John Bell: Blog

Image by Fed­erico Fieni

I then asked my friend, “so why would they ever use the Google (non open source) license ver­sion.” (EDIT: One of the com­menters below pointed out that all Android is open source, and the Google apps pack, includ­ing the GPS, is licensed on top. Doesn’t change the argu­ment, but wanted the cor­rect data included here.) 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!!

From the “Google is the new Microsoft” depart­ment:  Bill Gur­ley writes about Google’s bundling offer of free turn-by-turn nav­i­ga­tion with their Android mobile OS, and how it’s a case of Google using their dom­i­nance as lever­age to pay peo­ple to adopt their prod­uct.  Hmm…where have I heard this before?  Though the prac­tice isn’t quite as new as Gur­ley makes it sound, the arti­cle is inter­est­ing because it goes into the rela­tion­ships Google estab­lished and broke off as it’s Maps ser­vice devel­oped.  Again, there’s a famil­iar tem­plate:  Buy data and exper­tise until you can ramp up your own ser­vice that com­petes with the peo­ple you were just part­nered with at a level that ensures you will win.

I do have to won­der, though, if build­ing crit­i­cal data appli­ca­tions on a frame­work that is depen­dent upon adver­tis­ing dol­lars is a good idea.  Look at what has hap­pened to jour­nal­ism, a socially-critical indus­try that became tied to adver­tis­ing money–the almost inevitable response to increased com­pe­ti­tion has been the devel­op­ment of out­lets like Fox and MSNBC.  Google’s less than free model may be tying peo­ple to their ver­sion of Android for the moment, but that will only last as long as it takes for some­body to fig­ure out how to make more money using the true open source ver­sion of Android than they can get from Google’s kick­backs.  When the com­pe­ti­tion inevitably increases, what hap­pens then?  Can Google con­tinue to make money with­out col­or­ing their data to make what­ever con­stituents give them the most cash happy?  With other map­ping com­pa­nies hav­ing been put out of busi­ness in the interim, it could well turn into another case of money-generated reality.

via Google Rede­fines Dis­rup­tion: The “Less Than Free” Busi­ness Model « abovethecrowd.com.