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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.

5 of 330 comments (clear)

  1. Re:So let me get this straight... by TooMuchToDo · · Score: 0, Offtopic

    I would argue I can do far more with the Android environment than with the iPhone. Not a fan boy, just an objective opinion, as I've developed for the iPhone before and am neck deep in the Android SDK at the moment.

  2. Re:So let me get this straight... by ajs · · Score: 0, Offtopic

    Sounds very much like the experience on an iPhone, actually.

    Stock from the carrier some stuff is restricted. Jailbreak it and it's the wild west.

    I've had both an iPhone and an Android. I jailbroke my iPhone. I haven't bothered with my Android. Open development means that, for the most part, I don't have to. If I decide I want something that the firmware doesn't allow by default, I'll root it, but that wasn't where I stood with the iPhone.

    Google Voice, file transfer software, alternate music players, backgrounding, and many other basic features available to Android users MUST be gained by jailbreaking on the iPhone. That's why it's called "jailbreaking."

  3. Re:So let me get this straight... by Ash-Fox · · Score: 0, Offtopic

    I just got a G1 from my brother to use for development. I thought it was very cool I could wipe the firmware from T-Mobile and put a custom mod on there that allowed me to move apps to the SD card, use WiFi tethering, etc. Show me another phone/OS environment you see that happen on.

    Maemo 5.

    --
    Change is certain; progress is not obligatory.
  4. Mod parent up! by mcvos · · Score: 0, Offtopic

    I just got a G1 from my brother to use for development. I thought it was very cool I could wipe the firmware from T-Mobile and put a custom mod on there that allowed me to move apps to the SD card, use WiFi tethering, etc. Show me another phone/OS environment you see that happen on.

    Maemo 5.

    I already posted, so I can't mod you up anymore, but yes, Maemo sounds like it beats Android at its own game. No need to root it, because you are already root. It's your machine, after all. And the machine is basically a full PC in the shape of a smart phone.

    Still Android sounds like it's going to have a lot more support, so I'm still undecided.

  5. Re:So let me get this straight... by d3ac0n · · Score: 0, Offtopic

    Just as a side note, for all the Android fans out there, the Palm's WebOS has had the exact same ability since release as well.

    (In regards to not needing to "jailbreak" the phone to put cool mods and 3rd party stuff on it.)

    Just so you know.

    --
    Official Heretic from the "Church of Global Warming". Proven right thanks to whistle blowers. AGW = Flat Earth Theory