Google Voice: What’s up with that?

As an ex-AT&T “Bell head” anything telecom always gets my special attention. So when I saw the “Google Voice” re-announcement recently I couldn’t help wondering, “Huh, what’s up with that? How does this fit into Google’s core business?” Mostly though, I was interested in understanding why this and why now?

First, let’s put Google Voice in perspective. I’m gonna put it out there and say Google Voice is, IMHO, a refined GUI within a fairly standard VoIP version of unified messaging with number portability thrown in (sorry all for the techno-jargon, but a factual articulation of the technology seemed in order). Nice, but hardly deserving of the media gush that quickly followed this re-announcement, especially since Google Voice is a rebranded version of their Grand Central “one number for life” initiative launched in 2006. So this notion of having the same phone number for life has been done and redone dozens of times over the past dozen or so years. 

Now we all know that anything Google launches tends to bask in the Google glow, defying critical analysis.  So I seemed to be the only one interesting in knowing – why now?

In a recent Computerworld article by Mike Elgan, “Why Google Voice is free,” (6/27/09), Mike began to get at an answer of “why now” when he correctly contended that Google intends to monetize this free service via new advertising vehicles within their voice network.  While that answer makes total sense, it still didn’t get at the “why now” part of my question.

And then I was struck with a déjà vu moment – I realized with a jolt that Google is doing now what AT&T did in the 1980s and 1990s – I know since I worked at AT&T at that time. In fact, Mike Elgan made a similar connection when he observed that, “Google Voice means Google is technically, literally and actually a telephone company.”

Once I put that together, I realized that Google seems to be following in AT&T’s footsteps more closely than the media, or even they may realize. But more interestingly, that connection best explained the “why now” part of my question.    

First a quick AT&T history lesson. From the 1980s to the mid-1990s AT&T was in its full power as a global innovation brand fueled by its dominance in the communications business. While the diversity of the AT&T business was amazing, it was generally focused on communications, and they stayed “close to their knitting” (AT&T had many such quaint terms).

But competitive communications pricing pressures being what they were, AT&T expanded into business well beyond its core competency starting in the late 80s. It dabbled in home security, launched PCs, sold electronics games and even explored Pay-Per-View (PPV). They did this so they could grow by controlling digital information delivery channels from its source to its final consumption points to leverage the vast AT&T infrastructure. This explains lots of these diverse AT&T businesses, including their short-lived attempt to build their own internet via a project called “HomeCenter” (circa 1994).

These ambitious (dare I say arrogant) goals were necessary to fund its “big” company overhead. So it played in lots of industries because it could and because the cache of the AT&T brand blinded the leadership into believing that such an AT&T Information Network goal was achievable. So tons of resources were thrown at these diverse business plays in the hopes of reaching the business promised land that a lock on controlling information to users would have provided.

We all know how it turned out. In the briefest of years, AT&T went from a powerhouse to literally being almost a shell of its former self, regulatory issues notwithstanding. Only now, nearly 25 years later, is it beginning to make a brand comeback.  But it will probably never relive its former glory days.

So flash-forward to Google today and why Google Voice now?

Right now, Google is in its prime and has become the arbiter of technological coolness, much the way AT&T was in its day. And like AT&T in communications, Google has a very strong hold on the online ad market, but it’s facing new types of pressures from technology, as well as new business models. Furthermore, the Google PPC money machine is losing its grip and has, by many accounts, already plateaued.  This is similar to what happened with AT&T when MCI entered the field.

So much like AT&T did 20 years ago to maintain its growth, Google is trying to do the same – control the data distribution channels. In the case of AT&T, it was all about information delivery to business and residential users. In the case of Google, it’s all about advertising delivery to its “product” – to its users of its services.  

The trouble with wanting to dominate all delivery channels (whether it be information or advertising) is that you are forced to go further and further afield from your core competency. And while “playing” in disparate businesses is something a leader brand can afford to do, over time the core business tends to suffer – slowly, but inextricably. And then at some point, you are willing to throw out the knitting needles. AT&T did, and that did not end well. Google looks like to be headed in the same direction.

So the launch of Google Voice lets me see these parallels more clearly. As wonderful as Google Voice may be, I am tempted to say to Google, “Stick to your knitting.”

Judy Shapiro

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9 Responses

  1. great post! Looking forward to your next one.

  2. Google has plans for its own personal computer operating system, the company’s official blog has announced, setting up another clash between the Internet search king and software giant Microsoft.

    ”We’re announcing a new project,” said the Mountain View, California-based company, revealing the system would be based on Google’s Chrome browser and would be an open source operating system initially targeted at netbooks.

    The move is ”our attempt to rethink what operating systems should be,” Google said.

    The search engine giant said it will open source the code for ”Chrome OS” for user input and that netbooks running the system will be available by the middle of next year.

    ”Speed, simplicity and security are the key aspects of Google Chrome OS. We’re designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds,” the company said.

    Google noted that in deciding to embark on the new track, they took heed of its user messages, namely that ”computers need to get better.”

    People ”want their computers to always run as fast as when they first bought them,” and they want to access the internet instantly, Google said, adding that “we’re definitely going to need a lot of help from the open source community to accomplish this vision.”

    The Chrome browser was originally launched in September but has failed to enjoy the spectacular success of Google’s search engine.

    The company floated its first US television advertisements in recent months for Chrome, as the browser has only captured a tiny share of a market dominated by Microsoft’s Internet Explorer.

    Microsoft’s freshly launched search engine Bing, meanwhile, aimed to hit back at Google’s gains in the search market, although it still lags behind its rival.

