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This is Why Google Scares the Sh*t Out of Companies

Wow. I mean really, WOW! One announcement of a Web based product that is currently inferior to your product that only runs on a very limited number of devices and your company looses Billions of dollars. Wow.

This is what happened to TomTom and Garmin stock prices when Google announced Maps Navigation. I suspect their stock prices will come back *some* but not to their previous levels. A new bar has been set and it’s very, very low. There was a certain amount of value in those companies because there existed a barrier to entry: satellites, relatively expensive hardware, distributors, supply chains, etc.

Google had all of that or didn’t need it. New rule book and they made it up.

Now a similar announcement by a different company wouldn’t have had this effect. But it’s Google. And Google doesn’t play the way your company does. It doesn’t have the same cost structures and it has a major cash cow that can fund that free product for many years before it becomes profitable. Basically long enough to drive you out of business. (This reminds me of another company in the 80′s and 90′s)

Google scares companies. But Google is also starting to scare people. It was bad enough when the only real data they had on you was your publicly available data and your search history. But now imagine a scenario that Louis Gray is toying with, where someone goes all Google.

You run the Chrome OS, which is basically the Chrome Browser running on Linux. You use only the Google Docs product and of course Search and Gmail, then Google Chat and  Google Reader. Now throw in to that an Android phone with GPS and Maps Navigation.

Google knows every Web page you visit, every search you make and has your documents and email in their searchable database, plus they know where you are at any given point (because no one goes further than 10 feet from their phone anymore).

As a user you can control the products you use and where your data is stored (at least to some degree). But as a company how do you compete with this?

A few days ago  I suggested every company needs to be reevaluating all aspects of their business and I meant it.

Going even further back, two years ago (ironically when writing about Google and their effect on your business model) I suggested to disrupt your own business model. Don’t wait for Google or someone else to disrupt your model do it yourself. At least theoretically. This way you’re less caught off guard and maybe even come up with a whole new business.

HP did this when they launched their Ink Jet devision to compete with their highly profitable LaserJet devision. Google even did this when they launched Google Wave, which is *supposed* to be a replacement for email.

What does your disruptor look like?

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About Tac

Social media anthropologist. Communications strategist. Business model junkie. Chief blogger here at New Comm Biz.

  • http://limpet.net/mbrubeck/ Matt Brubeck

    This wasn't all Google's doing. TomTom disclosed their third-quarter results yesterday, too. Their profits were down almost 50% compared to last year. So their business was already shrinking before Google started maintaining their own U.S. geodata. The Android announcement at the same time was just one more chapter of a story that's been going on for a while.

  • http://uptownuncorked.com geechee_girl

    Free is not always better. For example: I can't drive and chew gum at the same time, so a map I can barely see on my phone that I would have to hold while trying to drive is not good for me (or anyone). So, no Google Map app here - sticking with my large screen, safe driving TomTom :) (also @clubtomtom on Twitter actually replies to people and helps if you need it - None of the online Google presences ever reply to people. Plus, their products are clunky. Don't get me started on Google Voice… Docs…)

  • http://www.newcommbiz.com tacanderson

    Totally agree Matt. You can see TomTom was on a downward trend. I think in the short term they'll be the first casualty. Harmon still has a long life ahead I'm sure but not an easy one.

  • http://www.newcommbiz.com tacanderson

    Geechee. I totally hear you. But free doesn't have to be better or even as good. Encarta bs Britanica taught us that.

    People are already Putting iPhone mounts in their car to use Google maps mostly hands free. And Maps Navigation isn't tied to just a phone. Android is Open sourced, there's no reason Google or someone else could make a dedicated GPS with this.

    This is just the first warning shot. But it's going to be an ugly battle that Google is more well equiped to fight.

  • http://twitter.com/DroidForums Droid Forums

    I think this had more to do with TomTom reporting earnings that were nearly 50% lower then last year then with Google's announcement.

    http://www.droidforums.net

  • wesR

    It's interesting how the courts have really lagged behind the technology in regards to privacy, monopolies and market power. Yes smaller companies are fragile but the incredible power that monster companies like Google (and Facebook and Microsoft, the old gray man) is something that should be taken seriously by both our governments and venture capital groups looking for innovators. It's bad for the economics of the US and Canada to have companies with this much market power aggregating so much information about the public. Lagging even slower behind the courts are we the people who willingly lap these information services up without questioning the power we give Google and others.

  • http://twitter.com/jeffhora Jeff Hora

    Succinct analysis. You are well aware of the difficulty larger companies have with incubating disruptive business/products, especially if they could, in ANY way, shape or form, even shave the cash cow, let alone compete with it. We need to reassess how “internal start-ups” can be given room and oxygen to blossom into the goodness they can be (or crash and burn, so we can learn for next time).
    Another scary point you make is about PEOPLE becoming scared of Google's ubiquity. There are well recognized security concerns, and I still get a little wiggy if I find my data is being housed in ONLY one place (and/or by ONE company). If diversity is good for us in other areas, this might be another place to look for it.

