The Google Effect

Here guys, just thought this was a great read from Gizmodo about how scary powerful Google is. Here it is quoted from Gizmodo.com:

“Today, as soon as Google showed off its beta GPS navigator, the stocks of Garmin, TomTom and other companies in that industry fell into the toilet. It’s hard to compete with free Google apps, but that’s not why they’re screwed…

TomTom owns Tele Atlas, who drives the roads of the world in order to make maps, and until recently was a major map provider for Google. Nokia owns the only major competitor, Navteq, who has also provided maps for Google. Look at Google Maps now, though, and you’ll see that the entire US bears just one single copyright: Google’s.

Street View wasn’t just a neat way to get imagery to accompany the data already found in Google Maps. As it happens, it was a way to drive the same roads that were already in Google Maps, tracing them with Google’s own road teams, and—through efficiency and brute force—do away with those costly map licenses. Google has mapped the US, and will surely map the rest of the world soon enough.

This is just a timely example of Google’s monstrous growth, and the destruction it causes. Any business that trades in data or packages it for public consumption may one day face the same issues. It’s not just whether or not to compete with the behemoth, but even whether or not to go into business with it. In either case, there is a chance of being destroyed.

Garmin might have a long-standing relationship with Navteq, but they don’t own any maps. How can they compete with a free Google app when they still have to pay? (Worse, Garmin is still stuck in the hardware business, where profits are extra thin.) TomTom owns the maps, but charges $100 for their own app because they also make money licensing maps to car makers, competing GPS makers and web services—like Google. Before, Google was a fat revenue source for TomTom; now Google is a sprightly competitor.

If a unique supply of data was the only thing keeping TomTom and others on the Google chuck wagon, who will be next to fall off?

I was always afraid of spiders growing up, not because of the eight legs or the umpteen eyes, but because of the way they kill their prey. They get them in a nice convenient position, then they use their venom to hollow out their victim’s insides, until they’re just dead-eyed shells. To be killed in such a manner is my worst nightmare; perhaps I should ask TomTom how it feels.

I am a fan of Google products, and a daily user of them. This is not an attack of Google’s business practices, but an explanation of the sort of destructive innovation that has made them so huge so fast. (It’s also a warning to consider carefully any entities that gets this strong, especially if you plan on going into business with one.) Though predecessors like Microsoft experienced similar explosive growth, and grew a similar sudden global dependence, we’ve never seen the likes of Google. The GPS business isn’t the only one that will be consumed by its mighty maw before it’s had its run.

We’ve already seen the devaluation of the office apps that make Microsoft rich; we’ve already seen how Google’s experiences with Apple and others helped it create telecommunications platforms (both mobile with Android and completely virtual with Google Voice) that threaten its former partners’ existence; we’ve already seen how Google converts photos, videos, news wire stories and other former commodities into freebies by smashing the false notion of scarcity that “service” providers had literally banked on.

So who is next? What other hallowed brands will go the way of Garmin and TomTom? Corbis and Getty? Reuters and AP? Warner and Disney?

This is a tale already told, bound to be told again, but the fundamentals are worth studying—even if we use Google Docs spreadsheets to do it. I have never spoken with a spider, but I am certain they’re not evil, despite what fantasy lore tells us. They’re just doing what comes naturally, and doing a hell of a job.

-Wilson Rothman, Gizmodo Writer

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