Tuesday, November 29, 2011

Poor sales of Chromebooks won't stop Google from promoting Chrome OS

AppId is over the quota
AppId is over the quota
@ yphilogene

Barriers to entry in the PC and mobile phone ecosystems are much, much lower than barriers to entry in web search. The continued existence of free operating systems like Linux, in many cases without subsidies (e.g. from hardware or services firms), is very strong evidence of this. If you don't like Windows, you can install Linux or buy a Mac. If you don't like Mac OS, you can install Linux or Windows. If you don't like iOS, you can install Linux or buy an Android/Windows phone.

If you're an advertiser (Google's actual customers) and you don't like Google, what can you do? In the US, maybe you can advertise via Bing, but you'll immediately reduce your audience from about 70 per cent to about 30 per cent of the potential market. In most of Europe, Bing is still a 'beta' (including in Germany, which is the largest market in Europe), with insignificant market share, and Google effectively control the entire web search market.

The tricky thing is that advertisers won't switch until audiences switch. Without advertisers (customers), there's no revenue. Without revenue, the enormous costs of building and maintaining a search infrastructure lead to enormous losses. As a result, only firms with very deep pockets can even think about competing. This isn't like PCs (or in some cases even mobile phones) where you can offer cheap or even free alternatives, and customers can switch to them for free.

One of the cleverest tricks Google have managed to pull to keep away the competition authorities has been to claim that their customers are web search users, who can switch to a competitor with a click of the mouse. In fact, Google's customers are advertisers, who are far more locked into Google's web search platform than customers of Microsoft, Apple or Intel have ever been locked into any of their respective platforms -- especially here in Europe, where switching from Google to anything else would mean an advertiser would lose perhaps 95-99 per cent of the audience.

Google's trick has worked so far, but it's transparent to anyone who understand the technology and has studied the market. I think the competition authorities will catch on eventually. When they do, Google may be in very serious trouble.

View the original article here

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