危 wēi  danger

Google realized early that location-based services were of real value – the ‘maps’ tab seems to have been on its search page forever.  However, in order to offer complete mapping services Google was dependent on licensing key data from two duopolists that ruled the mapping business – Tele Atlas and NavTeq.  The two companies priced their licenses under strict terms, safe in the knowledge that the barrier to building a database of turn-by-turn directions was huge.  The companies’ positions were apparently so strong that their customers, Tom-Tom and Nokia, bought them for $2.7bn and $8.1bn respectively.

机 jī opportunity

But, the barrier to entry wasn’t too high for Google to surmount.  After spending years with thousands of cars on the road building its own database the company terminated its license with Tele Atlas earlier this year.  And then Google announced on October 29^th that it would offer free navigation with its Android Operating System (OS) – Tele Atlas and NavTeq’s share prices each dropped c20% on the same day.  Google’s business model doesn’t depend on electronic product sales – it depends on advertising revenue.  If widely adopted, its mapping API will create a platform for a global geo-based advertising network.  In fact, Google is so keen for its OS and API to be adopted that it even offers an ad-split to the product and service companies that build with them. ‘Free’ pricing is widely touted as a great way to speed adoption, well Google are effectively offering ‘Less than Free’ (they’re paying).

how about…

• Questioning barriers to entry that are perceived to be insurmountable?
• Asking if changes in technology are likely to lower them?
• Offering products or services for ‘free’ or even ‘less than free’ to speed adoption?

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