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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!
When I first read this I thought about IBM back in the day. They could put a small company out of business simply by announcing, "Yeah, we're working on that too." And they had to fight off some well-founded lawsuits. Eventually, IBM became known for quiet and consistent R&D (Giant MR comes to mind) because they had to watch what they said.
Will that day come for Google? I think not (or it's a long way off). IBM's issues with the courts came around the same time Ma Bell was dismantled, which couldn't happen now.
I'd rather have someone respond than be modded up.
The operative word being "dominant". Google isn't the only big-time company that obviously throws money at people to use their shit (remember MLB and Obama's inaguration streaming with respect to Silverlight?), but they might be one of the few to actually succeed at it.
Bing is a joke, Yahoo is for 12 year-olds. If the other giants actually innovated instead of rehashing and hyping to death the same tired shit, maybe we'd have some real competition.
The one thing about Google you have to understand is that they employ lots of very smart people: they employ scientists, research graduates, economists, technicians and business people. They have calculated with sheer intelligence all business moves: they know what they need to do to get the best business and business position.
In short, they are the foundation. Eventually they will collect all human knowledge and make the encyclopedia that encompasses all human knowledge... this is just a rouse for the real purpose of Google...
I wonder if they employ psychologists?
Slashdot needs Geekcode | Can anyone recommend any good SCIFI? My tastes: Foundation, Startide Rising, CITY, Ringworld,
Navteq was aquired by Nokia.
Food: It's whats for dinner
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.
It's only a matter of time before Android takes over top market share for smartphones, the only real question is how long it takes. Now before you start screaming fan boy, bear with me here.
- Android is free
- Android can run on almost any piece of modern hardware, on any carrier (you listening Apple? probably not.)
- Every major carrier and every major smartphone maker either already has an Android phone, or has one in the works
- Being open source, carriers and smartphone makers can customize it as little or as much as they want
- Once smart phone makers are hooked on free, the only reason to dump Android is if there's a better mobile phone operating system out there that's worth the cost. Tough to do considering Android will be constantly approved upon given it's open source. Seriously, why dump Android to pay a per unit license fee when Android can do everything most smartphone users want their phone to do (and more in some cases)?
Some disclaimers apply here:
- No I don't have an Android phone, but yes I've used it enough to be familiar with it (including 2.0).
- I don't think its 100% there yet, but it's not far.
- Apples UI design is definitely better.
I'm sure some will disagree with me, and that's fine. Obviously this is my opinion and a guess. If you're looking for some ammo though, I use a Pre, switched from an iPhone and am pretty darn happy with it.
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.
I find this concept baffling. There's a low barrier to entry, and if Google raised prices enough advertisers would go elsewhere. If customers didn't like the search engine, they'll go elsewhere.
This isn't what the antitrust laws were designed for, they were designed to prevent abuse of government granted monopolies or monopolies over physically limited (supply side) resources. There's no ethical or rational reason to define a monopoly as "being too successful in your field despite numerous competitors".
When one power company or phone company uses anti-competitive tactics to drive out their competition I'm all for going after their asses, but most applications of antitrust law nowadays are just bullshit crybabyism by competitors.
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.
Less than free as in beer, less than free as in freedom?
I thought we were talking about Google here, not Apple.
Please note, kdawson,
The day Google announced the free turn by turn navigation coincided with the day both companies announced corporate losses.
Who's to say how much either news contributed to the stock drops. I can't, and ignoring said fact skews the story. Bad editor, bad, bad.
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.
Japanese are comfortable being bombarded.
Too soon?!?
Science advances one funeral at a time- Max Planck