I'm reading the book - Focus - The Future of Your Company Depends on It, by Al Ries and I couldn't help relate the principles mentioned therein with today's internet companies, and when one thinks of internet companies, one can hardly exclude Google from the analysis.
Is Google focused enough? If so, what area can be correctly termed as its 'focus' area? Is it web search? Is it GMail? Is it content based text advertising (AdSense)? Photographs (Picasa)? Videos (YouTube)? Blogs (Blogspot)? Maps? Or is it a software company of a different kind (producing online Docs, Spreadsheet readers and Chrome)? Apparently Google is trying to capture the entire web. I won't be surprised if in the next few years, there is no online website / service provider left, besides the Google subsidiaries.
Once there was a time when IBM ruled the computers business. General Motors ruled the auto industry. AT&T ruled telecom. These companies probably still maintain a respectable market share, but their monopoly has certainly come to an end. And this, per the book, is an inevitable outcome when companies loose their focus.
When one engages in too many activities, one automatically creates too many rivals. Coping with the competitive pressures from so many rivals takes too much energy... often more than what the diversifying company thinks it has. Google may not have limitless energy, but it does have large piles of cash. It uses it to strategically acquire other successful online businesses, limiting its competitors to a handful of companies.
Second drawback of doing too many activities is the dissociation of the Brand name with the product / service it got originally associated with. Psychologically, one brand name cannot stand for two things in the consumer's mind, and producing two or more products / services will automatically kill your brand. Google seems to be strategically avoiding this trap by using different names / retaining the brand names of the acquired online businesses. It hasn't renamed YouTube to Google Videos, or renamed Picasa to Google Photos. A good move!
Google seems to have violated several of Al Ries' 22 immutable laws as well. It wasn't the first web search engine; it was (and probably still is) a significantly better one. This serves as a counter proof of the very first law - It is better to be first than it is to be better. The thirteenth law is also clearly violated - You have to give up something to get something. Google seems to want it all, and seem to get it as well. Only time will tell whether Google can defy the what Al Ries thinks are immutable laws of marketing.