Google Will Regret Shutting Down Google Reader

Google's decision to retire Reader will force many of the company's top users into its competitors' web of services - and not just their RSS services

The past few years have seen unprecedented growth in the scope of the products and services offered by the major technology players. While their business models differ, these lumbering giants understand the need to considerably diversify their offering in order to enhance their core businesses and insulate their users from competitive overtures. This strategy, which largely defies strategic management theories of “core” and “non-core” capabilities, has been pioneered by Google. Over the past decade, the company has launched close to 350 products and services – two thirds of which are ad-free. Despite this, advertising continues to constitute 95% of total revenue.

This why Google’s decision to retire Google Reader today is so incredibly surprising and foolish.

GoogleReader3

Google’s culture of experimentation personifies the Silicon Valley credo of “failing fast and failing often”: More than 1/3rd of the products and services it has brought to market have since been shut down. Yet, Google Reader differs from the dearly departed Google Health, Buzz and Wave in a few important ways:

1. Usage of the product provides clear customer insight. The websites a user follows and stories they read are strong indicators of their interests, as well as their preferred sources of information.

2. Google Reader users appear to be high value customers. They’re technologically savvy (and therefore likely to use multiple technology services), large consumers of information (Google’s mission is to “organize the world’s information and make it universally accessible and useful”) and influential (it is widely touted by journalists and news aficionados alike).

3. While Google states the product’s popularity is in decline (and total users remains unknown), the userbase is not insignificant in size. Feedly, a leading heir apparent, claims to have added 8M users since Google announced Reader’s pending demise. Given the likelihood that many (such as yours truly) have yet to pick a new service, its’ possible the total count of Reader users was in
excess of 25 million (at least 2.5% of Google Search’s December 2012 users). Furthermore, usage of the service was intense – with the majority of users accessing it numerous times a day (between mobile and online I likely check it countless times a day, reading an average of 55 articles a day, and 68,000 since February 2010).

One could argue that Reader provides Google with little incremental user insight. However, Google’s decision is problematic not because of point number one, but two and three.

Google has always said “competition is a click away”. That’s true, but only narrowly. The information Google has on each of its users is at the heart of their ability to deliver relevant search results (and advertisements). While it may take little effort to try one of Google’s competitors, it will take these services time to learn enough about you to deliver truly competitive results. In addition, becoming a Microsoft user (versus just a Bing user) takes considerably more than a single click. You’ll need to set-up multiple new services, port over your content, distribute your new contact information and so on. This stickiness keep users from moving to any of the services offered by Microsoft, Apple, Yahoo etc. – even if they are readily available.

The end of Reader is forcing millions of Google’s most active users to adopt new services offered by the company’s competitors. Digg (a social network of sorts) and AOL have already released RSS readers in response – and rumors of a forthcoming Facebook Reader persist. Using these not only means setting up a new user account (a major barrier), it constantly exposes users to these companies’ services. Now Google’s own offerings are “a click away”, its competitors, after all, are right there on the users screen.

To this end, I’m shocked Microsoft and Yahoo haven’t been working furiously to release its own service. Like many of you, I have a Microsoft account – but I haven’t used it for years. A great RSS reader would have me logging in dozens of times a day, something none of their existing products or services comes close to achieving. Furthermore, the product would help the companies dramatically increase mindshare among Reader’s vocal and influential users.

Google may be right that services such as Twitter and Facebook have “socialized” the news and that RSS will remain as niche news channel. But its decision to abandon the service is unnecessarily driving many of its best users to embrace the RSS services of its competitors. Ending Reader support may free up some headcount and drive the focus Larry Page cares so deeply about, but is this really worth it? I don’t think so.

Unfortunately, it’s too late to for Google to change its mind. Developers – both independent and corporate – have been tirelessly hiring, coding and testing their products in order to be ready for Reader’s D-Day. A reversal now would come with immense scorn from the developer community and public accusations of scorched-earth capitalism. The end of Reader has put Google between the proverbial rock and a hard place – and they can only blame themselves.


CONTACT THE AUTHOR
COMMENTS