Are Google Wrong To Shut PowerMeter and Google Health? #Connhome

It’s not every day that I get to call Google out for making a mistake.

At the end of last week came two rather unexpected announcements. Google announced that they would be shutting down both their Google Health and PowerMeter services.

The primary reason in both cases seems to be the “inability to scale” as mentioned by Google.  This by itself is strange. Consider the Power Meter situation. There are now five million smart meters in the US.  Not even 5% of the number of homes in the US. In the UK, the smart meter rollout hasn’t commenced yet. Most countries in the Far East are focusing more on the smart grid than the smart meters. Deployment is yet to commence in any significant form. So there is no scale possible in the market yet.

It’s possible that even within the 5m smart meters in the US, Google has very low market share. But these are surely just opening moves in the market. The smart meter data management market is predicted to grow from around $ 50 million to $ 500 million over the next 7 years, so there’s still 90% of the market to play for. There isn’t much that Google could have done to accelerate the market given the challenge of bringing together policy, standards, manufacturers, utility companies and creating and executing a significant national roadmap, for each country.

Certainly the early commercial movers in this space in the UK, such as First Utility, have already been using the Google Power Meter. So it’s not as though Google have no traction in the market. First utility, like others, are building their own dashboard now.

A similar argument can be extended to the Healthcare market. Telehealth is nascent at best, wherever in the world you look. The idea that medical records should be held by patients is still a novel idea. The devices which will create a healthcare data stream are not really widespread either. So it’s too early to call really and scale is a long way away. The Google announcement points to the Direct Project initiative, but that is really a standard, and not a repository.

On the face of it, this seems like an opportunity lost, for Google. We believe that across a number of vertical industries including health and energy, there is an emerging and key role for data intermediaries. Increasingly this will become valuable both as a gateway for data use as well as mining for aggregation and insight, into consumer behaviour. Especially, as this space is set to get very exciting with the Internet of Things, M2M communication and a tidal explosion of data which Google are extremely well placed to exploit.

But surely, this is all too obvious for Google. Should we be reading in between the lines here? What kind of hypotheses can we draw about this move?

Well, first, Google might know something we don’t. They may have done enough homework to suggest that collectively this will never be a big enough market for them to go after and they simply have much bigger fish to fry. This is a plausible argument, but it smacks of determinism, and ignores the possibility of explosive growth in this segment.

Or it could be that Google foresee a lot of legislative implications in this space and being embroiled in a number of scuffles already, with respect to consumer data, privacy etc, want to steer clear of an area so fraught with legislative risk.

Or, very likely, that with Google’s recent change of guard, there is a directive to refocus on some key areas – including, as we know, the social networking and intelligent automobile parts of the business. PowerMeter and Google Health are just implementation and marketing challenges. There is no great engineering feat required in the health and energy markets, and may simply not appeal to Google’s founders, or to its ingrained engineering culture. This may just be an Eric Schmidt legacy which was doomed when he stepped aside.

Whatever it is, it’s likely that consumer behaviour will change over the next five to ten years and Google may have missed out on significant revenues and potentially a leading role as a gateway to the home. Microsoft, which owns Hohm and Healthvault, will certainly be pleased about this.

Of course, there remains the likelihood that creating this kind of business from inside Google is much harder given their size and cost base. And Google could simply buy its way back into the market if it gets interesting.

 Google’s track record in areas where skills beyond great engineering are required has of course been limited. Their record in social networking with Google Buzz, Google Wave and other initiatives is spotty at best.

In sum, I suspect that Larry Page looked at all the projects when he took over and decided that he didn’t like the Google Health and Power Meter projects, presumably for very valid reasons, including their current lack of scale and decided he wanted the resources focused elsewhere. I do expect though that there is every chance that Google will buy a company in this space in the next 5 years once the market grows and some new innovative service does reach the scale that Google seeks.




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