Verizon Microsoft Love Fest
January 9, 2009
Update: January 9, 2009, 2 49 Eastern: A reader alerted me to this Business Week article about the Verizon Microsoft search deal. According to Rob Hoff here, Microsoft’s consideration to Verizon is in the $650 million range. I don’t agree with Mr. Hof about the importance of this win for Microsoft or its impact on Google. I don’t think the GOOG is going to be affected by this tie up. But the dollar amount is an indication of what Microsoft perceives the cost of thwarting Google is.
Original Post
I spoke with a couple of real live professional journalists today. I was answering my phone. I assume that other people were busy wheeling and dealing as I floated aimlessly in my coal drainage pit in rural Kentucky. The topic of the day was Verizon’s selecting Microsoft as the vendor to fuel Verizon mobile search. My view of this announcement was, based on the annoyed silences the professional journalists offered me, is different from the received wisdom. If you want to know what “everyone” is thinking about this deal, check out the CNBC story here. This General Electric organ is not going to get too frisky in my opinion. The story by Ritsuko Ano and Sinead Carew (assisted by Franklin Paul and Tiffany Wu with editing by Derek Caney and Matthew Lewis) “Verizon Picks Microsoft Search Over, Google, Yahoo” explains that the two corporate giants have a “long term deal.” The CNBC reporters included this insight from a pundit: “It’s certainly a feather in Microsoft’s cap.” I like that, “feather”. Amazing what a team of six professionals can do.
Okay, here’s my take. Verizon is on one side of the fence, confident its billions and brand can overcome any obstacle, even Google. Yahoo does not matter. On the other side of the fence is Google and the cadre of Open Handset Alliance folks, two thirds of the Internet Web search traffic, and about 19,000 allegedly arrogant non-Bell heads. Verizon skipped over the Kindle for mobile books, even though the other players are not doing particularly well. So Verizon picked Microsoft which in my opinion is not doing too well in the mobile department. Verizon’s less concerned with what may be the consumers’ choice and more concerned about Verizon’s choice.
Oh, and there’s the matter of “consideration”. I have zero knowledge of this particular Verizon deal. However, I opine that Microsoft paid for a chance to dine with the Verizon wireless executives. There will be some bells and whistles on the consideration, but that is standard operating procedure.
Alleged picture of the Verizon Wireless headquarters. Source: http://www.naiop.org/developmentmag/images/200203/doy-01.jpg
Will this deal make a difference?
The answer is, “It depends.” For Google, this deal means little or nothing in terms of user behavior. As it stands, users decide what service to use. Unless Verizon locks the user to a specific search system, users will select a search system. If the lock down is a burden, the Verizon mobile customer will switch. Telcos like Verizon deal with churn every day of the week. Losing and acquiring customers is the business. Excellence is not measured by relevancy scores or user satisfaction.
For Verizon, I don’t think the standardization on Microsoft means much either. There will be the usual promotions that are designed to keep or acquire customers. But a deal with Microsoft is one tiny component of the mobile decision. The package is important. The price is important. A single feature is important only when it contributes financially. Verizon will know whether the Microsoft deal makes sense in a year. Not before.
For the Verizon mobile user, the deal means zero. I am a Verizon high speed wireless customer. I noted today that the service was able to display four Web sites in 30 minutes. In short, I was not a happy camper. The core service did not work the way I expected or the way it was described in the Verizon promotional literature. Will I switch? Sure. But wireless high speed access in the US is pretty crappy. I got better connections at Norway’s sliver of the arctic than I did at lunch today. Microsoft search won’t make any difference to a user. In fact, at lunch a person wanted to know how to get from the rat hole diner in Harrod’s Creek to the big city of Louisville. We showed her directions on the iPhone using Google Maps. I think she will become a Google Maps user, regardless of her wireless service. The clarity of the map and the nifty look did the selling for the AT&T iPhone service with Google Maps as the data source.
Bottom line, step back. The big picture is that Verizon is a phone company. It has the DNA of Bell heads. Microsoft is an on premises software company. You figure out how well that will work for a user looking for information on a Verizon wireless device.
Stephen Arnold, January 9, 2008
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