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Less Than Free

Posted by kdawson on from the fine-price-point dept.

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.

4 of 330 comments (clear)

  1. that settles it. google is evil. time to move on. by Anonymous Coward · · Score: -1, Troll

    if you don't agree you can go back to sucking dicks for a five in the back alley of the art district. god damn faggots.

  2. Re:Google is the Foundation by zionian117 · · Score: -1, Troll

    That gets modded interesting? You clearly need to develop some real intellect.. maybe read some books and not just slashdot comments...

  3. Re:that settles it. google is evil. time to move o by Anonymous Coward · · Score: -1, Troll

    Parent is correct; the fact that he was modded down proves you are all a bunch of dick-sucking faggots.

  4. Re:Maybe I'm blind by Anonymous Coward · · Score: -1, Troll

    Its fascinating to see the Google Reality-Distortion-Field at work. Really fascinating..

    Maybe one day you can join the people in this world whose mental model agrees with reality.