Comments on: Google Maps a Disruptive Path with a “Less Than Free” Pricing Model http://scholarlykitchen.sspnet.org/2009/11/04/google-maps-a-disruptive-path-with-a-less-than-free-pricing-model/ What's Hot & What's Cooking in Scholarly Publishing - from the Society for Scholarly Publishing Wed, 17 Mar 2010 00:34:25 +0000 http://wordpress.com/ hourly 1 By: David Crotty http://scholarlykitchen.sspnet.org/2009/11/04/google-maps-a-disruptive-path-with-a-less-than-free-pricing-model/#comment-5534 David Crotty Tue, 10 Nov 2009 19:29:14 +0000 http://scholarlykitchen.sspnet.org/?p=6796#comment-5534 I'm sorry, I was focusing more on the GPS consumer industry, the companies that make and sell devices (and apps) that are bought directly by consumers for navigation. They're the ones being directly driven out of business by this new move, Google's release of a free version of their product. That's a different thing from companies selling map data to other companies for re-use in applications. But if those companies had sold unrestricted map data to Google at a low price, then wouldn't they now be in the same position, as Google's free apps are going to drive all of their other customers out of business? I’m sorry, I was focusing more on the GPS consumer industry, the companies that make and sell devices (and apps) that are bought directly by consumers for navigation. They’re the ones being directly driven out of business by this new move, Google’s release of a free version of their product.

That’s a different thing from companies selling map data to other companies for re-use in applications. But if those companies had sold unrestricted map data to Google at a low price, then wouldn’t they now be in the same position, as Google’s free apps are going to drive all of their other customers out of business?

]]> By: Eric Hellman http://scholarlykitchen.sspnet.org/2009/11/04/google-maps-a-disruptive-path-with-a-less-than-free-pricing-model/#comment-5533 Eric Hellman Tue, 10 Nov 2009 19:02:17 +0000 http://scholarlykitchen.sspnet.org/?p=6796#comment-5533 You're confusing cost and price here. Google wanted to buy unrestricted map data, and judged that their cost would be less if they did it themselves. By looking at their revenue rather than their costs, Navteq and TeleAtlas took themselves out of the market. I guess you could take the point of view that in their lust for the GPS navigation market, Navteq and TeleAtlas failed to realize they were actually in the mapping business. You’re confusing cost and price here. Google wanted to buy unrestricted map data, and judged that their cost would be less if they did it themselves. By looking at their revenue rather than their costs, Navteq and TeleAtlas took themselves out of the market.

I guess you could take the point of view that in their lust for the GPS navigation market, Navteq and TeleAtlas failed to realize they were actually in the mapping business.

]]> By: David Crotty http://scholarlykitchen.sspnet.org/2009/11/04/google-maps-a-disruptive-path-with-a-less-than-free-pricing-model/#comment-5531 David Crotty Tue, 10 Nov 2009 18:36:07 +0000 http://scholarlykitchen.sspnet.org/?p=6796#comment-5531 The only greed I see here that's relevant is Google's. I do agree that GPS companies have overpriced their products, but let's say that all along they offered them at a very fair, or even very generous price, a great value to the customer. They'd be in the exact same position as they are now. Google is interested in selling ads, not in selling GPS systems. They're not competing by undercutting the GPS companies' high prices, they're not even in the same market. They're driving the value of the GPS companies' product to zero in order to sell a different product (ads). It doesn't matter what the pricing model of the GPS companies is, as long as it is higher than free. No one is going to pay even a very fair price for an identical product to one that's available for free. The only greed I see here that’s relevant is Google’s. I do agree that GPS companies have overpriced their products, but let’s say that all along they offered them at a very fair, or even very generous price, a great value to the customer. They’d be in the exact same position as they are now. Google is interested in selling ads, not in selling GPS systems. They’re not competing by undercutting the GPS companies’ high prices, they’re not even in the same market. They’re driving the value of the GPS companies’ product to zero in order to sell a different product (ads). It doesn’t matter what the pricing model of the GPS companies is, as long as it is higher than free. No one is going to pay even a very fair price for an identical product to one that’s available for free.

