Umair Haque / Bubblegeneration

Tuesday, November 27, 2007

Research Note: Competition At The Edge

Verizon decides to shift to openness.

Now, read this - about Google hoping to develop renewable power. We'll come back to that in a bit.

Maybe a more accurate way to put it - Verizon gets blown apart by Google.

This is a (really) big deal. Not for the telecoms industry - forget that, it's lame, and we all know how the story must end.

Rather, it's a vitally important important demonstration of how competition at the edge is so vastly different from competition at the core.

Google is challening other players to be better - more open, more good, lighter, etc.

Contrast with core-focused competition: boardrooms challenge other players to see who can be the most closed, evil, heaviest, etc.

That's how record labels/film studios/clothes makers/retailers/automakers/insert massconomy player here/ got themselves into the messes they're in.

What's revolutionary about Google isn't just that it makes cool stuff. Rather, it's that Google is radically changing the essence of strategy: it's making yesterday's massconomy games, and how to play them, thoroughly obsolete.

Leave the details aside for a second - and really think about it from an economic point of view.

What just really happened? By focusing on doing good and being open, Google has literally forced one of the largest, nastiest, and most recalcitrant incumbents in the world to it's knees - in a matter of weeks.

Now that is seriously awesome. Compare it to the renewable power link at the begining. That's another industry prey to exactly the same dynamics.

A bit more formally: the strategic intent is the same - total revolution, good beats evil, etc. The economic mechanisms are the same - openness, markets/networks/communities/etc.

See the point?

While most players continue to fight it, Google is rethinking strategy for the edgeconomy. But you can't fight economics - you can only rethink your strategy.

-- umair // 6:51 PM // 5 comments

Comments:

Slight hat tip to Verizon for actually getting a clue, no?

What if everyone started to get it?

More on my blog:

http://smoothspan.wordpress.com/2007/11/27/verizon-drops-the-open-bomb-maybe-the-old-school-is-starting-to-get-it/

Cheers,

BW

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Bob Warfield // 11:51 PM

Speaking of strategy, what does alternative energy have to do with Google's mission of organizing world's information...

I know that Google probably spends a lot on energy bills, but that is going a bit too far to start producing your own energy.

I am surprised not many are asking this question.

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Anonymous // 1:16 AM

Anon, I think you answered your own question. The amount of power Goog consumes at all its sites is huge. And will only get more so. And think about this...the old electro grid is seriously weak and vulnuerable. Remember the Great Lakes blackout of a few years back? Goog can't afford to invite everyone onto its cloud and then have it all vaporize because some wahoo in Cleveland scraped the insulation off a 75 yr old wire.

And, besides, just think of the revenue stream...and Goog ain't nothin if not about the revenue stream.

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Scott Crawford // 6:20 AM

Does Verizon taking out the walled garden have much to do with Google though? Open access has been the norm in Europe for the last five years?

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James // 11:06 AM

I find Fred Wilson's comments in his blog very interesting as part of the overall argument about "good and evil" DNA...see http://avc.blogs.com/a_vc/2007/11/fear-and-loathi.html particularly as it applies to Google vs Verizon but also check his words on Apple...!!

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[email protected] // 4:33 PM