Why Google Voice Reminds Me of AT&T
And Not for the Reasons You May Think
First, let's put Google Voice in perspective. I'm going to put it out there and say Google Voice is, IMHO, a refined GUI within a fairly standard VoIP version of unified messaging with number portability thrown in (sorry all for the techno-jargon, but a factual articulation of the technology seemed in order).
Nice, but hardly deserving of the media gush that quickly followed this re-announcement, especially since Google Voice is a rebranded version of its GrandCentral "one number for life" initiative launched in 2006. This notion of having the same phone number for life has been done and redone dozens of times in the past 12 or so years. Of course, we all know that anything Google launches tends to bask in the Google glow, defying critical analysis.
Computerworld's Mike Elgan correctly contended that Google intends to monetize this free service via new advertising vehicles within its voice network. But that answer still didn't get at the "Why now?" part of my question -- until he made another observation: "Google Voice means Google is technically, literally and actually a telephone company."
And then I was struck with deja vu -- Google is doing now what AT&T did in the 1980s and 1990s. I know since I worked at AT&T at that time.
First a quick AT&T history lesson. From the 1980s to the mid-1990s, AT&T was in its full power as a global innovation brand fueled by its dominance in the communications business. While the diversity of the AT&T business was amazing, it was generally focused on communications and it stayed "close to its knitting." (AT&T had many such quaint terms.)
But competitive communications pricing pressures being what they were, AT&T expanded into business well beyond its core competency starting in the late '80s. It dabbled in home security, launched PCs, sold electronic games and even explored pay per view. It did this so it could grow by controlling digital-information delivery channels from source to final consumption point, all in the name of leveraging the vast AT&T infrastructure. This explains lots of these diverse AT&T businesses, including its short-lived attempt to build its own internet via a project called HomeCenter, circa 1994.
These ambitious (dare I say arrogant?) goals were necessary to fund its "big" company overhead. It played in lots of industries because it could and because the cache of the AT&T brand blinded the leadership into believing that such an AT&T Information Network goal was achievable. Tons of resources were thrown at these diverse business plays in the hope of reaching the business promised land that a lock on controlling information to users would have provided.
We all know how it turned out. AT&T went from a powerhouse to literally being almost a shell of its former self, regulatory issues notwithstanding. Only now, nearly 25 years later, is it beginning to make a brand comeback. But it will probably never relive its former glory days.
So flash-forward to Google today -- why launch Google Voice now? Right now, Google is in its prime and has become the arbiter of technological coolness, much the way AT&T was in its day. And, like AT&T in communications, Google has a very strong hold on the online ad market. But it's facing new types of pressures from technology, as well as new business models. Furthermore, the Google pay-per-click money machine is losing its grip and has, by many accounts, already plateaued. This is similar to what happened with AT&T when MCI entered the field.
Much like AT&T did 20 years ago to maintain its growth, Google is trying to do the same -- control the data distribution channels. In the case of AT&T, it was all about information delivery to business and residential users. In the case of Google, it's all about advertising delivery to its "product" -- the users of its services.
The trouble with wanting to dominate all delivery channels (whether it be information or advertising) is that you are forced to go further and further afield from your core competency. And while playing in disparate businesses is something a leader brand can afford to do, over time the core business tends to suffer -- slowly but inextricably. Then at some point, you are willing to throw out the knitting needles. AT&T did, and it did not end well. Google looks like to be headed in the same direction.
The launch of Google Voice lets me see these parallels more clearly. As wonderful as Google Voice may be, I am tempted to advise: "Stick to your knitting."
~ ~ ~
Judy Shapiro is senior VP at Paltalk and has held senior marketing positions at Comodo, Computer Associates, Lucent Technologies, AT&T and Bell Labs. Her blog, Trench Wars, provides insights on how to create business value on the internet.
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Ya can't say you didn't warn them.
