The e-conomists view on googles developement
In response to the freeconomics article:
The freeconomics attitude is not specifically new, especially not with user software. Most software that is introduced to the market ends up being “shareware” to attract customers with low/no introductory costs, but due to update costs (addons/licenses) that’s where the real costs are generated.
In the case of google, one the first look a “all free” company, that offers most of its products (google search, google documents, etc) for free seems like a beneficiary project.
What google is actually trying to acquire is something that cant be calculated in monetary terms: customer trust.
Since it is clearly based in a system-structure it faces high rates of moral hazard and a natural uncertainty on customer side of hidden intentions. (comp. Kleinaltenkamp et al.; B2B Marketing)
apart from being under the top ten ad-selling company’s on the web, they have huge expansionist/monopolistic plans, continuously growing in other media-related markets.
a few examples:
gOS: The first “opensource” desktop based on google aps, is already being sold in WalMart and will be the main operating system for the coming “cloudbook” the rival of asus eeepc.
according to wallstreet journal last month they showed the plans of google entering the mobile phone market (The possibilities that the mobile phone market offers for advertising is humongous and completely unexplored and unexploited! In the uk there are the first ad-subsidized rates, which give you free minutes if you accept up to 6 sms per day of advertising. Think where this can go, while your Nav-system is looking up the route you can watch commercials on the screen!!).
There is no functioning “free” social network that google hasn’t copied or actually owns. From wikipedia to facebook, either they are being rivaled by google or bought up. As stated above there is a strong monopolistic tendency.
good literature for further reading (incomplete Bibliography):
- Levit&Dubner: Freakonomics
- Harford: The Undercover economist
- Anderson/ Narus: Business Market Management
- Kleinaltenkamp: Einführung in das Business-to-Business-Marketing