Google's Big Idea

I thought it was time we joined in all the speculation about what Google's grand vision is, especially as I'm increasingly convinced that, unlike Microsoft, they really "get" what's happening vis a vis mobile technology.

If you haven't been following recent events, let me start by summarising some of the key ones recently:

Google Talk takes them into VoIP. This means that they can offer free (or cheap) phone calls to anyone with a net connection.

This includes people connected to public or paid-for wifi connections. It also includes calls via a PC, or with a phone capable of hooking up via wifi. There's already models that can do this (Nokia's brick-like Communicator, as an example) and a lot more expected soon, subject to operators agreeing to distribute them.

Om Malik wrote a Business 2.0 story, which is a fine piece of investigative journalism and deduction. Om suggests that some of Google's recent moves indicate that they're planning (get this) to offer free wifi access to everyone in America. I know it might sound far fetched, but Om explains how it's possible and I certainly think it's more than plausible.

Google likes to think big and how much bigger can you get than becoming everyone's ISP and phone provider?

Google is about to raise another $4 billion by selling 14.159265 million shares. What do they need this kind of money for? Something big, obviously.

In case you missed the story or the point, the number of shares is based on the first eight numbers making up Pi. Clever or smug?

Google is about to launch Google Wallet, to compete with PayPal, based on numerous rumours. Again, I think this will happen. It's a great market opportunity that PayPal has had to itself for far too long. Enough people hate PayPal to flock to a rival offering, especially if it was run by Google. I've had a few run-ins with PayPal myself, so I'll shed no tears if they get done over.

But Wallet also offers their advertisers a way of charging for goods and services, especially for micropayments, where credit card charges are usurious (c 30% for transactions costing $1, for instance).

Google have also just announced plans to move into offline media, by buying up adspace at wholesale prices and selling to its advertisers for a better price than they could get on their own.

So they're exploring the offline world now.

Google has already launched a form of local search, based on sms.

OK, so that's some of the key trends and clearly, there's probably a lot else happening at Mountain View that we're not privy to - either by announcement or rumour and gossip.

All this suggests to me that they're going to make a play for the Long Tail of offline media, just as they've captured the Long Tail of online media.

Let me give a scenario, in maybe 10 years time.

You're out shopping, with your mobile phone, obviously. Your mobile has taken over as your primary means of making all voice calls - using Google Net's VoIP, naturally. Why would you use anything else, when it's free and works everywhere? You don't even have to search for a good connection like those old GSM phones.

Your phone has also become your primary means of accessing the internet, again via Google Net, obviously. Your phone is a thin client, with most storage and processing done on the web. Most people don't have even a PC anymore. If they want to do work that involves a keyboard and a bigger screen, they just pop their phone into the nearest docking station and away they go. With the added advantage that the phone has ensured that the screen layout, favourite apps, bookmarks and files are all available exactly as you'd want them.

Your phone also knows your location at all times - not through anything fancy, like Assisted GPS, but because Google Net knows exactly where you are on the Google Grid.

So suddenly, true location based marketing becomes a reality, no longer a question like "when the tech is available" or "providing you're in line of sight" or "if it's accurate enough".

Shops log on to Google's ZagMe service (indulge me!) and in the same way as they can tell AdWords who they wish to target and how much they're willing to pay, they can alert shoppers to offers they think they'll like. Unlike AdWords, where the merchant chooses keywords, ZagMe will work by matching merchants and shoppers, based on the shoppers' preferences.

Because the ads are served over wifi, there's no cost of transmission (unlike today's sms), so ads can be cheap and gross margins for Google, humungous.

ZagMe will also be a self-learning application. So if the shopper doesn't like a merchant or the type of offer, they can tell their phone and they don't get that again.

The shopper can also decide when and where they want to get ads. And how they get delivered - with an audible alert, or just a silent pop-up on the screen. They can opt out of any and all messages too, if they want, permanently or for a period of time - say, two hours.

