Google presents the Business concept of “FREE”

We all know Google; it’s a part of our lives and one of those strange words that is both a noun and a verb. What isn’t as often noted is how they have pioneered an entirely new Business concept that could be called “Free” stuff for all.

Google started in 1998 and 16 years later it enjoys revenues of $17Billion mostly be giving their products to the ultimate consumers for free; a business plan that has put fear into the Big-business community.

It is very easy to understand how Amazon and Apple make money. They sell books, computers, software, apps, electronic gadgets, consumer goods, electronic books, music, video and so on to their customer base.

In contrast, Google spends vast sums of money developing products then gives them away for free. Some examples are,
1. Their Search engine, the verb / noun “Google”
2. Google email (Gmail) Do you remember when AOL wasn’t free?
3. Operating system Software, Chromecast
4. Operating system for PCs that stores in the “Cloud” , ChromeOS
5. Maps (Google Maps) on cell-phones and computers.
6. Cloud-based apps (Google Docs)
7. Video hosting and sharing (YouTube)
8. Matrix, The Google way to find cheap air flights
9. Photo sharing, editing and organization (Picasso)
10. RSS reader (Google Reader)
11. Photo storage in the “Cloud” with Picasso
12. Free Blogging sites & tools (Blogger)
13. Language translation (Google Translate)
14. 3D modeling software (SketchUp)
15. Operating systems (Android).

In addition to these “Free” to the consumer programs and apps they are pouring research and development cash into driverless automobiles, lifespan expansion and their own wireless phone company (think Verizon).

They are a serial disruptor of established Business plans. They give away a Computer operating system that challenges Microsoft and things like Google maps on your cell phone have upended the various GPS unit manufacturers. It is very difficult to beat a competitor who is happy giving away his product. AT&T and Verizon must now contemplate viable competition to the near monopoly they have enjoyed for years.

Google, in contrast to the way businesses have been structured, believes that all information should be freely available and abundant. They make great effort to ensure that information remains free.

Microsoft has long been the Darth-Vader of tech innovation but even they seem to sense the change. Their business plan is essentially an annuity-like charge for everything, but in the last few years they have introduced “Bing” a search engine that mirrors Google and in January 2015 they announced that their new Windows-10 would be free to past customers. I think they see Google in their rear-view mirror and we all know that “objects in mirror are closer than they appear.”

So, how does Goggle make money? To understand the paradox of essentially gifting your products, you have to understand what exactly Google is selling. Google is so dependent on free and abundant information that if info becomes scarce, Google’s business model will collapse. That means that Google, unlike Microsoft, Amazon and Apple, et-al is not in the business of selling information. So, what are they selling?

To understand exactly what Google is selling, there is a crucial point to understand; in Google’s ideal universe, information is free and abundant, but consumer attention is scarce. This is a positive feedback loop that attracts the attention of the consumer. This info loop forces businesses to give more and more information away, which in turn causes information to be more abundant (collectively), which in turn makes consumer attention even more scarce (for each individual businesses), which forces businesses to give yet even more information away. And by the way, the fact that you are reading this for free is testament to the fact that I’m trying to attract your attention.

And here is the crux of Google‘s business model—it sells access to consumers’ attention (access to you BTW). By using Google’s free products, your attention is totally captured by Google. Then it sells your attention to businesses in the form of advertisements (e.g. paid advertisement in search engine results page, blogs, your emails if you’re using Gmail etc). It’s kinda a very sophisticated kind of “Shopper-Tabloid”

That is why Google is so busy giving away wholly integrated sites of interesting products and services. The whole purpose is to capture your attention which they then sell. To put it simply, Google, at its core, is an advertising company that has discovered that creating interesting products to give-away captures the eyeballs that advertiser’s prize.

That’s why Google will never charge for the free stuff that it is giving away. If they do charge you can bet they will lose a lot of the attention of their consumers. As a result, they will then have less attention to sell.

This is beyond wonderful for the consumer but the source of much angst in boardrooms around the globe. The business world greatly values predictability and Goggle’s business plan is the anti-profit predictor.

As you use the free to the consumer services of Twitter, Facebook, Snapchat or any of the hundreds of free apps for your phone, thank Google as the pioneer of “Free.”

Disruption in your business or investment is not just possible but now it's probable; If you think I'm kidding just Google it.

let’s be careful out there!