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If you care about #mobile and smartphones at all, it is crucial that you fully appreciate the depth of what is going on with Google’s Android strategy (which is why I’ve clipped a lot of key excerpts from this great post; by all means keep an eye on Bill Gurley, his stuff is usually excellent and in depth).
The only thing that they are lacking is Apple’s branding finesse, but it is pretty hard to compete with “LESS-THAN-FREE” in the long run…
…the more I wonder if I too may have underestimated the unprecedented market disruption that is Android.
One of Warren Buffetâs most famous quotes is that âIn business, I look for economic castles protected by unbreachable âmoatsâ.â An âeconomic castleâ is a great business, and the âunbreachable moatâ is the strategy or market dynamic that heightens the barriers-to-entry and makes it difficult or ideally impossible to compete with, or gain access to, the economic castle. …
For Google, the economic castle is clearly the search business, augmented by its amazing AdWords monetization framework…and Google would clearly want to put a âunbreachable moatâ around it. …
So here is the kicker. Android, as well as Chrome and Chrome OS for that matter, are not âproductsâ in the classic business sense. They have no plan to become their own âeconomic castles.â Rather they are very expensive and very aggressive âmoats,â funded by the height and magnitude of Googleâs castle. Googleâs aim is defensive not offensive. They are not trying to make a profit on Android or Chrome.
They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it…
Because they are âgiving awayâ money to use their product, this creates a rather substantial conundrum for someone trying to extract economic rent for a competitive product in the same market.
This is the part that amazes me the most. I donât know if a large organized industry has ever faced this fierce a form of competition â someone who is not trying to âwinâ in the classic sense. They want market share, but they donât need economics. Imagine if Ford were faced with GM paying people to take Chevrolets? How many would they be able to sell?…
Here is the one I see as the most relevant for all businesses large or small:
Business models sink or swim. Several new business models have emerged this decade, among them VoIP, Social Networks and online video. But with a few exceptions, they havenât been profitable. 2009 could be something of a crucible for them. Companies offering products or services for free will be tested as ad dollars remain scarce.
I would submit that this is very much true, and has been true for most small businesses even before the dislocations that 2008 brought us. Whether you are an entrepreneur just starting out, or already own a working business that you would like to grow with new products or services, (Profitability) Proof of Concept is EVERYTHING.
Many people, especially in the early phases of a new business (including many tech start-ups), concern themselves with a bunch of side-activities that I collectively call “playing business”: Things like getting stationary and business cards printed, building a brochure Website, hiring a lawyer to incorporate or file patents, etc. etc.
And the truth is, until you test your offer against the reality of your target market (if you’ve done your homework on identifying/selecting a detailed one), you have no business, and can dispense with just about all the formalities.
Pay-Per-Click (PPC) advertising through Google Adwords et al. has made it shockingly simple to market test, so that just about no one has any excuses left for not doing so (and the same goes for launching new products or services for an existing business). So why then is it that we tend to avoid going straight for the Proof of Concept first? The answer is simple: fear. We’d rather cling to a cherished illusion or dream, than find out the cold hard truth.
Fair enough, it’s understandable from a psychological perspective, but it is likely costing you and everybody else enormously in terms of the time and effort wasted on errant paths that should have been trimmed long ago, and in terms of failure to flexibly adjust to the realities of your market.
Here’s wishing us all the courage in 2009 to “Fail Fast”, that is to test fearlessly and up front. If you remember only one thing for all of 2009, make it these three little words: Proof of Concept.
If your business has anything to do with Google, or if you have any interest in the development of the Internet, or if you know what Google is :), you should take the time to review this 30+ slide presentation from French consulting firm FaberNovel, entitled "Everything you always wanted to know about Google but were afraid to ask" (or more likely, never stopped to ask).
If you’ve been wondering about what Google is really up to with its forays into mobile phones with their Google Android OS (now out on the G1 Phone with T-Mobile), why they don’t care when many of their services don’t monetize (yet or ever), and why Google is interested in "stealing our voices" (?!?!), then this slide deck is for you.
I am very serious about this, spending about 10-15 minutes studying it can save you dozens if not hundreds of hours of reading tech newsy blog posts, or checking Techmeme.com every few hours. Once you understand the big picture of what Google is doing, you can create plans for your own business around them if applicable (and if your business is going to thrive in the 21st century it is almost certainly applicable), or actually model (copy) some of Google’s strategies and principles.
Study especially the explanation of how Google uses network effects starting on slide #24. Happy strategizing!
As an aside, it is extremely profitable to search SlideShare.net for presentation slides in your area of interest. You usually get highly condensed/integrated information, you can use successful presentations as templates for your own work, and possibly upload your own presentations in your own areas of expertise.