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.”
Filed under: AT&T, Bell Labs, Google, judy shapiro, profitable business model | Tagged: Computerworld, Consumer telephone service, Freemium business models, Internet telecommunications, Mike Elgan, VoIP | 9 Comments »