]]> By: Eric Hellman http://scholarlykitchen.sspnet.org/2009/11/04/google-maps-a-disruptive-path-with-a-less-than-free-pricing-model/#comment-5529 Eric Hellman Tue, 10 Nov 2009 15:20:46 +0000 http://scholarlykitchen.sspnet.org/?p=6796#comment-5529 I think the main lesson to take away from this is that if you make too much money from an asset that you control, there will inevitably be other businesses and business models that try to remove your income stream. If Navteq and TeleAtlas had not been so greedy, Google would not have gone into their business, and we'd all be happy with $10 turn-by-turn iPhone navigation apps. I think the main lesson to take away from this is that if you make too much money from an asset that you control, there will inevitably be other businesses and business models that try to remove your income stream. If Navteq and TeleAtlas had not been so greedy, Google would not have gone into their business, and we’d all be happy with $10 turn-by-turn iPhone navigation apps.

]]> By: David Crotty http://scholarlykitchen.sspnet.org/2009/11/04/google-maps-a-disruptive-path-with-a-less-than-free-pricing-model/#comment-5461 David Crotty Wed, 04 Nov 2009 15:43:35 +0000 http://scholarlykitchen.sspnet.org/?p=6796#comment-5461 I think the lesson here is that if you do business in the digital realm, there will always be someone who is willing to give your product away for free in order to sell something else (or sometimes to just give it away for free). This is something you must take into account in your business plan, that at some point you'll be competing against "free", and your product needs to have compelling reasons for customers to continue to buy it. Google is probably the leader in this activity (Craigslist is another powerhouse). Google's business model is to drive the price of everything on earth to zero, with one exception, that being text ads placed next to all those free things. Companies that sell things like operating systems, office suites, GPS navigation systems, newspapers, phone service, books, etc., all now have Google giving away their products in order to sell ads. If the GPS industry is to survive, they'll need to come up with something their product can do, or a level of quality that's well beyond what Google is offering. iTunes is an interesting example here. They are willing to essentially give away music (well, at least sell it at little to no profit for themselves) in order to sell iPods. So while they're on the bandwagon of this business model, they're also competing against it, because their chief competition is free illegal downloads. In some ways, they're losing that fight, as many, many more songs are downloaded illegally than are purchased. But iTunes provides a quality experience, and a quality product, and that matters to enough people that are willing to pay rather than using the lower quality alternatives to make the venture profitable. That's another lesson here--someone's going to disrupt your business and take away a chunk of your customers, because for many, free and <a href="http://scholarlykitchen.sspnet.org/2009/09/29/is-good-enough-good-enough-for-you/" rel="nofollow">"good enough"</a> will suffice. Can you remain profitable with a smaller number of customers who are willing to pay for quality? I think the lesson here is that if you do business in the digital realm, there will always be someone who is willing to give your product away for free in order to sell something else (or sometimes to just give it away for free). This is something you must take into account in your business plan, that at some point you’ll be competing against “free”, and your product needs to have compelling reasons for customers to continue to buy it.

Google is probably the leader in this activity (Craigslist is another powerhouse). Google’s business model is to drive the price of everything on earth to zero, with one exception, that being text ads placed next to all those free things. Companies that sell things like operating systems, office suites, GPS navigation systems, newspapers, phone service, books, etc., all now have Google giving away their products in order to sell ads. If the GPS industry is to survive, they’ll need to come up with something their product can do, or a level of quality that’s well beyond what Google is offering.

iTunes is an interesting example here. They are willing to essentially give away music (well, at least sell it at little to no profit for themselves) in order to sell iPods. So while they’re on the bandwagon of this business model, they’re also competing against it, because their chief competition is free illegal downloads. In some ways, they’re losing that fight, as many, many more songs are downloaded illegally than are purchased. But iTunes provides a quality experience, and a quality product, and that matters to enough people that are willing to pay rather than using the lower quality alternatives to make the venture profitable.

That’s another lesson here–someone’s going to disrupt your business and take away a chunk of your customers, because for many, free and “good enough” will suffice. Can you remain profitable with a smaller number of customers who are willing to pay for quality?

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