Are Google fans too cheap to pay for anything?
Does Google=Free?
I consider myself a Google fan. And my reluctance to actually buy anything from them makes me wonder if I just keep looking to them like the rich kid down the street we’re all nice to because he keeps trying to buy our friendship.
I love many of the things Google produces. I even own a small amount of Google stock. I think Google has collected some of the smartest people on the planet and is changing our world in ways that few have ever done before. Yet, I think despite the things that Google does well, there’s one thing it’s not so successful at: Actually selling things to fans of the Google brand. Apple fans get excited about what Apple is going to sell them. Google fans get excited by what Google is going to give them for free.
I’m not talking about AdSense and AdWords. Those are primarily business to business services. I’m talking about the things Google has tried to sell directly to end users where we give cash to Google: Google Video, pay-per-view movies on YouTube, the Nexus One and to a degree Android apps.
What does Google mean to people? To most people it’s not “Do no evil”. To them Google means “free”. Our first experience with Google was as a great search engine with minimal advertisement that was free to use. Services like free Google Calendar and free Gmail expanded on that.
Because of this, Google is known to the larger public as the company that gives you free stuff that’s supported by advertising you’re free ignore.
Then Google tried launching things that cost money (not counting B2B stuff). After the failure of Google Video (which featured paid content) they bought YouTube and went back to a free content model for video for a while.
I think the way people interact with Google and what they expect might be a reason that even though Android phones are very popular in general, the Google name is why Android applications don’t sell anywhere nearly as well as iPhone apps do according to developers.
I’m totally willing to be convinced that Google can be a brand people buy stuff from. But here are some example cases that say otherwise:
Google Video
We don’t need to do much analysis here. Google made a very big noise when they launched this platform to sell TV shows and movies. Not many people wanted to buy episodes of Deep Space 9 or Charlie Rose from there and it lost to iTunes and Bit Torrent. The meh design of it didn’t help either. Now it’s a search engine for video
YouTube (pay per view)
Recently Google tried an experiment when it offered Sundance feature films like The Cove as pay-per-view downloads on YouTube (Wired). How badly did it fare? The entire slate of films took in only $10,709 during the 10 day period (NY Times). Google says it was “happy” with the outcome. Kind of like the AppleTV is a “hobby” for Apple.
Google backers try to dismiss the effort by saying the movies were too indie and the project was under marketed. The problem with that is The Cove had a lot of buzz going into it and the whole enterprise had the biggest online marketer in the world behind it. This either says the Google machine isn’t very good for selling things (which I find hard to believe) or the Google brand isn’t something we want to pay for. We go to YouTube to watch stuff for free.
In my own experience with Google AdWords trying to push my own DVD’s I found that a person typing “Andrew Mayne DVD” into Google search was far more likely to be looking for a torrent of the DVD than actually a place to buy it. Then is symptom of an ecosystem where people expect everything to be free.
Google Checkout
Launched four years ago, Google’s effort to compete with PayPal has been disappointing. While more of a business service, its front end is faced towards consumers. Even after trying various ploys to get merchants to use Google Checkout, it still has negligible market share. PayPal gets 30 times the traffic. If it weren’t for the fact that Google Checkout is already 4 years old and you know, owned by Google, it’d be easy to make excuses for it. Crunchbase on Google Checkout
I would love for Checkout to be a much stronger contender. As an online vendor I’m not comfortable with PayPal being my own practical option. Yet I’m not willing to take the Checkout plunge myself. Nor are a lot of other people. I don’t think it’s a trust issue. I just think when we see the “Google” name we don’t feel like reaching reaching for our credit cards.
Making matters more vexing, Paul Boutin at VentureBeat.com writes that part of the problem with Android app purchasing (see below) is Google Checkout: Why so few paid Android Apps?
The Google Nexus One
Every Nexus One user I’ve talked to loves their phone. By all accounts it’s a worthy phone to compete with the iPhone. However, even an Apple fanboy like me is confused by the rather low sales figures for the phone. 135,000 in 74 days? This is scary for two reasons. The first is that it indicates that the Google brand isn’t nearly as strong as many thought - at least as a brand you actually buy things from. The second reason is that it questions the use of Google as an end to end marketing solution. Google has put a large amount of effort into selling the Nexus One. Type “phone” into a Google search and it’s the first sponsored link. For weeks it was the sponsored video on the YouTube homepage and popped up in Gmail. Check out Chris Matyszczyk at CNET’s observations on that: CNET
Unfortunately that synergy didn’t move the needle very much. The Droid sold over one million phones in that same amount of time and put Android in ten times as many hands as the Nexus One did. There are a number of mitigating factors like timing, televisions ads, etc. But none of them adequately explain the sad sales figures for the Nexus One. An article at Design by Gravity insists that Google’s overmarketing and underselling are all working according to plan. I think otherwise.