So ZagMe tells you about an offer you want and you decide to go into the shop and buy it. You pay for it, with your mobile phone's Google Wallet.

Google Wallet is more than just a payment system though. It's a feedback loop providing information to the ZagMe ad server. If you've just paid for a coffee, for instance, you're not going to want another coffee ad for say, an hour.

More sophisticated that this, it builds up a pattern of your responses to offers and presents more of the same. It learns what'll make you buy a Hugo Boss suit as opposed to an Armani, and pitches the incentive just right.

ZagMe and Wallet become a useful and valued tool for shoppers, as great targeting, relevance and location make everything they send you welcome.

One of the things that Google has managed to do online and why they make so much money is that they've found a way to exploit the Long Tail of advertising - tapping into billions of marketing dollars that didn't really exist before. My bet is that they want to do no less than to open up the same Long Tail for real world merchants.

This would allow them to become the most dominant media owner on the planet, cornering the ad market on and offline and at the junction where the two meet. If they can have all that for $4 billion, it's a bargain.

A word of warning however. Moving from their existing model to a service where customer care will suddenly become important, will not be a stroll in the park. People don't generally call you to complain that their search engine results aren't very good. But they do to complain that their phone doesn't work, their internet connection is down or that their Wallet won't allow them to make payments.

So if you want to run the world's biggest customer care programme, maybe your should be applying to Google.

This has been rather long already, so what do you think? Am I on the right lines?

Om Malik thinks that it's about Pay Per Call and I agree that this could indeed be part of it. Oliver at my alma mater comes to the Pay per Call conclusion too, but speculates that they'll then launch an ad-funded free calls programme, which is the point where I have to say, our opinions diverge.

But do leave a comment and join the conversation on this one. Whatever Google ends up doing, it's going to have fundamental repercussions for business everywhere, as well as for all of us as technology users.

Comments

[Njar]

the google speculative future plan story is awesome. great link..

Makes we wonder if there could a be future wikipedia entry for a company which creates itself purely as an google aquisition target lol

[Dan]

I think what Google and MSN are doing really validates what companies like eStara, www.estara.com, have been doing over the past few years. People that advertise both in print and online, want to be able to track the success of their campaigns. Click to Call and Pay per call advertising makes this possible. So far, eStara has been the leader with large enterprise customers. It will be interesting to see what happens now that there's so much speculation about Google and Microsoft joining the race.

[Lars]

Russell.. Great Post!

Here's some food for thought from the other side of the pacific.. 8-)

The recent launch of Google Talk should come as a non-too-subtle sign that there may well be some interesting moves afoot for that companies somewhat latent mobile strategy. With their massive IPO piggy-bank, and well-suited for wireless key offerings, some industry wags (err.. that would be me) are wondering how long it will be before we hear public musings about the companies plan to acquire the only available U.S carrier left 'in-play', T-Mobile. With SoftBank (Yahoo BB) set to enter the carrier market here in Japan sometime next year, a comparative case study and the due-diligence has already been done.

As Googles main offerings; Search, Maps, Mail, News and Ads are all well-established and easily ported to mobile, I could envision a "G-Mode" style data portal extending the brands reach and help secure and improve market share on both sides of the equation. T-Mobile has about 20 Million customers and an estimated 6,000 hotspots, however their GSM/GPRS network is becoming slowly outdated and the parent Co. in Germany has been considering what they might do with an extra $30 Billion to spend in their domestic market vs. taking another investment plunge in the U.S. to upgrade for a new 3G system.

Both Google and Yahoo have established a critical mass of fixed-line users and need a better strategy to expand that model into the mobile space. By stepping into the carrier postition drivers seat they can control the users data experience and further monetize their existing contents and services. No doubt Google is aware of the SoftBank plan here and would be paying close attention to the business model, though while somewhat different with Yahoo already being a well-established ISP in Japan, certainly there would be some synergy between the two.

