Much has been written about Google waving good-bye to its ballyhooed enterprise system Google Wave as well as its recent acquisition of Slide, an online leader in social entertainment. The fact that both events occurred during this same week indicates preferences may be shifting on the Social Web from business applications to those that fill our desire for more leisurely pursuits.
The news of the acquisition surfaced earlier this week, and the announcement for many comes as no surprise. According to TechCrunch, the sale price for Slide Inc was $182 million with an agreement to pay an additional $46 million in employee retention bonuses. Slide's official comment on the acquisition underscores Google's decision to favor a move to a social gaming platform.
In shuttering Google Wave, a web app for real time communication and collaboration, it appears on the surface that the technology was either a product introduced 'before its time,' or offered too many elaborate components for the average user to absorb. In my estimation, there is more to the story.
Some analysts think that bits and pieces of Wave will be integrated into Google's next shiny thing - the social platform GoogleMe, which will focus heavily on social gaming. Support for this theory is not only based on the Slide acquisition but also Google's $150 million dollar investment in Zynga, the number one online gaming operation in the world that is presently closely aligned with Facebook (Google's competitor in this space).
My belief is that instead of focusing on the details of these transactions, the bigger picture is why does a company the size of Google retire one major product in favor of another. In Google's own worlds, "despite these wins, and numerous loyal fans, Wave has not seen the user adoption we would have liked."
The operative words here are "user adoption." Users don't want business enterprise solutions. Users want to have fun. It's simplistic and somewhat disconcerting at the same time. But the evidence is showing that while collaboration enterprise organizations are popular, they are not producing the return on investment Google, Facebook and others can generate from social gaming.
With the success of Zynga's online Facebook hits such as Farmville and Mafia Wars, one report indicates the Zynga could trade at a $5 billion valuation. With its 237 million monthly users (67 million daily active users) who play multiple games for hours on end, it generates millions in revenues via fees, advertising and the sale of 'virtual goods.'
Facebook Credits which takes a 30 percent cut off of each transaction are also shifting their focus to the gaming market versus some of their other revenue generators. Google, if it is to be successful at all in the social media milieu has to adopt some of these practices. Google Wave was not the answer, whereas Slide and Zynga appear to be the right moves if Google is ever to gain traction in this space. Your thoughts?
For other posts on Google's entry into social networking and online gaming, check out some of my previous posts.