In Google's Killer App published in today's IMedia Connection, Brandt Dainow says that Google Analytics killed the Web Analytics Software Industry.   I think the answer is Yes and No.  Certainly, on the low end, the answer is YES, the low end is, effectively won by Google - ClickTracks, for example, is dead (for better or worse - and I would not be surprised if that's why John Marshall quit ClickTracks a couple of months ago).

Here's some excerpts from the Google's Killer App article and my thoughts about it:

"….Google Analytics version 2 is not revolutionary. It does not extend web analytics software by providing new forms of analysis. Neither does it extend our understanding of websites by offering new approaches. What Google has done is simply take every feature in every product on the market and put them all into one system, and then make it available for free.

I am surprised by the range of features Google has added. I would have assumed some had been patented by the companies that created them. I can only conclude this is not the case. The range of features Google has borrowed from other products suggests the web analytics software industry managed to do 10 years of research and development without registering even one patent. This must be unique in the history of computing. If Google has stolen patented ideas, then I can only conclude they simply don't care and will rely on their massive cash reserves to sort it out later.

I say this as someone who, until this month, ran a company that produced web analytics software and directly competed with Google Analytics. No more.  There is simply no way my organization can produce the range of features Google offers and make them available for nothing."

Google has not won, or even entered the higher end Web Analytics area - there's still no real segmentation ability, no Demographics Profiling, very limited Goal Setting and certain other limitations that make it unsuitable for Medium and Large Enterprise sites….and that's where the money is.  

In fact, there's no point in trying to make Google Analytics scale to large enterprise sites - GA was not designed for it and it would be way too hard - plus sites that are large have other requirements for privacy settings, accessibility settings, language settings, that would make a Google Analytics Enterprise product more of headache than a benefit.

But if Google were to buy Visual Sciences/WebSideStory or Omniture (not so much Coremetrics … I doubt they'd be interested in Coremetrics) they'd own all the Analytics Market, pretty much.

I also found Brandt Dainow's article easy to read and thought provoking - as it gets me to use Google Analytics in a different way than I'm typically using it :

"…What Google has done is make these five numbers consistently available for almost every report. Next, they have taken every measurement that is technically possible to get with today's technology and allowed you to cross-reference these critical measurements against them.
 
For example, I can compare bounce rate by screen resolution to determine how my site design works on different screens. This is an important issue at present as designers push people to drop support for 800×600 so they can do more visually exciting work. I was able to look at this issue for a client recently with Google Analytics and show them that failing to support this resolution was costing them $100,000 a year in lost sales. Small percentages add up to big numbers on busy sites.

Coming from another angle, I can review bounce rate by country or city. This will tell me how my site appeals to different regions. In fact, I can compare bounce rate by keyword, by search engine, by affiliate site, by ad campaign and probably by eye color for all I know."

But then again, in a moment of cynicism, the author states:

"..Thus in a few minutes, you can generate a complex reporting schedule and information flow that will fool the organization into thinking it has a handle on its websites. "

Google Analytics makes you think you have all the information you need at your fingertips, but it's more the perception of it than the reality.

"…Site design can be assessed via overlays that appear over your website and show which links were clicked and how they contributed to conversions. This system does deceive a little, however. It is not really analyzing each individual link. If multiple links or images go to the same page, they will appear individually analyzed, but in fact they are all treated as one and the same.

Management reporting is also catered for extremely well. Most people use web analytics not to manage and improve their site, but merely to create reports they never look at for their managers, who also never look at them. Google makes this pointless process very easy. You can create mailing lists so reports can be emailed, create user-access accounts so people can see the reports online and schedule regular report runs."

"…The shape of the web analytics software industry has greatly changed with the new version of Google Analytics. In my view, everyone else is dead, they just haven't stopped moving yet. If you haven't installed Google Analytics on a site and devoted some serious time to it, you're already part of the previous generation.  "

Again, an over simplification of Google Analytics dominance to get people worried; I don't buy it for the medium to high end customers that simply need a lot more customization and range of features Google can deliver today.