I would argue though that AT&T (and other telcom providers) were further encumbered by the regulatory environment.
But the parallels are striking. Thanks.
Everybody reading this should be familiar with the FCC's 2008 700MHz spectrum auction for Internet use. The spectrum is now available due to TVs recent move to HD.
The big bidders were AT&T, Verizon, Google, a Craig McCaw group and a regional bid by Cablevision for metro NYC.
Prior to the auction, Google won a government ruling that if a bid of at least $4B came in through the auction, it was in the best interest of all users of the spectrum (customers), to be able to change their web access provider at a moments notice. That means a tool on a consumer's web enabled device (smart phone or computer) could continuously search for the best access price and always connect customers at the lowest cost available, which might even be free. That ruling is currently being challenged by CTIA (The Wireless Association) for obvious reasons.
The technology now exists and is waiting to be unleashed to provide omnipresent internet access at substantially higher speeds, 50-100x faster than current speeds. This will enable a lot of magical things to happen, particularly as it pertains to two-way, real time video communication.
Independent of the new spectrum yet to be unleashed, you have the rise of the smart phone, which is running on slow 3G speeds right now. But it's easy to imagine the capabilities at 100x faster speeds, that are everywhere and always on.
Smart phones will be the number one way US consumers access the web by the end of 2010. The math is very easy. Cell phones outnumber computers 3 to 1. Smart phone penetration is already in the double digits and only needs to equal 34% of all wireless phones to surpass computers. Best Buy conducted a survey in 2009 that found 40% of all non-smart phone customers intend to purchase one within the next year. Combine that with the fact that wireless phones by their nature have a much greater incidence of use than a computer, as they're always on and always with consumers.
Additionally, smart phones are WAP enabled. They don't have to use a cellular signal to operate. They can run off of the wireless internet. The only current limitation for a smart phone to circumvent the wireless phone spectrum via VOIP based calling is that wireless internet access isn't omnipresent with a single access connection.
What all this is leading to is a new playing field where Web enabled wireless tools will replace activities traditionally done by phones, computers, televisions, radios and more.
Google excels in the Web. That's all they're thinking about. That's why they;
1) bid on the 700 MHz spectrum
2) bought youtube
3) are getting into the "phone" business.
When will the government choose to unleash the new spectrum? It could be awhile as there a economic ramifications to it's release. When it is released, Google is prepared to compete and win.
Rodney Mason, CMO
Moosylvania
The Great State Of Design
www.moosylvania.com
www.twitter.com/rodmoose
www.twitter.com/moosylvania
The only point is that Google is a data focused company and with all its data and analysis, I think they are the first ones that will see if the tide starts to turn against them or their products.
Google has access to more data than any company has ever had, so hopefully it can use this to make their products better and avoid the traps of AOL, AT&T and Microsoft.
This may also be the reason behind much of their recent decisions to make new products open source, opening up access to their APIs.
http://thelostagency.wordpress.com
Paralleling AT&T and Google (historically), there are more similarities than not. Google is definitely over-reaching outside of its comfort zone and origins, and dabbling in too many things IMHO. This recent re-announcement of Google Voice along with the death of Google Notebook/Netbook (at least for now) is an indication of their lack of a clear vision and concise brand.
Google Voice, much like Gmail on steroids, is designed to rule the mobile computing platform.
Very smart decision on their part. Own the phone access and own access to the platform.
Why? Because it's all about mobile advertising which is in its infancy now but will grow exponentially...and quickly. That's central to their business model.
And Google will have unique advertising access. Smart.
Scott Lackey
Jugular, Co-Founder & Strategic Director
http://www.jugularnyc.com/blog
Perhaps, but never for free.
Likewise, AT&T at its most monolithic (and consumer unfriendly) never provided anything for free. (Roll-over Minutes don't count - you still have to pay for the actual service).
