Why The Google Solar News is Good For Microsoft (GOOG, MSFT)
Generally, when high-tech companies try to branch out and then fail,the attempt becomes an embarrassing distraction that leads to lots ofsoul searching.
Remember Apple’s venture into the Newton and handheld devices backin the 1990s, or its gaming platform, or its early online communities?Or how Intel tried to move into: (1) ISP services, (2) consumerelectronics, (3) communications chips and (4) cameras? Or Sonydesktops? They all fell flat. Apple made a comeback in handhelds, butit took ten years and completely new products. And these were adjacentmarkets. Google’s push into solar has very little, if anything, to dowith its core search business.
These side ventures typically fail for two reasons. First, the sideventure must engage in a continual and ultimately futile hunt forresources. One of the execs in Intel’s communication group told me oncehow he would ask for R&D funds every year. The board would ask himif the group would ever be as big as the processor business. No, wasthe reply. He didn’t get the funds. If you worked at Google, what wouldbe a more promising career path: overseeing a new advertising platformor putting together a solar farm?
Second, there is what I call the Engineer’s Fatal Flaw: I passedphysics, therefore I know everything. Deep down, Google’s move intoalternative energy is predicated on the idea that it made billions ofdollars with some really novel search technologies. Let’s face it: Thereason some people think they could make a difference in solar isbecause they are rich. It’s not the track record in material science.Imagine if Yahoo said it was doing the same thing: Critics would scoff,and cite the fact that people are turning away from its horoscopepages. Intelligence from one realm doesn’t necessarily pass to anotherrealm.
Desperation will also play a role. Google is already venturing intotechnologies that other companies are mining. HelioFocus has developeda solar turbine (see story here). And lots of companies – eSolar, BrightSource, Skyfuel,Abengoa, Schott, most of the major chemical companies – are working onthat too. If they fail, they’re unemployed. If Google’s team fails,they’ll probably get some free T-shirts and a transfer to a newdivision.
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