"There are two simple reasons for this: usage of Google Reader has declined, and as a company we’re pouring all of our energy into fewer products. We think that kind of focus will make for a better user experience."
Google wants to migrate its aggregation platforms to its social media service and help shift users to Google+ and other social tools.
Although it's true the Reader app is old and has been somewhat neglected by Google, its remaining users are exactly the people who don't want their news delivered exclusively socially by feeds like Twitter. They also don't care for the sleek, image-heavy magazine-style RSS readers offered by other developers.
Tech and media bloggers seem split, with some telling the rest to step into 2013. But as Jim Alley at Bloomberg Businessweek notes, "reminding your most loyal users that, in fact, you’re not the only game in town — oh, and it’s quite possible to switch — doesn’t seem quite as savvy."
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