Google Voice - just like Google Search, Google Mail, Google Chat, Google Chrome, Google Maps, Google Earth, Google Docs, Google Calendar, Google Reader, YouTube, Android, Blogger, and every other service Google provides is 100% free.
And as the number of mobile handsets increases across the globe (and continues to far exceed the number of computers in use), it seems to make sense for Google to expand its relevance onto that platform. And since Google's core business isn't search - but rather "organizing the world's information" - and more and more of that information will be passed along over cell phones / mobile devices, I can't help but to paraphrase Arnold Drummond and ask the inevitable question "What'choo talkin' about, Ms. Shapio?"
Ernest Lupinacci
Ernest Industries
"When pushed to the limits of its potential ... the new form will tend to reverse what had been its original characteristics"
Examples include, like you mention, telco's becoming video providers while mso's become telcos; networks becoming computers (eg cloud computing) while computers become simply extensions of the network (eg netbooks). even something like a car he says, pushed to it's limits, will become something else -- a computer (GPS, ABS, temperature control, etc).
Stephen Byrne
www.diffusion.com.au
Twitter @spbyrne
Google should stick to its knitting!? Yeah... I guess they should just do search. They shouldn't get into email, video, online shopping, mapping, images, blogging, wikis, web browsers, office software alternatives... How exactly is VoIP, an internet media service, not part of their knitting.
And you talk about VoIP like its old news! VoIP is NOT a mature technology. Have you looked at Skype? Great features, but you can't dial 911 with it. Have you looked at Vonage? Their audio quality is junk and they're not as flexible as skype. Have you looked at VoIP phone handsets? They are generations away from being consumer-ready. VoIP is, in fact, a technology in need of a strong champion - like Google - who can fuel development of complete consumer VoIP solutions instead of the hobbyist junk out there today.
I won't draw any conclusions about your work experience but for me, I was fortunate to live in the middle of every major telecom milestone including mobile, unified messaging, VoIP and of course the Internet. I may be wrong in my opinion – but one could not rightly say "oblivious". As to Google's MO – uh that's easy as has been reported over and again. Its main business is not search – but delivering advertising messaging to its "product" (users) for its corporate customers.
As to your real point which was that anything internet based is "close to Google knitting", I disagree. Their core business is delivering advertising messages anywhere on the Internet and their goal is to dominate or create all these advertising delivery channels.
That's what I worry about. The newly evolving crowd-sourcing development technologies allow people to create very personalized experiences pretty quickly (ala APIs, widgets etc). This will fragment the advertising delivery machine beyond which any company can successfully corral. AT&T could no more stem telecom technology fragmentation trend than Google will able to constrain the fragmentary channels through which advertising can be delivered ala chat rooms and new interactive video communities.
As far VoIP needing a champion – again I do not agree. VoIP as a residential play will be always limited not because of a lack of category maturity but IMHO because of the continuing fragmentation of communications options from IM to the newer real-time Twitter feeds.
But then if, as you say "VoIP is NOT a mature technology" and that's been around for over 15 years, then that makes Google just about an adolescent. No wonder I worry.
Judy Shapiro
But seriously, the writing was on the wall. In fairness, though, Google has been gunning for Microsoft for a long time now -- the fun comes in seeing how they do battle.
Judy
Go here to read about a time line if you care to.
http://techie-buzz.com/featured/google-chrome-operating-system.html
I agree with ajasie that there has been information out there for a while now that Google may build and release their own OS. Afterall, Google did introduce Android for mobile phones, a company which it acquired a few years ago.
Should Nike stick to just doing running shoes? Why apparel? Why golf clubs?
Your logic would have told Google not to get into the email market too, right?
It's undoubtedly tricky to push into new areas and has many challenges. But that's what makes companies brilliant. Those that can execute should win.
Finally, I think you're missing a fundamental difference between Google and AT&T--business culture. I will agree with you on one point, we need to learn from history. But I think you're using Google as a convenient go to, but the example is flawed. It'd be like comparing United to JetBlue, Virgin America or SouthWest when it comes to customer service. Yes, they're all in the same industry but are different in more ways than they are similar.
