

Google Redefines Disruption: The “Less Than Free” Business Model - ypavan
http://abovethecrowd.com/2009/10/29/google-redefines-disruption-the-%E2%80%9Cless-than-free%E2%80%9D-business-model/

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pierrefar
So when MS bundled Internet Explorer, that was bad because it was using its
profits from selling Windows and Office to subsidize its entry into a new
market. Now that Google is using its ad revenue to build a mobile operating
system (not its core business) and bundle really good value-add, that's good?

Details: <http://en.wikipedia.org/wiki/United_States_v._Microsoft>

Is our memory really that bad?

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idlewords
Microsoft had a monopoly on desktop operating system sales. The question at
issue wasn't whether bundling unrelated products is bad in principle, but
whether it amounted to an anticompetitive practice because of Micorsoft's
complete control of the market.

Our memories are fine, you just picked a poor analogy.

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jeremyw
Actually, during that period, I was often vexed that very few separated the
good idea (bundling a web browser free) from the bad (anticompetitive OEM
deals) -- at least in the national papers. It all got lumped into Microhate.

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bad_user
sorry, i downvoted you by mistake :)

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iamwil
Thought it was a rather insightful read, even if it gives new names to old
things. It also makes me wonder what the next thing will be to marginalize the
internet, just as the internet marginalized the OS.

A lot of this strategy hinges on people using google as a default search, and
advertisers using it to perform targeted advertising. I think when you see
another way that people find out about things they want to use (and pay for),
that'll be a time when the tides turn. (saying it now, it sounds obvious)

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oliverkofoed
"Less than free" sounds a lot like what i would normally just call "revenue
share".

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fizx
As easy as it is to be cynical about this sort of thing, coining a new phrase
brings a fresh perspective, and additional abstraction.

Whereas before I thought of service pricing and revenue share as two separate
things, now I see them as part of a coherent strategy.

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msg
_Naysayers to these assertions will likely have the same retort – quality is
key. They will argue that Google’s turn-by-turn apps are inferior to their
well honed market leading products. ..._

I don't think this is credible just from watching the demo. The GPS devices
aren't connected to the internet. Satellite data, street view, and maps search
with voice are pretty killer. They're ahead of my Garmin on features.

More videos here:

<http://www.google.com/mobile/navigation/index.html#p=default>

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richardw
And traffic data with alternative routes to use. The connection makes it easy
to report congestion and get updates.

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jbellis
Dumb question: why is turn-by-turn so hard if you already have map data?

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baltoo
Dunno, but from the top of my head: one-way streets, no-left-turn-allowed-
here-signs, prolonged roadworks. Perhaps the map data doesn't even map up
actual streets that well (does this road go over that one, or is it the other
way around?).

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lunchbox
But Google Maps can already provide directions from A to B, and these factor
in one-way streets, etc., so Google should already have that data, right?

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limmeau
Apparently they used to buy that data from the big two.

[http://googlemapsmania.blogspot.com/2008/09/google-maps-
drop...](http://googlemapsmania.blogspot.com/2008/09/google-maps-drop-
navteq.html)

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mooism2
I don't think consumers will see it as being cheaper than free. I think
they'll see it as something that's part of the phone (service) they pay for.

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DrJokepu
I think by 'less than free' the writer of the article meant 'subsidized by
Google searches' - that is, not only Google gives away Android for free, it
also pays a share on the income on Google ads clicked on the devices to
carriers.

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mooism2
I was reacting to the last paragraph:

> Another perhaps even more important factor is that when a product is
> completely free, consumer expectations are low and consumer patience is
> high. Customers seem to really like free as a price point. I suspect they
> will love “less than free.”

I don't see how customers will see stuff from Google on their Google phone as
"less than free".

The carriers will get subsidies, but they're not the ones who will need
"patience".

So I don't see how the writer can justify that last paragraph. Am I missing
something?

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chipsy
The point about Chrome OS also being a revenue-sharing OS is a very perceptive
one. Existing Linux distributions already get significant revenue by shipping
a customized Firefox with a Google search box. Giving a share to the
manufacturer is the logical next step.

Revenue sharing seems to be a common evolution for many business models, where
the infrastructure exists to support it.

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chasingsparks
Couldn't you argue that they already have used this model before -- with
FireFox? Stretching it a bit further, couldn't you say PayPal used the "less-
than-free" model by giving their customers money for joining and for sending
joins in its early days?

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robryan
It's going to be really hard to compete with Google on these offerings as a
3rd party mobile platform provider or a GPS software provider when there main
product is up against a quality product given away to improve the overall
advertising business.

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tolmasky
At this rate everything will be made free and supported by advertising, at
which point there will be nothing left to advertise.

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sahaj
i don't get it? please clarify!

