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Less Than Free
VC Bill Gurley has up an insightful piece on the strategy behind Google's releasing turn-by-turn mapping for free. He calls it the "Less Than Free" business model, and it is beyond disruptive. On the day that Google announced its new service, the stock in the two companies that had controlled the market for map data, Garmin and TomTom, dropped by 16% and 21%, respectively. (Those companies had bought Google's erstwhile map-data suppliers, Tele Atlas and NavTeq, in 2007.) "When I asked a mobile industry veteran why carriers were so willing to dance with Google, a company they once feared, he suggested that Google was the 'lesser of two evils.' With Blackberry and iPhone grabbing more and more subs, the carriers were losing control of the customer UI... With Android, carriers could re-claim their customer 'deck.' Additionally, because Google has created an open source version of Android, carriers believe they have an 'out' if they part ways with Google in the future. I then asked my friend, 'So why would they ever use the Google (non open source) license version?' ... Here was the big punch line — because Google will give you ad splits on search if you use that version! That's right; Google will pay you to use their mobile OS. I like to call this the 'less than free' business model. This is a remarkable card to play. Because of its dominance in search, Google has ad rates that blow away the competition. To compete at an equally 'less than free' price point, Symbian or Windows Mobile would need to subsidize." Gurley speculates that the company may broaden "less than free" to include the Google Chrome OS.
The virtue of Android, from the carrier's perspective, is that it allows them to create terrible branded user experiences.
Don't blame me, I voted for Baltar.
or something...
Let's see, using dominance in one market to establish dominance in another market. Check!
It's certainly a hard deal to pass up for carriers. Is leveraging like this considered to be approaching an abuse of monopoly for Google?
As in beer. The cost is less than free because you get paid to drink the beer.
I have something in common with Stephen Hawking...
What am I missing?
You're likely missing the bigger picture.
Eventually google's turn-by-turn will have integrated street view imagery, and probably virtual advertisements on the buildings paid for by those businesses (or their competitors)...
Furthermore, as you pass areas of interest, you'll likely see wikipedia articles and user-generated-content (read: pictures/reviews) pop into view (like Google Earth), and eventually google will own your entire travelling experience.
Traffic. Online maps in many of the urban centers also report congestion and estimated delays.
No it's not. Having dominance in one market is a monopoly. Using dominance in one market to establish dominance in another market is an illegal monopolistic activity, in some countries anyway. Using a strategy that gave you a monopoly in one market, in another market is perfectly acceptable though which I think is what Google is really doing here.
ayottesoftware.com
you are very happy to point out that MS is convicted for abuse of a monopoly position, which is true, but please try not to make it complete fud-style.
First of all, having a monopoly is legal. Nothing wrong with that.
Secondly, MS got only convicted way after becoming a monopoly, AND abusing that position to work themselves into other market. Your comment makes it sound like it's the other way around.
Google can be argued to have a dominant position in search and online advertising, whether it qualifies as a monopoly you will have to ask a judge.
This subsidising of an ad-supported operating system imho does reek of abuse of position in one market (on-line advertising) to push out competitors in another market (mobile phone advertising).
You're not thinking BIG enough. Their stated goal is to monopolise any and all information available and put it in easily indexed electronic form. This includes, obviously, YOUR data, i.e. where you live/work (through IP tracking, gEarth), what you're interested in (Search, Youtube), what you consume (Marketplace, affiliates), aka your net worth, and any means you use to communicate and access data, be it through your PC (gDesktop, Chrome OS), mobile (Android+apps) or any other conceivable device/network.
And when you gaze long enough into the code, the code will also gaze into you.
Aren't those the same arguments used when talking about the superiority of Linux on the desktop, and yet we still have less than 5% market share?
Just sayin'
http://www.zombieapocalypse.tv/
"- Apples UI design is definitely better."
Yep, well, you just defeated your own argument.