But I do think that I am comparing apples to apples in one critical sense – AT&T in its day drove much of the technological innovation and thus market value. Google has that same leverage.
I do not question that a growth strategy can tricky – but business discipline within a corporate culture that is very successful is very hard to do because success often diminishes a company's ability to apply critical thinking and good old fashioned common sense.
That is what happened to AT&T and I see some of the same symptoms at Google. My worry largely stem from understanding that when big companies "dabble" in ever broadening divergent roads it can end badly.
But I concede the point – that there are probably more differences than similarities. Yet this one similarity has profound implications.
However, I think Google's moves make sense and it's learning what it's good at (not radio or print advertising).
The thing is, each of their applications make total sense.
It's not about getting into the phone business or the email business or the OS business. That's secondary. They're about the data business. The applications do one thing for Google, and one thing only. That is to generate data. Each interaction, engagement, use of an app = data. Their product strategy (where it makes sense) is to create applications that compel people to do this. That should be the measure of whether Google is on track or not.
Right now that data feeds into the most efficient ad serving system out there. The more important question for Google and the world is what's next with their monetization engine.
Now, if Google got into the airline business then yes, I would agree with you, they're dabbling where they shouldn't. But I don't think Google Voice is off strategy and thus a bad example.
"...controlling digital-information delivery channels from source to final consumption point, all in the name of leveraging the vast AT&T infrastructure. This explains lots of these diverse AT&T businesses, including its short-lived attempt to build its own internet via a project called HomeCenter, circa 1994."
What was AT&T trying to do with the data?
I still think it's really different.
Again the similarities are clearer to me than the differences.
Actually BuckyBoy, in the 1980's AT&T was one of the best loved brands because it was seen as a benevolent and very capable corporate custodian of the phone network. It is also worth mentioning that many people were the recipient of very low cost residential phone service that was almost free.
AT&T's consumer loyalty was piddled away when they were forced to compete against a competitor, MCI, who was actually inflating its earnings (though no one knew about it at the time). So it forced AT&T management to go into businesses they had no business being in. Customer loyalty was understandably shaken and the death spiral began.
My point is that AT&T enjoyed a brand equity that rivals anything Google enjoys today (the freemium model notwithstanding). Seems hard to believe in today's world – but it is true nonetheless.
Again -- the two companies both enjoyed a deeply loyal consumer base. Another similarity that is consistent between the two companies.
They'll have millions of voice mails to listen to and prefect voice to text recognition. AKA: Voice Parsing.
Imagine, you're watching an episode of "The Closer" and Deputy Chief Brenda Leigh Johnson is talking about her cat... a window pops up about Purina Cat Chow and where to buy it in your area.
Very valuable to advertisers. The fact that nobody sees this astounds me.
Been there and done that too :(
@JudyGShapiro -- Still don't agree with you using Google Voice in this instance. I couldn't agree more with your point about staying focused BUT you have to realize that this is totally on point for Google and remains a bad comparison to AT&T's failures.
I go back to my initial comment, do you think Google should have stayed out of email? Do you think Nike should have stayed out of apparel? It's the same thing.
But how far a company wonders competency-wise in its quest for growth is such a slippery slope that often once the slide has begun it is incredibly difficult to halt.
The Google Voice launch just made the parallels between the two companies more stark for me. Then, by sheer dumb luck, Google announced the day after I wrote this piece its foray into OS (again). I'll tell you one thing, for me Google going into the OS business feels like that line in the sand has been crossed – even more than Google Voice does.
My Grandmother had a saying, "It's good to be open minded, just don't let your brains fall out". I hope Google takes that lesson to heart.
Here's some food for thought about Google's strategy.
Google compels people to use its first product, Search, by giving phenomenal results. It builds a massive customer base.
