Microsoft Charges For Windows Mobile; Google Pays You To Use Android — Why Google Was Smart To Destroy the GPS Navigation Market

TomTom's stock price

Google’s release of free turn-by-turn navigation in their newest release of the Android 2.0 operating system for mobile phones has turned the entire GPS industry upside-down. The incumbents’ and would-be competitors’ responses are a case study in desperation.

For example, the VP of Marketing for the makers of VZ Navigator:

The reason it’s sad for me is that Google is attacking the most profitable part of the mobile software development community.

And that brings us to the next point, which is that, if they’re going to make this part of the Android platform, who’s going to do all the dirty work? Who’s going to do that integration and porting work for each new device, each new screen, each new chipset, each new set of firmware, each new tweak to the OS.

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I’d be sad too if Google took over my entire market because their business model allows them to offer my most valuable product free. If you want to read something truly pathetic, follow the link and read the entire article.

Questioning Google’s engineering capacity is also pretty silly, especially since Android runs on standard hardware and handset manufacturers will decide whether to build compatible phones.

[Google is] willing to destroy value just so others can’t get at it, even if it means destroying value for itself.

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Google’s providing phenomenal value to consumers and handset manufacturers. Unfortunate that you can’t compete.

But the real story here is the pattern behind Google’s disruption. Nokia, HTC, Palm, Samsung, and LG used to pay a lot to develop operating systems for their phones (or pay Microsoft for Windows Mobile). They passed those costs on to Verizon, AT&T, Sprint, and T-Mobile.

Motorola Droid

Now Google is giving away a OS that can compete with the iPhone and offering to pay partners a percentage of revenue earned on searches conducted on the devices. The same model will apply when their Chrome OS is released for PCs.

This is a total shift. The industry used to spend millions, if not billions, on mobile OS. Now they can EARN money, and in most cases end up with an improved product.

Mobile, the next frontier of personal computing, is an obvious target for this model, but mapping and navigation are natural expansions, too. Whether Google Maps was created as a cool improvement to the then-current best maps available online or a tie-in to search, the potential as a business is enormous.

One solution to diluted advertising dollars is going local. Media giants are experimenting with localized news sites for good reason. Google has long offered advertisers the ability to display ads regionally, because roofers in Albany will probably find sales leads from the Albany Minigazette to be more valuable than leads from the New York Times. Imagine searching for Ethiopian food and being offered a coupon for a restaurant a few blocks away. What could be more powerful?

Google’s investment in geographical services starts to look pretty smart and integral to their core business. Increased relevance leads to more valuable advertising, which leads to higher payouts for device manufacturers and service providers, which leads to increased adoption and search growth.

Look for expansion in areas where Google already has service offerings. Their foray into books is the only other currently-visible service I can see with huge distribution potential. Meanwhile, mobile is the safest of bets.

One thought on “Microsoft Charges For Windows Mobile; Google Pays You To Use Android — Why Google Was Smart To Destroy the GPS Navigation Market”

  1. I find it kind of distressing that google bought AdMob. It seems like they have a leg up in monopolizing the ad exchanges in the mobile industry, even more so than they did with desktop ads.

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