Less Than Free 330
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.
Re:More than free? (Score:3, Informative)
No. You get more, yes. But free doesn't describe what you get, it describes what you pay. And you are paying a negative amount. Therefore it is less than free.
FYI Navteq was not aquired by Garmin (Score:5, Informative)
Navteq was aquired by Nokia.
Re:Google is the Foundation (Score:5, Informative)
I wonder if they employ psychologists?
They employ multiple psychologists, each specializing in different areas of operation. This can be a huge help when attempting to understand why customers, partners, and employees behave the way they do. Add in the fact that by employing a large number of highly intelligent people, their employee population undoubtedly has a higher than average number of people with certain personality imbalances. It comes with the territory.
Android WILL take over. (Score:5, Informative)
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.
Stock Prices Falling. (Score:5, Informative)
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.
Re:Google is the Foundation (Score:5, Informative)
Searching the jobs site... [google.com]
Your search - analrapist - did not match any data available in our jobs section.
Please edit your search terms and try again.
Damn it... I'm just assuming all the positions are currently occupied...
Re:Monopoly (Score:2, Informative)
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.
Are you seriously saying there's a low barrier to entry on internet search?
New data center spending:
2006 - $1.9 billion
2007 - $2.4 billion
2008 - no sources?
Why would the invisible hand let a company take in 3 times their operating costs year after year? Surely if there is actually a low barrier to entry somebody out there would settle for just a measly 200% markup.
But don't let rational thoughts stop you, or the fact that there are only a few companies in the West that could even buy the hardware to compete with google, let alone the talent.
Re:Google is the Foundation (Score:2, Informative)
Comment removed (Score:3, Informative)
Who, coincidentally, give Ovi Maps away for free (Score:3, Informative)
With all of their phones.
http://europe.nokia.com/explore-services/maps [nokia.com]
http://betalabs.nokia.com/ovi-maps [nokia.com]
Re:Horseshit. (Score:2, Informative)
Re:most users aren't aware of how much google know (Score:3, Informative)