A fair point, but there is the difference that the smartphone market is nowhere near saturated (although the iPhone is rather popular) and Android has solid support from major smartphone manufacturers and carriers. Of course, the iPhone has a serious foothold in the market at the moment as their App Store has had a significant head start. (Personally, I think the vast majority of apps should just be web pages anyway, so I don't think that should really matter.)
Mathematically you can - any time someone pays you you are effectively paying them a negative amount. Sure, physically you can't, but when has that ever stopped a slashdotter's argument? :)
That's also the only possible way 'less than free' would make any kind of sense at all. And 'more than free' can't possibly be what's being referred to in this article - I mean, if the price is more than free then the price has some positive value, so you are paying for it.
Absolutely! Linux on the desktop does share many of those common points. The key thing that distinguishes the two is that (in my opinion) Linux on the desktop doesn't actually compare well to Windows from a user's perspective. Unfortunately one of the major factors when deciding between the two is a dependency in what a person is used to. Fortunately, Android has FAR less of a battle to win in the smartphone space given how relatively simple phones are compared to computers and how poor Microsoft's offering is compared to the rest of the market.
I fail to see the harm. In order for this sort of thing to be illegal, some user somewhere has to come to actual harm somewhere. Instead of paying through the nose for navigation information (much of which is already public knowledge), people get it provided by advertising sponsors like they get their free TV. There's room for free TV and cable also. As long as the other providers provide a premium experience and content, they'll be fine.
Should they fail to provide a premium experience and content, they'll lose customers. Isn't that what's supposed to happen?
In the article he points out that Google wanted to do some things with the data that they didn't want to let Google do. They told Google no. In the old world, where the buyer of that data had no choice that would have been the end of the story. But now, apparently Google has the resources to build their own data and publish it however they like - they're not held hostage by the vendor of their information.
It seems fair to me that if Google takes the trouble to drive a car through and photograph every major intersection in the country, index it against their map, address and aerial photographs, they ought to be able to publish that data any way they like.
In a world where we have monopoly after monopoly leveraging their power to prevent progress, here we have a powerful company leveraging its tremendous market power to cause progress to occur. I think that's fabulous.
Help stamp out iliturcy.
The difference is that all the telecom companies aren't in Microsoft's pocket from the start.
Aren't those the same arguments used when talking about the superiority of Linux on the desktop, and yet we still have less than 5% market share?
Unlike the desktop, people don't have 20 years' worth of weird old DOS and Windows apps that they 'need' to run on their phones.
Plus I don't believe that Linus is paying companies to install Linux on their PCs yet.
Arguably, Apple has had great success by having a completely closed system which is why the argument that Android will succeed because it is open is such a fallacy in my opinion.
Android may be great, but its implementation is different on every Android phone. Different hardware, different features, different amounts of android functionality. You don't really have a consistent user experience any more than you do with Windows Mobile. Also, I bet that apps will not run the same across the hardware since so many different phones running Android have a wide variety of specs. I can see it turning into the nightmare that game/application developers have when making an application for the PC - you have a few hundred million permutations of possible hardware combinations in your potential user-base - good luck getting it to work properly and consistently on all of them!
Even to this day nearly every app made for the iPhone/iPod Touch will work very consistently across every version. Granted, the newer versions of the iPhone and iPod touch run and load the applications faster than their predecessors but the overall hardware that the developer has to deal with is very nicely uniform. This is also one of the core reasons why I think that the 360 and PS3 and Wii have such success compared to the PC for gaming. When you buy a game for those platforms you expect that you can take it home and it will just work.
I'm excited to see Android provide some real competition to Apple but realistically, even if Verizon does get the iPhone because Apple is facing strong competition from Google's mobile OS, do I really want to go back to Verizon? They have a great network sure, but they also had crappy customer service, dicked with their phones by disabling features and then trying to sell them back to me, doubled their smartphone cancellation fee and employ all kinds of scumbag tactics including selling unlimited data plans that aren't unlimited. Why is everyone so keen on being their customer again?