Google creates arguably the world's most efficient matching engine to deliver relevant ads alongside. It does so by looking at search data and matches it to ads. Great. But, what happens when people leave the search page? Google loses their audience.
Google realizes that it has this very efficient engine they just need to get in front of people. What else do people engage with? Hmmm...email, IM, voice, other content. They create gmail, gtalk, Voice and its Content Network. On and on.
What happens when people leave these applications and make their way through the www? How does Google keep them churning out data? Give them an application where they can do all their www stuff!!! Welcome...Chrome.
Well, what happens when people leave the www and use other web services or web based applications (everything's moving to the cloud afterall)? Well...why not an OS that's designed to optimized web services and applications?!
It's not a stretch. It's genius!
Hence the danger. All these "genius" ideas are so seductive in a corporate environment because they are, well, genius. But then they hit the real world. Even by your own description, they seem to be gunning for dominant control of the WWW world, much like the AT&T world I referred to.
And that does not feel like stretch to you ripe for diasaster?
Let's look at results.
2008:
$21b in revenue
$4b in net income
Q1 2009:
$5.5b in revenue
$1.4b in net income
This in the worst economy in recent times.
I'd say those are pretty good results and a pretty good track record.
All that aside, you miss another key point about Google. Innovation and entrepreneurial spirit. Maybe you've never experienced the culture in the Silicon Valley, or maybe you have, I don't know. But you clearly don't get the desire to win and innovate. Google, Apple, Amazon, etc. They all risk through growth and innovation. Sometimes they fail but more often than not they succeed.
That's the point, Judy.
In the end, SirMichael, I hope you are right. I hope they manage to pull off what AT&T couldn't. I hope they avert the descent that tormented AT&T because when big companies descend they take a lot of little guys with them. I hope your faith in them is justified. I really do :)
I simply spoke from my heart when I worry about what happens to workers when big companies try to grow too far from their competency (however you describe it). I sat in those AT&T conference rooms when times were bad having to decide who to let go and who to keep – all because of a lack of business focus. That scenario is not unique to its time either. BTW, it's worth remembering that AT&T's "track record" was as solid as Google is today.
To re-state the premise of my article, I only said Google "reminds" me of AT&T. More to the point, though, I want to be wrong. And unless you have a crystal ball seeing into the future, time will be the final arbiter of how this debate turns out. Not you or me.
The AT&T of 20 years ago has very little in common with the Google of 2009, in reality.
For example, what IS Google's "core business"? Does it have one?
Some would say Google was founded on its search technology.
But, no, many would argue that all their revenue comes from Adwords.... and that Google is, in fact, an advertising agency.
However, with the prevalence of Gmail. Many would argue that, no, "I encounter Google many more times a day in Gmail than any other way. Google is an email company."
HOWEVER, if you ask the CEO of Google, I think he might tell you (and hasn't he said as much in his own interviews?), that Google is a Information Company. Google is about INFORMATION. ALL information.
Sorry to say it, but, the folks at Google today are at least 10,000 times SMARTER than the leaders of AT&T of 20 years ago.
Google plans to control, manipulate, "mash-up", resell, and use INFORMATION.
ALL INFORMATION.
They now have all web sites. They are obtaining more and more of all email traffic. Telephone calls are the next logical frontier of information.
Google Voice -- importantly -- TRANSCRIBES every voicemail.... and creates a permanent ARCHIVE of every voicemail, every telephone conversation, and every text messaging conversation!
What else is there!?!? If Google has every web site, every telephone conversation, every voicemail message, every text messaging conversation, and every email conversation.... The only thing left is recording, transcribing, and permanently archiving every PERSONAL conversation within your own home, office, and bedroom...
Think about it.
They are intent on "knowing" all of our conversations.
What they chose to do with all of that valuable information is the stuff of all sorts of theories... both fantasical futuristic predictions... and terrifying 1984 fears...