When Google (GOOG) announced a spring cleanup, Google Reader was included as one of the services that would be shut down. Other products being shut down include Building Maker and Cloud Connect. Google Voice for Blackberry (BBRY) is being retired too, though solid HTML5 support on Blackberry devices should make the impact less painful. [More Tech: Windows Blue: Briefing on the Next Windows Platform ]
Ending Google Reader and the other product makes sense. The apps do not make revenue. Yet as an avid Google Reader fan, the shutdown will lower interest in using Google+. Google’s effort to simplify its product offering might have the opposite impact for its loyal user base, creating an opportunity for competitors to gain users.
In Google’s defense, Google may have cut Reader due to the cost of complying with privacy. Collecting user preference data, such as reading interests, +1’s, and favorite articles is a way for Google to monetize Google Reader. Additional costs would be required in managing and addressing concerns for user privacy.Investing Ideas 1. Facebook, Inc. ( FB): FB, which is shifting its advertising strategy, could build an RSS reader that allows users to choose the content they want on their profile. Facebook is experimenting with ad posts on the main news feed, and increasing its focus on mobile ads. Having a website content aggregator like Google Reader would solve its problem of a declining active user base. 2. Microsoft Corporation ( MSFT): Microsoft could build an RSS reader that integrates with Outlook.com and/or its Bing search engine. By winning over loyal Google Reader users, Microsoft gains Bing users, making its online Office offering more attractive as compared to Google Docs, and could promote Skype (which competes with Google Hangouts). Investors might want to be less interested in: 3. Google Inc. ( GOOG): Since the announcement, Google shares dropped steadily, down 6% from the $844 peak reached at the beginning of March 2013. The mantra that “less is more” may not apply with Google Reader closing. Google Reader was a preferred gateway for accessing content for other popular sites. Shutting this down will cut a mature user base, and will indirectly hurt the Google+ growth strategy in the short term.
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Written by Chris Lau, Kapitall Contributor