Google Labs Shuts Down to Streamline Operations

Google is shutting down its Google Labs division to streamline operations and focus on more profitable projects

Google Labs was a testing ground for Google's new projects, such as Google+, as well as features for the Mountain View, Calif.-based company's existing products, including Gmail, Google Calendar and its Android mobile OS. It allowed users to try out prototype projects and then offer feedback to engineers before releasing new programs to the public.

Bill Coughran, Google's senior vice president for Research and Systems Infrastructure, said Google Labs has been vital to the company's growth, but said Google needs to shift focus and concentrate more on its already-functional projects. Some of Google Labs' projects are set to end immediately, while others are being shifted to other areas in the company.

The shutdown may have something to do with Google's efforts to rein in spending. The company's second quarter report revealed operating expenses rose almost 50 percent and equaled about a third of its revenue, leading some analysts to worry operating costs and acquisitions may hinder future earnings.

Google CEO Larry Page, who assumed the helm in April, says streamlining the company is a priority. He maintains Google spends most of its money on its core products, and promises it will continue to do so. However, since many investors are worried about Google's recent expensive acquisitions, such as YouTube, the Google Labs shutdown may reassure investors that Google is keeping a closer eye on its operating costs.
By shuttering operations such as Google Labs, which allows product testing but doesn't bring in revenue until it releases the products, the company can concentrate more on proven money makers such as Android and AdSense. The company is already devoting resources to bolstering its Android OS, tackling fragmentation and ensuring a consistent user experience across its various implementations by phone makers.

Google Labs is just one casualty of the company's streamlining plan. Google this year has closed personal health records site Google Health and ended Google PowerMeter, a Web-based monitor for home energy use.

By shutting down Google Labs, a division that has served the company well in the past, Google may be sending a signal that it means to cut back on duplication while concentrating on its more public efforts, which may benefit existing projects such as Google+ and YouTube.