Google and the Threat of It Becoming Your Competitor

In the middle of last year, Google launched Google Fiber in Kansas City, offering a comprehensive and compelling high speed Internet and TV offering.  Let’s just say for the first time ever I thought “maybe it would be good to be living in Kansas City.”  OK, I got over that quickly.  I had largely forgotten about Google Fiber but recently, in a group of which I’m a member, someone asked “is Google serious about getting into this business?”  Short answer: no.  But Google’s initiative here is instructive as part of its larger strategy.

You may remember that back in 2008, Google bid on spectrum.  Google didn’t actually want to own the spectrum but wanted to force the price over a threshold which guaranteed openness.  Bidding $4.6 billion (yes, billion with a “b”) or more sent a message to the carriers about Google’s willingness and ability to invest to get what it wanted.  Verizon ultimately topped Google’s bid, to Google’s relief, but a message was sent.

Google pursues this same approach with its Nexus line of products. Their idea here isn’t so much to compete with its partners, though there’s certainly an element of that, but to set an example of what can (and should) be done.  Google can use the threat of direct competition to get device manufacturers (and carriers) to support features Google feels important to be supported (e.g., NFC and payments).  You could view Google’s purchase of Motorola as its expression of dissatisfaction with other handset manufacturers and the carriers, wanting more direct control of handset production.  Certainly the Motorola purchase was also motivated by Motorola’s patent portfolio but the handset club was no doubt an attraction.  Google walks a thin line here.  Samsung’s recent embrace of Intel’s mobile platform and operating system is certainly a response to the Motorola threat.  This isn’t necessarily the biggest threat in the world but Samsung is taking a page from Google’s own playbook.  These megaproviders have sufficient assets to engage in high-stakes games of chicken.

So, back to Google Fiber. We in the US are far from state of the art in our wired (or even wireless) infrastructure. In fact, we’re about 16th.  My first cable modem deployment was around 1997.  At that time, Cablevision delivered 10 Mbps to my home.  Here we are, 15 years later, and Cablevision’s base service to my home promises only 10 Mbps.  Still.  (They’re actually delivering closer to 16 on a regular basis, but we’re hardly talking about Moore’s Law kinds of evolutionary speeds.) Why do we lag so badly behind Western Europe?  One major study concluded that it’s competition that accounts for the difference. Google’s current and future business prospects are inextricably intertwined with better and faster broadband access, wired and wireless.  So, if it’s competition that will lead to improvements and if competitors are loathe to push each other — that requires massive capital investment — then Google has to provide that competition.   There was a day when you might have thought Verizon’s FiOS was going to be the great challenge to the cable companies.  Verizon has killed that hope. So into this breach steps Google Fiber. Who here wouldn’t want that service? The message is “look what can be done”..And c’mon Time Warner, Comcast, Cablevision et al. Get with it or maybe we’ll do it in your neighborhood. And customers, demand more. It must piss Google to no end that it’s entirely reliant on two of the most backwards-thinking oligopolies in the world, cable and wireless, which exert considerable influence over Google’s future monetization opportunities (e.g., payments).

So, does Google want to own spectrum? Manufacture devices? Deploy cable systems?  No it doesn’t.  But if it doesn’t get other parties to do things they way it wants them done, Google will absolutely do the things it needs, not just the ones it likes.  Google surely has the resources.  It’s sitting on nearly $45 billion in cash.  That’s quite a war chest.

2012: The Lost Year

2012 was a strange year for me.  On the  employment front, I spent (way too much) time working on a start-up that never came to fruition.  I then took a job that didn’t produce the opportunities either I or the employer hoped would come to pass.  In all that time, I was holding off on blogging because I was saving “the good stuff” for my new opportunity.  Lesson learned.

But I’m back, with a vengeance.  The world has changed a lot in a year…but has also progressed not nearly enough, and in ways that I think are counter to where we’re going to end up a few years out.  I’m back to document and discuss my perspectives.  I’m also back with a new attitude and approach.  In the past, I wrote long blog posts.  OK, very long blog posts.  I think the world still needs long-form exploration of issues, and I’m not going to shun that approach, but I’m going to supplement it with regular (even frequent) top-of-mind pieces.  Some of these will be spurred by current events or just random interactions I’ve had in various media.  The net will be that I’m going to try to write often (3-5x/week).  I hope you welcome the increased interaction and I look forward to discussing the timely and important technology and business issues we’re facing

My theme will, as ever, remain “disruptive technologies.”  For five years now, I’ve defined this as the intersection of social, mobile and cloud.  More recently, I’ve added analytics/big data into the equation (even while I think this is a grossly misunderstood area; more on that soon).   I’ll be adding some new things in the mix for 2013.  You can get a hint at through my regular video series, Pardon My Disruption, produced with the Stamford Innovation Center. If you’re in Stamford at noon the second Friday of every month, come on by and join our recording.

Just a quick note about Pardon My Disruption.  If you’ve ever watched the ESPN show Pardon the Interruption, you’ll get the idea of where I’d like to take this concept.  For those of you not familiar with it, PTI is a daily sports news show hosted by Washington Post sports columnists Michael Wilbon and Tony Kornheiser.  They’re, if this is not an oxymoron, two literate sportswriters and they banter about the day’s sports news.  They have adopted what I have embraced as the winning strategy for dialogue/debate shows: 1/3 legitimate debate, 1/3 mutual exploration of the issues and 1/3 scurrilous personal attacks.  I would love to evolve this into a full-time daily thing.  I just need two things: my Michael Wilbon and someone who will actually sponsor this and/or pay me to do this.  For now, I’ll just do this monthly with the Innovation Center.  Hopefully I can evolve it to something more structured and frequent and then, maybe, on to its full expression.

Nice to be back.