I have a couple theories. One is just the fact the Google=Free to most people and actually *buying* a product from Google is a very alien concept to most of us. The other theory is that this perception exacerbated the problem when Google wanted to sell an expensive consumer device.
Prior to the launch of the Google Nexus One there was a lot buzz about a potential Google branded phone. Some of this speculation even put Apple fans to shame. Even BusinessWeek speculated that a Google Phone might be free. But don’t blame rumormongers for starting that. The seed of a free phone was planted by Google CEO Eric Schimdt back in 2006 when actually said that mobile phones should be free (MSNBC). Now he was talking about a far off distant time when mobile advertising rates would cover those costs; but who would know better than Google when that time would come? Who better to make it happen?
When Google’s first branded phone actually arrived it was a bit of a letdown for people who were expecting a free or even heavily discounted phone. The fact that it cost $400 more than a (subsidized) iPhone was like finding out Santa was going to invoice you for Christmas presents.
Many were expecting a revolutionary phone and business model. What they got was a solid iPhone competitor and less revolutionary business model. Google’s excitement that you could buy it online directly from them wasn’t as groundbreaking to the rest of us.
Given the fact that Verizon sold a heck of a lot more Android phones than Google did, it seems safe to say that Google may not have the edge on actually selling the platform.
Google fans were expecting Google to bring the Google=Free to smart phones. When they failed to do that, their fans failed to show up.
The Android experience
Giving away the (again free) Android OS to phone makers was a great way to create a Google friendly mobile platform for their advertisers and offer up competition to Apple that Microsoft and others weren’t able to deliver. Trying to replicate the entire iPhone experience however is problematic: As someone who wants to sell something I’m much more excited by Apple fans than Google fans. So far it looks like Android users are only into free apps. 98.9% of Android downloads are free apps
There is of course a large community of people who use jailbroken iPhones to run cracked iPhone games and apps. But as a percentage of iPhone users it’s miniscule. The entire iPhone experience works well enough that it’s easier to buy the game for $.99. How many iPhone app developers do you hear crying about lost revenue to piracy?
It’s also interesting to note that when we routinely hear about iPhone publishers having million-dollar months in the App store PC World, it’s cause for celebration in the Android community when someone cracks $15,000. Android is new to the game compared to the iPhone and developer revenues will go up. More apps in the Android market will help and as the number of Android users edges closer to iPhone users it will become more lucrative for developers. However I doubt we’ll ever see parity with the iPhone.
As the Android platform matures and Google phones get into the hands of more law abiding citizens as opposed to bit torrent-prone early adapters it’ll be a solid place to make money; provided the OS fragmentation and hardware variability doesn’t screw things up too much.
The danger for that market from a developer’s perspective is that Android’s openness makes it very easy to pirate. And the tools for doing that are only going to become more ubiquitous. Given the current problems with the Android Market (only certain phones see certain apps, the carriers can restrict what’s available, etc.) more and more people might start choosing to go elsewhere to get apps - sites like Pirate Bay.
Another question we don’t have an answer to is what happens to the Android handset if the iPhone goes unlocked to a specific carrier? A big part of the adoption of Android is because of AT&T and people being locked into other carriers. Most of my Android using friends bought the phones because they couldn’t or didn’t want to go to AT&T.
Because Apple makes money from actually selling phones they have a lot more invested in marketing, developing and keeping users happy then Google does from a product they give away for free (except the Nexus One - but they even undermarketed that).
The fight between Apple and Google to buy mobile advertiser AdMob is a sign that both of them see a big future for ad supported applications. As a developer I have to wonder if Google thinks that’s the only future for mobile applications?
Will Google always equal free?
Soon I’ll have to spring for a larger Gmail account. I’ve said for years I’d love to pay for a better YouTube experience. I’d even pay for Google Voice if I actually used it. I’d also pay for machine translation and a host of other things Google does pretty well.
I think service by service Google will change its perception to a brand that you buy some things from. But it won’t be a quick path. I also think core fans of Google will either complain or not show up whenever Google tries to actually charge them for something.
Until then I’m convinced that for the Google faithful Google=Free.
If you have some counter examples or think I’m overlooking something, you can email me at: andrew@andrewmayne.com