One can't help but notice how the mobile data industry in the US is, in some ways, comparative to i-Mode circa 2002. It made me think about how DoCoMo's ability to build their business model really did rest on the fact that they owned the pipeline into users hands. Merely creating and offering good contents would not be enough. They had a subscriber base with monthly billing already established so by offering custom made handsets with a 1 button click to their portal feature, the carrier was able to leverage their existing infrastructure in a controlled and compelling way.

The network will be the challenge. What is the cost/benefit for entry by acquistion vs. starting fom scratch? Look at Vodafone's market entry model; when customer billing, relationships with handset makers and the existing content providers base is all ready to roll so they can hit the ground running. The slow build from scratch to get all pieces of the puzzle in place is a somewhat unpredictable and drawn out process that in the end may well eat any potential savings in lost (time) opportunity costs.

A possible co-op situation with the T-Mobile side handling telecom and the Google camp bringing their established content and brand offering to the table, would seem to be a good match. Perhaps we'll see some type of JV that incorporates both parties expertise as a trial to what might indeed develop, based on success, into a larger play on the other side of the Atlantic with T-Mobile's parent Co. Deutsche Telecom.

imho..

[Marat]

Lars, it was a really awesome insight! What do you think about Google coming to JP and cooperate with livedoor and its WiFi network or snapping up Voda JP? Or maybe buying into eAcess and Mobile?

[Russell Buckley]

Thanks for the comments everyone - keep them coming!

Russell

[scott shaffer]

Russell,

Good stuff.
Here's what I see.

Google Grid/ISP (dark fiber, BPL broadband powerline,)

Google Talk -VOIP that works using the Google Grid

Google Pages -Google buys Yellow pages and offers webhosting to EVERY small business in EVERY city. Google then offers every small biz the ability to use their advertising in conjunction with a listing in Google Pages...think huge database filled with many businesses that dont have a web presence.

GooglePS...Google implements the ability to coordinate EVERY search function with GPS. They have that huge database with Google Earth and they could tie in a GPS function with it. Will G buy a triangulation company?

The way they launched Google Talk was smart. They were able to get thousands, maybe millions of cell phone numbers when people registered.
I see numerous opportunities with this.

The next thing they need to offer is Google Talk for mobile.

Google Mobile Talk would be a search window (like AOL IM) that comes w/ Google Talk and any keyword search is matched with GPS .

Just some ideas..

[Pete Cashmore]

Great post, Russell. I've always been interested in mass online storage, so this paragraph really caught my attention:

"Your phone has also become your primary means of accessing the internet, again via Google Net, obviously. Your phone is a thin client, with most storage and processing done on the web. Most people don't have even a PC anymore. If they want to do work that involves a keyboard and a bigger screen, they just pop their phone into the nearest docking station and away they go."

I've always subscribed to this view of the future, but with phones storing more and more data, others have argued that it could be stored on the device itself. The disadvantage, of course, is that you may want to use multiple devices to access your data, in which case online storage is a must. What is your opinion: online storage, on-device storage, or a combination of the two?

Also, do you think Google will dominate this mobie-led world, or is there room for a bigger player in this new system? As we move from an OS model to a web-based model, Microsoft is being pushed out of the way by Google. Could Google (and its PC+web model) be beaten by a mobile led company? Or is Google fast enought to adapt? The aquisition of Dodgeball, and the building of an extremely-fast grid suggests to me that they might - what do you think?

[Russell Buckley]

Pete

Thanks for your comment.

I think there's plenty of room for a new player, with mobile at the very heart of its strategy.

But Google's going to be pretty formidable. They have a high familiarity factor to carry across into mobile, clearly a very clever management, with real vision, great engineering talent and a humongous war chest make things happen - and to buy anyone who looks like a threat.

I keep coming back to the thought - when is Microsoft's mobile epiphany going to come? We shouldn't ever write off Redmond, but they're cutting it very fine this time. They need to turn the horse around and gallop out of the canyon, coz the one they're riding up is a dead end.

Russell