Telcos should co-operate, not compete with Google

17 Nov 2008

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Google’s influence and market power with key telecommunications industry stakeholders is having a significant impact on the industry, an analyst has claimed.

“The communications industry ‘ecosystem’ — encompassing regulators, internet service providers, advertising, and media customers and service providers — finds itself in Google’s crosshairs, not because Google necessarily wants to compete with telecom service providers or content developers, but because it finds their business process to be an impediment to innovation and change,” said Alex Winogradoff, research vice-president at Gartner.

Winogradoff said Google will continue to be a market disruptor and disintermediator, especially in the communications market.

“Carriers should selectively partner with Google rather than trying to compete, especially in areas where they don’t have differentiated and core assets,” he said.

“However, carriers should also find common ground with Google (for example, on network neutrality) and, if necessary, look for creative ways to oppose Google on issues critical to their survival."

Gartner said that coming late to the operating-system and mobile markets has not been a problem for Google, and that its Android and Open Handset Alliance (OHA) activities have already had a profound effect on the mobile industry.

As well as disrupting the traditional telecom ecosystem, Google’s actions are diluting the market potential and the service providers’ ability to profitably monetise their investments in new markets (such as entertainment and software as a service (SaaS) applications).

Gartner has highlighted six critical actions by Google that have already had, or will have, the greatest impact on the telecom industry, including the 700MHz auctions, the formation of the OHA and development of Android, Google’s involvement in the Net Neutrality debate, its move into static and dynamic location information, its promotion of  ‘white space’ spectrum development and its cloud computing and SaaS offerings.

In terms of cloud computing, Google is looking to engage enterprises by getting them hooked on using Google’s applications and cloud computing infrastructure.

Making it easy for users to download Google applications and giving them free space on Google’s cloud infrastructure will give Google great marketing insight to help it develop a presence within the smalland mid-size business (SMB) market initially, with eventual migration to larger enterprises.

The impact on carriers looking to generate revenue from the SaaS business model within the SMB market will require carriers to clearly differentiate their applications from Google or partner with it, Gartner said.

By John Kennedy

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com