Big companies like Google, Facebook, Apple etc are always compelled with competition and thrive for innovation as well as grow by acquisition. However, like everyone else, these companies make mistake too. Some times costly mistakes by buying companies at hundreds of mollion valuations only to shelve them after an year or so. Sometimes, the in-house initiatives are shelved too. It is better to take such hard decisions sooner than later. Such decisions lead to better focus and an ability to put resources on better-paying initiatives.
Here are some latest cancellations of projects from these companies:
1. Facebook Shutting Down Deals Service:
It seems that Deals are not making that much money. Is it a good news or bad news for Groupon? Definitely one less competition. However, the timing is bad. Groupon has filled IPO and is expecting a very high valuation. However, there are some concerns being expressed about its business model and its ability to sustain the growth and revenue. When Facebook backs out from the deals, it might be look as if it is validation that deals are not good for busines model and it is a bad omen for Groupon. Facebook followed a hybrid model to get deals. It sourced deals its own but also became a deals aggregator for select deals companies such as Gilt Groupe’s Gilt City; local deals service Home Run; restaurant website OpenTable; women-focused PopSugar City, and outdoor-oriented Zozi. It seems that the copons and deals market is maturing, the average weekly revenue from deals is going down. Thats why Yelp too is slowing down / getting out of daily deals.
2. Facebook also gave up on checkins by cancelling Facebook Places. This is of course a good news for Foursquare. However, Facebook is not giving up on locations. Instead of mimicing Foursquare, it would now allow users to tag everything with locations. Now, this approach would give distinction but would not compete with Foursquare. But it is a decision based on the usage of the places, resulting to re-strategizing on focus.
2. Apple Cancels iTunes TV Rentals – on.mash.to/prgRCV however this decision is based on Apple’s analysis of the current usage of iTune rentals vs buying. As per Apple, consumers prefer to buy than rent the music. So, Apple chopped down it. It may be getting some rental money, but it is always better to cut off project that does not pay appropriately.
3. While Facebook and Apple are cancelling these projects, Google does not want to be left behind too. Its new CEO is axing many projects like Slides, Aardvark, Flash Map API, Google desktop, Google Notebook, Sidewiki, Image Labeler, Google Pack, Google Web Security and so on. Never mind if you never heard some of these. May be that is the reason Google dropping them out. If you are interested in more details, visit Google’s official blog: http://googleblog.blogspot.com/2011/09/fall-spring-clean.html
BTW this axing does not mean that Google is slowing down on acquisitions. In contrast, while Facebook, and Yelp slowed down on deals, Google this week quietly acquired Zave Networks for deals and coupons. Read http://www.simplyzesty.com/google/google-acquires-coupon-provider-sets-sights-on-social-commerce/
When you may spot acquired companies in the list, would you wonder whether these companies would have been successful if they were left alone? Or it was better for founders to cash-in and move on?