Google's Strategic Threat to Carrier Margins for New Services

By: Alex Winogradoff Emailed: 1644 times Printed: 2110 times    

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While Google and the carriers might be in agreement on high level market principles, they disagree vociferously on how best to achieve them. This market polarization may take enough margin off the table for carriers to make their business plan for many new revenue opportunities (for example, entertainment, SaaS and mobile services) unattractive. Competing with Google on its own turf is also not a viable economic option. Unless carriers find ways to reach an accommodation with Google, Google's actions will continue to be disruptive to the telecom ecosystem. Although Google may not be able to exercise full control over everything, it has publicly espoused the following goals:

  • Google will do everything it can to "change the game" in mobility by stimulating the pace of mobile innovation in devices and applications. It will focus on encouraging the development of "smarter" edge devices plus spectrum-sensing technologies.

  • The goal of Android is to have mobile phones work at least as well as the computer, leveraging software toolkits based on Linux, Java and high-end Web browser technologies.

  • Enable the development of open standards and a consistent user interface across apps, allow mix and match, encourage a plug-and-play environment, and unified fixed and mobile access devices.

  • Looking to have businesses move all their back-office operations onto the Google cloud and have Google run all their computing and application assets. A current example is Google's e-mail on-demand offering, which eliminates need for manual self management, archiving and rapid recovery to meet government regulations.

  • Promote open and unlimited global broadband availability. It will continue to push for a national broadband policy (in the U.S. and globally), over-the-air use/sharing of spectrum (for example, 700MHz, white-space) and the development of spectrum sensing technologies.

  • Constantly trial and experiment with marketing approaches using "free" offers as an acquisition tool. Will not rush to monetize applications or services, but rather identify the most effective way to engender customer loyalty before monetizing.

  • Continue to develop horizontal as well as vertical applications and collaboration tools that can be easily accessed or shared and simple to use on any device or computer in the world.

  • Continue to evolve the Google search engine to be the world's best, creating an artificial intelligence capability to make it as "smart as people."


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