Google Sends Signals to Telco Poobahs

December 21, 2009

I enjoyed “Verizon Snuffs Google for Microsoft Search.” The Register summarizes Google’s dalliance with Verizon. Then Verizon hugged Microsoft and slipped into its mobile browser. Apparently some Verizon customers were annoyed. For me, the most important part of the write up was:

Verizon has unilaterally updated user Storm 2 BlackBerries and other smartphones so that their browser search boxes can only be used with Microsoft Bing. The move is part of the five-year search and advertising deal Verizon signed with Microsoft in January for a rumored $500m.

When I read this, I thought about Microsoft’s other attempts to buy traffic for the search system. Like AT&T, Verizon is off balance. Google is no longer the clumsy Web search outfit. Google is a key player in the telephony market worldwide.

In my opinion, AT&T and Verizon have a bit of a problem on their hands. Google does not have to hurry. Furthermore, Google continues to nibble away at different chunks of the communications market. My research suggests that Verizon, like Microsoft, will have to find a better way to compete with Google. Depriving customers of choice and buying traffic are great tactics. Too bad Google is playing a different game with different rules.

Three blind spots for Verizon exist in my opinion:

  1. Verizon has to accept the reality that Google has better plumbing. That technology edge is going to put Verizon in some weird yoga positions.
  2. Verizon perceives itself as a giant company. It is giant. It is focused on the US market. Google, on the other hand, has a global vision. Thus, Verizon has a perception problem.
  3. Google has engineered solutions to some long standing telco bottlenecks. Right now, telcos do not understand Google’s many initiatives. This failure to see the different small communications actions like messaging in Google Calendar as part of a larger fabric. The Google engineers have outflanked and jumped over Verizon.

Telcos face start choices. Ignore Google. Cozy up to Google. Fight Google. None will work. Verizon will make decisions that I perceive as questionable because Google has nipped at Verizon. Like an angry bull in a bullfight in Madrid, the bull does not make good decisions. In the end, the bull becomes a quarter pounder with cheese. Through these cartwheels, Google is messing with the minds of telco executives. Most recent distraction: Nexus. I can hear it now, “Google can’t make handsets and sell them.” Maybe, maybe not. Distraction.

Stephen E. Arnold, December 19, 2009

Disclosure time: Freebie. I hasten to report this fact to the Bankruptcy Courts. Some telcos may end up in those fine institutions.


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