Certain Habits


How Google Leverages Technology to Dominate New Industries

Google has a knack for developing a technological capability and then leveraging it to transform seemingly unrelated industries, making a better solution, a FREE solution, or, more often, both.

Witness last month’s announcement of free turn by turn directions for all Android phones. This is the product of several capabilities.

First, Google has built the most comprehensive mapping information anywhere. They purchased Keyhole, a satellite information provider, and they continue to launch satellites to provide detailed geographic information and aerial photos within their maps. Then they drove cars around to capture street-level photos of most buildings in most areas. Unhappy with paying subscription fees for street mapping information, they built their own, proprietary database.

Second, Google, through their index and their Google Business Directory offerings, has the most comprehensive collection of data about local businesses and attractions. And they have the ability to close any gaps that are discovered quickly. If they’re not number one already in local information, they soon will be.

And third, they integrated text to speech and voice-operated command technology that they have built to give their navigation software a bunch of useful (“hands-free controls”) and wizbang (“voice-operated commands”) features.

The cost? Free. The combination? Delightful (if you’re a customer) and deadly (if you’re a competitor).

That last technological capability—speech to text, text to speech—is at the heart of other recent Google initiatives. Google Voice pledges to revolutionize personal telephony and voice mail. It brings the telephone into the Internet age (by making it manageable) in way Skype never did or could. Skype is a way to make calls, not manage communications.

Google’s unveiling of technology today that provides closed captioning for many YouTube videos is another example. The approach is brilliant on many levels. It leverages Google’s speech-to-text capabilities to make the fast growing form of web content accessible, for the first time, to the hearing impaired. Not stopping there, Google has married that capability to another core technology—language translation—to make it’s video content available to hundreds of millions or billions of additional customers. Not only does it expand Google’s market, but it does so in a way regulators and interest groups should appreciate.

Taken on its own, this announcement is just an expansion of a current product. But consider the possible extensions from here. What is the future of Hollywood as DVD revenues collapse? Anyone doubt that Google would be willing to use it’s video + translation technology to help Hollywood figure out improve digital video distribution (for a slice of the action?) Would they have much a choice if algorithmic transcription and translation became a baseline customer’s (or worse, regulator’s) expectation for how things should work online? Who else (save perhaps Microsoft) has the data set, computing resources, and computer science talent to build those capabilities?

I don’t mean to suggest that transcription and translation are core technologies that will prove decisive and power Google to conquering dozens of additional markets. Indeed, these are small compared to its index, search algorithms, ad placement technology, data, data centers, mapping technology and nascent operating systems. That Google can leverage non-core technologies like transcription and translation to earn advantage elsewhere, however, illustrates just how much more powerful their core technologies could prove.

If nothing else, these are interesting times.

[edit: I’ve just read Bill Gurley’s take on Google’s use of mapping technology in mobile phones. It’s smart on a number of levels and you should read the whole thing. Something I hadn’t thought about, however, was how Google’s ad technology can fund sales by offering users and manufacturers a share of ongoing revenue:

Google’s brilliance doesn’t stop there. It is hard not to have been surprised by the rapid rise in recent buzz surrounding the Google Android Smartphone OS. 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 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. Double ouch!!

Double ouch indeed.]

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