"To strive, to seek, to find, and not to yield." - Tennyson
Ahh, another demand-created "monopoly". I find that concept just fascinating. Apparently in this day and age you can have a monopoly in something even when there are 50 alternatives just because the consumers overwhelmingly choose your product.
Then how do you, as a matter of law, divide between "good" monopolies that just provide the best service for customers and "bad" monopolies that use armtwisting to get ahead?
What about companies that do both to get ahead in a single market?
What happens when a company gets its lead position in one market the "good" way and then uses its power in that market to leverage its way into another market that it normally wouldn't be able to compete well in?
Because that's what our laws against tying are about. I'm not sure that Google counts as a monopoly, but what they're doing is clearly tying. They are using their ad services to squeeze competitors out of the mapping market in the same way that MS used its OS dominance to kill the original Netscape. Mind you, I'm not saying that Google is violating antitrust law (since I know enough about antitrust law to know how little I know), but we're not talking about Google winning the mapping market through just being awesome. We're talking about an unfair pricing advantage.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Windows did not dominate the OS market by superior design, but by superior approach. MS built a platform and let any hardware manufacturer use it. Google apparently read their tech history and is taking the same approach MS did a few decades ago, with the open factor as icing on the cake. I expect the rewards to be huge.
Shiny and marketing only go so far.
Aren't those the same arguments used when talking about the superiority of Linux on the desktop, and yet we still have less than 5% market share?
Just sayin'
but
1. there are no cant-live-without apps preventing people from migrating
2. people buy new cellphones more regularly than they buy new computers, and featurewise, new smartphones / older ones >> new PC / older PC, so the incentive for switching is there
3. they have the support of carriers, and last i checked dell and hp are in microsoft's pockets
4. users are not expected to install android on their phones
and so on
in other words, android has none of the disadvantages that linux distros suffer from
No it's not. Having dominance in one market is a monopoly. Using dominance in one market to establish dominance in another market is an illegal monopolistic activity, in some countries anyway. Using a strategy that gave you a monopoly in one market, in another market is perfectly acceptable though which I think is what Google is really doing here.
Exactly. Google's entire business model is:
1. Find advertisers willing to pay to get ads in front of people.
2. Make a bunch of free services and software to attract people to put ads in front of.
Somehow this is now anti-competitive? Nothing is stopping anybody else from doing exactly the same thing. Google is just better at it than the runners up.
First of all, having a monopoly is legal. Nothing wrong with that.
But there *is* something wrong with that. The conditions of an Efficient Market, upon which our current iteration of capitalism is more or less based, actually demand competition and mathematically prove that both affordability and total innovation ultimately suffer when monopolies exist. Some economists believe 4 companies owning a total of 80% in a given market effectively form a cartel, and gouge their customers automatically; they charge more and innovate less unconsciously, even if they don't communicate with one another, even if they don't know the other 3 competitors *exist*.
Google probably controls almost 80% of search *by itself*. If 4 companies owning 80% of a market can do serious damage, one company owning 70% or 80% is a potential catastrophe.
Google gives us cool things for now, but ultimately their primacy online could be an even bigger problem than Microsoft's primacy in operating systems.
Unfortunately, a lot of this comes down to hardware support from cellphone manufacturers. Maemo 5 is open-source, and looks very very cool... However, the only phone that runs it is the N900, which is more of an old-fashion brick than a real cell phone.
I prefer Maemo, because I like to program in Qt4, rather than Java, and there are real advantages to a cell phone that runs Xorg, However, Android has momentum that I think is now unstoppable. If you want to hack for fun, go with the N900. If you want a customer base for your apps, go with iPhone first, and Android second. Long term, I suspect Android will even surpass the iPhone in user base. If you want to own an application niche, now is a good time to hop onto Android.
Celebrate failure, and then learn from it - Nolan Bushnell
ChoicePoint already knows all of those things about you and more, and then they sell that data to anyone who can pay. Way more evil than Google.