by Timothy Lee
Wed, Nov 28th 2007 1:11pm
The generally-reliable Wall Street Journal is reporting that Google is planning to introduce a free network storage product. In response, over at ZDNet, Larry Dignan suggests that Google is late to the party and worries that they'll turn customers off with annoying ads cluttering up their desktop. This gives Google too little credit. In the first place, virtually every successful product Google has launched has entered an already crowded market. Most obviously, there were already plenty of search engines when Google was founded. More recently, GMail and Google Maps were both launched in what were thought to be relatively mature markets, but Google nevertheless found ways to shake up those markets by producing extremely polished offerings that had features missing from existing products. It may very well do the same thing in the storage market. By the same token, it would be shocking if Google tried to shove intrusive desktop ads down users' throats. Google has always been careful not to let its efforts to generate revenue interfere with the usefulness of its products. For example, it offers POP and IMAP features for GMail, despite the fact that it doesn't have any way to directly monetize users who check their mail that way. Google does that because it knows that almost every POP or IMAP user will check their mail on the web some of the time, and it will get the chance to display ads to users at that point. By the same token, I expect that Google will find non-intrusive ways to present ads in some parts of the GDrive product, while offering other parts of the product ad-free. The most obvious way to do this is to follow the GMail model: ad-free access from the desktop alongside an ad-supported web-based interface. As Mike pointed out earlier today, one of the secrets to Google's success is to recognize the power of complementary goods. Google understands that if it can get a lot of users using its products, it will eventually find a way to monetize those eyeballs. And more importantly, it understands that it's short-sighted to generate revenue in a way that alienates customers and thereby reduces long-term traffic growth.
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