  • http://www.newcommbiz.com tacanderson

    It's a difficult situation. I'm not one prone to government involvement - I don't have any more faith in them than I do the Big Co's, (SarbOx isn't the answer). But what scares me the most isn't the intentional privacy violations but the unintentional ones that will come from the companies not even realizing how much power an data they have.

    And, if histories any indicaator, I'm afraid people will need to get badly hurt before anyone does anything about it.

  • http://www.newcommbiz.com tacanderson

    Jeff, internal startups is a whole can of worms I've had to try and swallow before :p This is why big companies tend to acquire companies than start their own. It's cheaper to let 5 -10 startups battle it our and acquire the winner than it is to try and launch one silver bullet. There are legions of Ivy League PhD Business professors that specialize in just this very thing, I won't claim to do it any justice I'm a couple of blog posts.

    The data concern is a tricky one. (Pardon my uber geek analogy here but) it kind of reminds me of Star Wars where the Emporer wins no matter what the Jedi do. He's playing both sides.

    On one hand it's scary how much information one company may posses about you but what happens when multiple companies start “housing” your data and now multiple companies can start comparing multiple data points about you. Or even more likely we simply tell the World everything they need to know through our mobile/social activity. There's no way to know which way will prove the better way until one fails. An that could be a costly experiment.

  • http://www.newcommbiz.com tacanderson

    Jeff, internal startups is a whole can of worms I've had to try and swallow before :p This is why big companies tend to acquire companies than start their own. It's cheaper to let 5 -10 startups battle it our and acquire the winner than it is to try and launch one silver bullet. There are legions of Ivy League PhD Business professors that specialize in just this very thing, I won't claim to do it any justice I'm a couple of blog posts.

    The data concern is a tricky one. (Pardon my uber geek analogy here but) it kind of reminds me of Star Wars where the Emporer wins no matter what the Jedi do. He's playing both sides.

    On one hand it's scary how much information one company may posses about you but what happens when multiple companies start “housing” your data and now multiple companies can start comparing multiple data points about you. Or even more likely we simply tell the World everything they need to know through our mobile/social activity. There's no way to know which way will prove the better way until one fails. An that could be a costly experiment.

  • http://www.briox.com Itamar Rogel

    Good discussion here… Indeed the creation of data silos is a problem, and one not so easy to balance. I think the solution might be found in government regulation of data visibility, ownership, mobility & security, having rigid rules governing:
    1. The users' ability to understand what data a given corporation has about them and to view it
    2. The absolute ownership of the users on their data and their ability to have it, in acceptable effort - removed, exported and mobilized (to another service provider).
    3. Definition of “classes” of data sensitivity and what measures are required to protected the data at any such given “class” (not all data types are created equal; obviously i.e. your health records are more sensitive than your Flickr photo collection).

    Companies would still hold the data, but this kind of guidelines can make that situation more acceptable to live with.

    Since it seems that market forces haven't really succeeded in upholding the above guidelines, thus some degree of regulation is (sadly) required. The problem is that this would make it harder to maintain cloud-based services (thus hurting innovation), and even might render some business models (which enabled some free web-based services) ineffective… Still, in the long run - it seems like the least price to pay in order to maintain innovation (allowing new entrants to the market to compete effectively) and users' trust and freedom.

  • danbobinski

    Hiya Tac,

    Great post. It inspired me to blog a bit about why I decided not to run with Google to power my office operations (http://bit.ly/4q902e). There's just too much opportunity for things to go south. The title of your post was most apropo.

    PS. Like geechee_girl and a few others, I'll be avoiding Google's Maps Navigation. I'm sticking with my Garmin … code named “Bambi” (because I find myself saying “yes, dear” every time she talks). ;-)

  • danbobinski

    Hiya Tac,

    Great post. It inspired me to blog a bit about why I decided not to run with Google to power my office operations (http://bit.ly/4q902e). There's just too much opportunity for things to go south. The title of your post was most apropo.

    PS. Like geechee_girl and a few others, I'll be avoiding Google's Maps Navigation. I'm sticking with my Garmin … code named “Bambi” (because I find myself saying “yes, dear” every time she talks). ;-)

  • http://www.newcommbiz.com/does-anyone-else-just-wish-murdoch-would-pull-the-trigger-already/ New Comm Biz » Does anyone else just wish Murdoch would pull the trigger already?

    [...] This is Why Google Scares the Sh*t Out of Companies (newcommbiz.com) Share and Enjoy: [...]

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