment to the customer experience. Apple stands out because we are otherwise surrounded by Netflix Moments. In How Google Reader's Overhaul Betrayed and Irked Its Most Passionate Users, John Titlow wrote:

"It's ironic in a way, because in its big push to reposition itself as a social-friendly company, Google just displaced an entire community of users, effectively shutting down a social ecosystem that had existed for years.

The idea of a Netflix Moment is reassuring. It reaffirms the voice of the customer. The problem is, the customer and user are rapidly separating on the web. Google, Facebook, Twitter, and so many other free services are finding that the user base is the mechanism to create revenue, not the source of revenue.

Former Googlers that were involved with earlier Reader versions have also been vocal about the redesign missteps.

Kevin Fox: And so I put my resources where my mouth is. As the former lead designer for Google Reader, I offer my services to Google, rejoining for a three month contract in order to restore and enhance the utility of Google Reader, while keeping it in line with Google's new visual standards requirements. I will put my current projects on hold to ensure that Google Reader keeps its place as the premier news reader, and raises the bar of what a social newsreader can be.

Brian Shih (former Reader Project Manager): Google released the previously announced set of changes around G+ integration and UI updates today, and boy is it a disaster.... I expected them to give the product a facelift, and integrate G+ -- both things that needed to happen. But killing off functionality that could have easily been built on top of G+, and missing the mark by so much on the UI...and then releasing them under the guise of improvements? Bad decisions, indeed.

Did Google blow it? Clearly many users think so, but unlike Netflix or the banks, its stock won't likely be impacted, nor are protesters expected outside their campus. Most likely the company will see a huge spike in Google + usage and +1 activity. Thanks to the fact that Reader alternatives don't really offer the missing features either, Google probably won’t see a drop in subscribers. It isn't so much a Netflix Moment as a cake moment--as in let them eat it.

Dave Michels is a frequent contributor and independent analyst at He also blogs about telecom at PinDropSoup.


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