Google 2-Sided Business Model Case Study

The 2-SIDED TELECOMS MARKET OPPORTUNITY Realising Growth from the ‘Platform Play’ Chris Barraclough Keith McMahon March 2008

Telco 2.0™: New Business Models in Telecoms, Media and Technology www.telco2.net

STL Partners Telco 2.0™ Consulting www.stlpartners.com Education & Training Strategy Development New Proposition Development Business Case Development Project Management Support Frontline GTM support STL’s ‘ Mindshare’ tools and techniques for value innovation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Contents I ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Contents II ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Contents III ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

5. Case Studies – Telecoms is lagging other Industries ,[object Object],[object Object],[object Object],[object Object]

We will explore six non-Telco two-sided market case studies CASE STUDIES FROM OTHER INDUSTRIES 1. See Introducing 2-sided Markets: What Type Of Role Should Platform Play? for details Company Industry Platform Type 1. 1 Google Web Search/Advertising Audience Builder 2 Amazon E-Retailing Matchmaker 3 Monster Recruitment Matchmaker ,[object Object],[object Object],Music Matchmaker ,[object Object],[object Object],Gambling Matchmaker ,[object Object],[object Object],Logistics Cost Sharer

Google has changed the ad industry by giving products away to end users for free (in return for advertising), as well as reducing advertising costs for brands ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],= + CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

In its first 9 years, Google has achieved strong growth and now dominates the web search market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE 1. comScore, 2008

But Google faces at least two major obstacles in areas where operators are very strong ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],MY PERSONAL DATA MY STUFF MY IDENTIFIERS MY INTERACTIONS MY RELATIONSHIPS MY CONTEXT MY DEVICES Weak! CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE See Key 2-sided Market Options: Required Telco Skills And Assets for detailed description of each operator data asset

One way Google has sought to address obstacles is acquisitions, where it has focused recently on communications, security and customer analytics Source: http://en.wikipedia.org/wiki/List_of_Google_acquisitions CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE Date Company/Product Business Area Value (USD) 2001 Deja's Usenet archive Google Groups. undisclosed Outride, Inc. Spin-off from Xerox PARC. undisclosed 2003 Pyra Labs Blogger. undisclosed Neotonic Software CRM technology. undisclosed Applied Semantics Advertising technology. $102 million Kaltix Search engine technology. undisclosed Sprinks Paid listings unit of Primedia. undisclosed Genius Labs Blogging undisclosed 2004 Ignite Logic Website creation technology. undisclosed Baidu (2.6% stake) Chinese language search engine. All shares were sold in June, 2006 $5 million Picasa Photo management software. undisclosed Keyhole, Inc. Mapping software; used in Google Earth. undisclosed Where2 Mapping software; used in Google Maps. undisclosed ZipDash Used in Google Ride Finder. undisclosed 2005 2Web Technologies Web-based spreadsheet. undisclosed Phatbits Widget engine. undisclosed Urchin Software Corporation Web analysis. undisclosed Dodgeball Social networking. undisclosed Reqwireless Web browser and Mobile email. undisclosed Current Communications Group Broadband internet. $100 million (partial investment) Android Software for Handheld devices. undisclosed Skia Graphics software. undisclosed Akwan Information Technologies Latin American internet operations. undisclosed allPAY GmbH, bruNET Mobile Solution Provider, Germany undisclosed AOL (5% stake) Internet. $1 billion Date Company/Product Business Area Value (USD) 2006 dMarc Broadcasting Radio advertising software and platform. $102 million Measure Map Blog analysis. undisclosed Upstartle Writely, online word processing. undisclosed @Last Software SketchUp, 3-D modeling. undisclosed Orion Advanced search method. undisclosed Neven Vision Computer vision undisclosed JotSpot Website applications undisclosed YouTube Video sharing (San Bruno, CA) $1.65 billion Endoxon Mapping solutions $28 million 2007 Xunlei (partial acquisition) Network, file-sharing. undisclosed Adscape Video game advertising $23 million Trendalyzer Software undisclosed Tonic Systems Presentation software undisclosed Marratech video conferencing software Video conferencing (Stockholm, Sweden) undisclosed DoubleClick Online Advertising $3.1 billion GreenBorder Technologies Desktop enterprise security undisclosed Panoramio Geospatial Photo-sharing Service undisclosed FeedBurner RSS Feeds (Chicago, IL) $100 million PeakStream Parallel Processing undisclosed Zenter Presentations Software undisclosed GrandCentral VOIP Phone Aggregation (Fremont, CA) $45 million ImageAmerica High resolution aerial cameras undisclosed Postini Communications Security (San Carlos, CA) $625 million Tusli Google Blogger Api Engineering Team undisclosed Zingku Mobile social network and communication platform undisclosed Jaiku An activity stream and presence sharing service that works from the Web and mobile phones (Helsinki) undisclosed

Google is also investing heavily in trying to learn more about end users… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE

… and is paying network partners more for collating users with specific characteristics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Google company data CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE

There are some clear lessons for operators from Google’s success and current strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE

Google – SWOT ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],CASE STUDIES FROM OTHER INDUSTRIES: GOOGLE

Google 2-Sided Business Model Case Study

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Editor's Notes