    Web analytics firm StatCounter said last week that Bing had carved out an 8.23 percent share of the US search market last month, up from 7.21 percent in April and 7.81 percent in May.

    By contrast, however, Google continued to dominate the search market with a huge 78.48 percent share last month.

    Google already has an operating system, Android, but the company said in its announcement that while there was some overlap, they were separate entities.

    Android is only used for mobile phones at the moment, but the software has showcased Google’s keen interest in expanding beyond its search engine base.

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  3. Hello, from one ex-Bell Head to another. Great article but I respectfully disagree with you about how AT&T went from being the largest corporation in the world dominating everything in the Telecommunications business to an empty shell bought for its name in 2007.

    At divestiture in 1984 the Federal Government broke up the “Bell System” while leaving IBM untouched. Both companies had anti trust law suits filed against them and IBM’s suit was dismissed while AT&T was forced to negotiate their own disassembly. At the time they thought they did quite well by keeping the long distance business and the telephone equipment business. There were then allowed to venture into the other lines of business you have mentioned.

    They took on Big Blue (IBM) at their own game and lost in the marketplace but held the keys to superior technology that would later define the internet. That technology was UNIX an operating system that allowed multi users to perform many tasks at one time. They acquired NCR to help forge a new path into the computer market but that effort failed miserably when the corporate cultures of the two companies clashed.

    AT&T then spun off NCR along with the equipment side of the business (Lucent) to tend to their core business, the long distance market. Later they jumped into the cellular business and then the cable TV business and failed again selling off both ventures. By then, long distance had become a byproduct of the cellular business being packaged in with the regular service. Long distance service had become so cheap some carriers dropped the price of long distance to attract more customers.

    By 1996 the Federal Government decided they were going to allow the so called “Baby Bell” local operating companies into long distance and as a cruel joke said AT&T could enter the Local Exchange market. They also laid the groundwork for Competitive Local Exchange Companies to enter the local market at the expense of the incumbent Phone Companies.

    My point is that if AT&T had been left untouched in 1984, they would have had to innovate in order to compete or die a lot sooner. Instead the Federal Government left them in a regulatory limbo and finally cut the cord in 1996 after AT&T had already fallen off the mountain. AT&T’s core business disappeared and they had nowhere to go. “Sticking to their knitting” would not have helped.

    Today the Telecommunications industry is being re-defined by Voice Over Internet Protocol (VOIP) and the need for “Unified Communications.” Google is smart to try to get into this market but they are a little late to the party. Microsoft has quietly taken major steps into the Unified Communications (UC) market and with the release of their Office Communications Server 2007 r2 product, they are well positioned to provide the telecommunications services of the future.

    The battle that was once between AT&T and IBM is now between Microsoft and Google and for once, Google is having to play catch up.

  4. Paul — you correctly give a context of the regulatory and competitive environment that I omitted from my post. Your excellent summary though neglected to mention the phantom earnings that MCI was claiming that AT&T was fruitlessly trying to catch.

    But not so sure I come away with the conclusion that had it been left alone it would have either innovated or died faster. I was on the product side of the house and lived through the drive to enter new industries (including IBM).

    I do not contend that Google is exactly like AT&T — but they share a similar dynamic born of success. It tends to create arrogant business decisions that ultimately distract from the core business.

    There was vigorous debate in the Ad Age article that I wrote on this subject. You may enjoy seeing the lengthy comments. http://adage.com/digitalnext/post?article_id=137752

  5. Judy,
    I guess we all have different opinions about the downfall of AT&T. I was in the plant department of Southern Bell from 1973 to 1984. I was transferred to AT&T at divestiture and worked in the Information Systems part called ATTIS. In 1985 I was laid off and eventually went back to BellSouth until I retired in 2007. The AT&T that took over BellSouth at the beginning of that year was as you know SBC.

    I have been following the evolution of Unified Communications and it seems like the next big thing for all internet based companies. We have been talking about “Convergence” for a long time and I think it’s about to happen with UC. If you consider Google an internet advertisement company then you are right they should stick with their core business. If you think of Google as an internet services company then their venture into UC is the next step. (my opinion)

    You have a unique perspective coming from the old AT&T and now looking at the dynamic changes sweeping our old business. I will stay in touch with your articles at Ad Age.

    I am presently working as a Network Consultant for Avaya partners putting in software for call centers but I’m looking at opportunities in UC. I’m not sure jumping into the fray is the smart thing to do but it’s going to be fun to see what happens.

    I write a lot about UC in my BLOG at; http://divergentcommunications.com/cgi-bin/cblog/index.php

    It was nice talking to you, Paul

  6. I’m using Google Voice right now. All of my calls are free when I pick them up on my home phone. If I’m not home I pick the call up on my cell phone. Google voice has already given me the option of reducing my cell phone bill and by the way I don’t have a home phone bill. I have a little device the size of a box of matches that connects Google Voice to my home phones. Computer on or off I get free VOIP calls. When they come out with an OS I’ll try that too. Google doesn’t necessarily do “New” but they usually do “Better”.

  7. ya got me… why they are going down this road is beyond me.

  8. Actually I love Google Voice and I know many others do too.

    There is always room for new entrants who can “build a better mousetrap” and google voice is an example of that. I can send off free text messages to Bangladesh, India, and USA saving me money on my texting plan from Verizon Wireless.

    Google always does a wonderful job of giving users what they want so why not get into telecom. I understand that in the future they will be incorporating Voice with the Android. Plus they purchased a new VoIP company which they will incorporate also. I need to get myself an Androind now haha.

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