Why has Google been moving into the book business? One may begin to think that Google is losing focus away from its core business. However, these are clever strategies Google is using to protect its core business as its business undergoes a major transformation.
Think about how you searched for books 15 years back? You probably went to a library or a bookstore. 10 years back? You most likely went to the net and searched for the books there. Today? If you are like me, you go to Amazon and search there! Google is getting shut out of the search business for books. At the same time, Amazon is using its customer knowledge to promote real sales of other merchandise including books.
Now consider what’s happening to the internet search? It’s moving more and more to mobile devices such as smart phones! How do you search for stuff on your mobile devices? You perhaps have an app or you use a browser. Again Google is facing a big threat of being displaced as the search leader as the search itself moves away from browsers on computers to mobile devices. Recent rumors on tie up of Bing with iPhone points to the major threat Google faces as search moves to mobile devices. Google is responding to this threat with Android platform.
Now consider how you consume your media? Again we see a trend towards consumption of media on the go. Although Google still hasn’t figured out a way to make money from YouTube yet but YouTube success would likely be a big part of the potential success in video search as well as ways to make money from YouTube. However, as consumers consume more data rich content such as video, this helps Google at the expense of Telecom providers whose network gets clogged by video transmission. Telecom companies faced with user level quality issues can do one of the two things – add more bandwidth or deteriorate the bandwidth for heavy bandwidth users such as video content. Of course they can always charge by usage. If they add more capacity without charging for it, they lose (Google’s gain). On the other hand if they deteriorate data speed for video content or charge for pay per use, Google stands to lose. To prevent telecom majors from doing this, Google has been promoting a creative term “Net neutrality”. Spending a miniscule amount on high speed broadband network is another way to achieve the same objective. By showing the policy makers that consumers stand to benefit much more at higher minimum speeds of the net, it is probably hoping that it can shape the telecom policy regarding the minimum standards of broadband speed available to the general public.
In short, Google is protecting its core business as it dabbles in books and telecom. This goes on to show how sometimes, firms have to go beyond existing products and services to innovate on different levels to just stay alive in their own business.