Battle of the Business Models: The Mobile Front

September 26, 2008

Fresh from the victories in online advertising and Web search, Google is using its auction business model to disrupt the mobile telephony sector. Now patent documents are not products. Compared to IBM or Intel, Google does not run a high output patent factory. Furthermore, some of Google’s several hundred patent documents are interesting but not particularly substantive; for example, the cooling gizmos for Google’s servers.

On September 25, 2008, the USPTO published US20080232574, “Flexible Communication System and Methods.” The abstract for the invention, filed in March 2007, states:

A method of initiating a telecommunication session for a communication device include submitting to one or more telecommunication carriers a proposal for a telecommunication session, receiving from at least one of the one or more of telecommunication carriers a bid to carry the telecommunications session, and automatically selecting one of the telecommunications carriers from the carriers submitting a bid, and initiating the telecommunication session through the selected telecommunication carrier.

In a nutshell, Google has applied its auction methods to mobile telephony. Carriers bid to handle your call. You can read Wired Magazine’s discussion of this invention here. Let me offer several observations:

  1. The notion of a battle of business models, for me, is quite important. Telcos may find themselves innovating within a closed room. Google innovates outside those boundaries. Those in the room may find themselves conceptually unable to break of their confines. Could this trigger a replay of what’s happening in newspaper advertising?
  2. The computational infrastructure required to handle mobile call auctions is going to get a work out. Based on my research, no telco has a Google-killing infrastructure in place and on line. Will one or more telcos have the cash to match Google’s ability to compute at scale.
  3. In my briefings to selected telcos earlier this year, I recall the easy dismissal of Google’s telco dreams. I wonder if those executives are rethinking their earlier position?

With online advertising and Web search in the bag, Google is moving into another business sector with more to come.

Stephen Arnold, September 26, 2008


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