Clayton Christensen and Google both know something that the screaming masses don't. They live The Capitalists Dilemma.
Google builds products, but they aren't a product company. They are a conduit company. They build paths to information, and in-so-doing build paths to tomorrow. As their sector is ridiculously fast moving, Google's best shot at sustainable growth is in betting the farm on change. Google is betting their future on productive rather than migratory capital.
Here's how this works:
Sustained growth doesn't come from return on net assets or capital, but future return on not-yet-conceived products. In the long term, Google can't afford to sit on their cash or maintain stagnant products. Google's best shot at the future is to invest their capital in 10x ideas that create new markets.
In the long run, Google's success will not come from owning a category as much as being the pipeline through which innovation will flow. Google is trying to become the platform for the next-wave industrial revolution, not an also-ran in commoditized arms races around decade old technology.
This is a bold mission that hinges on the latest economic theory. And it makes all the sense in the world.
I would gladly trade Google Reader today for serendipitous computing (aka wearables like Glass) or automated transportation (self driving cars) tomorrow. Google has the economic strength and confidence to focus on tomorrow. Even if it means sunsetting a product with a few hundred thousand steady users today.
Here's to hoping investors and the market understand and appreciate what the press and many frustrated influencers don't.