Google vs. Amazon: Free vs. Paid / 04.02.08
It seems the idea of Google offering everything under the sun for free is catching on as Dave Winer chimes in with the idea of free web services similar to what Amazon offers. As I have written before there really is nothing stopping Google from doing such a thing, but every free service that they have put out so far that I know of has come with ads or at least the ability to take out the competition.
Web services on the scale of what Amazon offer are a whole different ballgame because they require a lot of maintenance and support and the services don’t act as a destination like other Google services do. In fact, the web services are completely hidden from view. When thinking of the possibilities here we must keep in mind that Google is an advertising company first and foremost. They know they can offer a free service because that gives them another alternative to place ads on, but with web services this isn’t an option. As I wrote:
Because they control their own ad inventory they can provide their services for free and place their ads on the services and receive 100% of the revenue. If they need more pages to fill with ads they can simply create another free service like they have with Ad Manager that appeals to publishers. Google’s problem isn’t going to be running out of ads, it is going to be running out of places to serve them.
Now ignoring this and assuming there is a possibility Google is thinking outside of their advertising box, Kevin Kelleher over at GigaOM proposes that they move forward with this idea.
As valued Google workers pack up their desks and launch new startups, this is the single best strategy for Google to bring them back into the fold. And it’s a great way to pull the rug out from under Amazon, strategy-wise and profit-wise.
I’m not sure the amount of overhead required to manage such services is worth the possibility of maybe nabbing a couple of start-ups. Winer believes that this could be used as a strategy as well, but also offers the argument that before they started selling text ads they had no business model which in a way is false because their business model was to try and sell their tech to Yahoo. Once Yahoo and nobody else offered to buy it up they just went forward and used the technology with some VC funding, built up an audience and realized they could place ads up on their search results.
With web services I don’t see the possibility of introducing a third-party (usually advertisers) to the equation which is what Google would be looking for if they wanted the services to make any business sense. To top it off you have to wonder if Google would rather not make Amazon a competitor with the whole Microsoft/Yahoo situation going on and their upcoming new best enemy Facebook making headway.
Is it possible for Google to offer web services for free and steal the thunder from Amazon? Yes it is. Does it make much business sense at all to do so with the maintenance and support that comes along with it? I don’t think so although as people who would get the services for free it is fun to think of reasons why Google should do such a thing.
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