The rate of innovation at Google has yet to let up, with announcements this week including:
• Android 2.0, including a software development kit for the latest version of the mobile operating system, which will appear first in the Droid from Motorola at Verizon Wireless.
• Google Maps Navigation (available first in the US), a free competitor of portable navigation systems such as TomTom, which saw its share price drop on the news.
• Music Onebox, a search engine for online music, provided via cooperation agreements with companies such as Lala and iMeem, and which also functions as a music service.
• PowerMeter (for the UK market), a smart meter service.
• An application store for Google Wave, its collaborative messaging services.
The most important aspects of Google’s development factory are the quick tempo, broad reach and free availability of most applications. In addition, data is stored in the ‘cloud’. For the end-user, this means that he’s always sure to have the latest information (important for services such as traffic info on Google Maps Navigation), but also that he’s dependent on a (good) internet connection and data security is less than it might be on a closed network. However, availability and security don’t seem to be issues for the city of Los Angeles, which this week closed a multi-million dollar contract to use Google’s e-mail services for its staff. Notably, the contract is for a paid service.
The big question telecom operators are now asking themselves is: should we also start developing, or should this be left to specialists? Let’s just say, the jury is still out. During Telecompaper’s FTTH NL 2009 congress, one of the speakers noted that “connectivity is a great business”, and the applications just come along ‘over the top’ to us. There is a lot to be said for telecom operators just focusing on their core activity (connectivity) and maintaining their networks. Below we look at two examples: Google Voice and Vodafone 360.
Google Voice is an excellent example of a great application that wasn’t developed by a telco. Whoever thinks that applications like this can only be developed by big companies like Google is mistaken. Google Voice, essentially a call management service (see our Research Brief ‘Google Voice: call management or common carrier?’), was originally built by a company acquired by Google, GrandCentral. This wouldn’t be the only case of Google buying in new services – it didn’t create YouTube either. The best applications at Google, such as Google Earth and Gmail, were developed during the 20 percent of their time the company gives its developers for their own projects. Many more popular internet applications were not the product of big development factories, such as at Google, Microsoft or Yahoo!, but the effort of small start-ups, such as Skype, Flickr, Twitter, Facebook and MySpace. So, the lesson is, you’re never too small to develop your own products.
As a side note, Google Voice was not the easiest example of how to bring innovation to the market. The service has already drawn fire form AT&T, a company that would probably love to bring this type of innovation to telephony. AT&T filed a complaint with the FCC over Google Voice blocking certain phone numbers due to high termination rates. Smothering innovation like this is not really the best strategy for telecom operators.
Now for Vodafone 360. This is also a promising (free) application, developed internally by Vodafone, although also as the result of a takeover. What’s good about this is it also draws on the other strength of telecom operators (in addition to connectivity): their customer relationships. Telecom companies can be jealous of developers worldwide, but they have one thing developers don’t: a customer relationship. Vodafone knows its customers, has a billing relationship with them and even knows where they are and if they’re making calls or online. Vodafone 360, which syncs contact lists with information from Facebook and other online services, makes good use of this information advantage.
Finally, a word about ‘walled gardens’, a past-it strategy which Vodafone 360 is also somewhat guilty of by allowing the application to run only on exclusive Vodafone handsets. Of course Vodafone has the right to do whatever it can to attract subscribers. And possibly this is only a temporary thing, as the application doesnt yet work on all operating systems. The risk here though is a rival such as Google can easily launch a look-alike service (free of course), and just look at TomTom to see what the consequences are then.
To sum up, everyone can be a developer. But the best telco applications will be the ones that draw on the operator’s strengths.
