The Trouble with Gmail

It’s easy to be a Google fanboy. They’re one of very few companies that have managed to become stupendously successful on several fronts simultaneously. First they came up with a technical idea — PageRank — that is as simple as it is brilliantly effective. Then they created a technical implementation, in both software and hardware, that has scaled to handle billions of webpages while still serving up results at lightning speed. And finally, unlike so many of the dot.coms that came before them, they found a way to monetize their success so that revenues grow in stride with their user base. The result: a successful IPO and market capitalization of over $25 billion… not bad for a company that’s only six years old.

A lot of people seem to conclude from this that everything Google touches will turn to gold. I beg to differ. Take Gmail as a case in point. One thing’s for sure: with Google’s incredible brand and great engineering, Gmail is bound to be a hit. It’s also a good way for them to address the oft-raised issue that their core asset, searching, doesn’t have a lot of “stickiness”; i.e. it would be quite easy for people to switch to another site if something better came along. For creating lock in, Gmail will doubtless be a useful tool.

But there are problems as well. One is that it is fairly easy to game the system, bending it for purposes it was not designed for. There is already an tool that lets you use Gmail as backend storage for your blog, with email messages published on the web as blog entries. This might not be a huge win in reality, since there are plenty of free blogging services out there (including Google’s Blogger), but it does suggest other intriguing possibilities. For example, someone could launch a website called Gmail Operating System. Just enter your Gmail address and you get an interface that lets you create hierarchical folders just like a local operating system and upload as many files as you want, up to the 1 GB limit. In fact, this could even be developed to seamlessly combine multiple Gmail accounts in one interface, so you could have access to multiple gigabytes of free online storage.

One of my favorite software industry pundits, Bob Cringely, recently ruminated about the options for disaster-proof backup of his most important files. I imagine he’s not alone, suggesting that this service could become quite popular. If so, Google might end up with far more arduous hardware requirements than they initially anticipated (based on the assumption that people would use Gmail only for email), thus swelling their cost base. Plus, if their service were hijacked like this, there would be no one to click on the advertisements displayed after each email, robbing them of their only Gmail-related revenue stream.

Speaking of advertisements, I’m not convinced that Gmail is going to be as wildly successful a cash cow as the search engine itself, even disaccounting the possibility of gaming such as that described above. I’m not a big fan of advertisements, but the Google ads appeal to me for one simple reason: when I’m using their search engine, I’m looking for something. And it’s when you’re looking for something that targeted ads are most appealing. If I query Google for lodging in the City of Lights (querying “Paris Hilton”, I guess), I’d be happy to see an ad that takes me straight to a site where I can book a room. When I’m reading email, I want to read email. I’m not looking for anything, and ads are only going to distract me. This might not deter potential users, but it will certainly cut down on the ads’ conversation rate. That’s bad since they only make money when you actually click on an ad.

I’m sure that Google has a lot of other irons in the fire, and no doubt some of them will turn out to be great drivers of revenue growth. But Gmail may end up being more trouble than it’s worth.

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1 Comment »

1. The problem about making sure that important files are never lost is a central point of my vision for a future open source, ad hoc, P2P, redundant operating system. See http://betterdifferent.com/software for details. See freesbie.org for how this is going to start. PEACE. N888

   Comment by Nate Johnson — 9/17/2004 @ 5:19 am

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