Why Google Voice Reminds Me of AT&T

And Not for the Reasons You May Think

By Published on .

Judy Shapiro
Judy Shapiro
I'm an ex-AT&T "Bell head," so anything telecom always gets my special attention. When I saw the Google Voice re-announcement recently, I couldn't help wondering, "Huh, what's up with that? How does this fit into Google's core business?" Mostly, though, I was interested in understanding why this and why now.

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."

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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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