Convergence, Google Style

The news of Google buying Grand Central seemed to come and go fairly quietly last week. This is an interesting development as it confirms some of the speculation that has been around for a few years about Google’s intent to get itself deeper into the telecommunications space. Grand Central’s core offering is around single number services that can reach you on any number of devices, whether they be fixed-line, mobile phones, or VoIP offerings like Gizmo Project. This is similar to the trials and tribulations of our intrepid user “Bob”, which I wrote about earlier.

With the acquisition of Grand Central, Google has an opportunity to provide a great integrated solution for consumers and small/micro businesses when Grand Central’s technology is combined with many of the other existing Google Services such as Google Mail and Google Talk. To be able to make complete sense of what the heck Google is thinking with this acquisition, it is helpful to consider Google’s current offerings, what drives Google to develop a particular service, and then finally to look at how Grand Central might fit into this overall picture. From my point of view, I believe that all of Google’s services are built around growing their two core offerings:

  • AdSense advertisements – These are the ads which a user or business can embed into their own web pages in return for payment based on clicks of the ad.
  • AdWords advertisements – These are the ads a business can purchase, and which appear in various Google Services (such as in the margins of Google Search, Google Mail).

And on a related note, I believe that most Google services are aimed at either:

  1. Encouraging the growth of personal websites (e.g. Blogger.com)
    • An increase in the number of personal websites means more sites to embed AdSense ads in, and in turn leads to an increase in the potential views of each ad.
  2. Encouraging the growth of a business’ online presence (e.g. Google Apps for your domain)
    • More businesses online means more businesses to buy AdWords (and also leads to more potential users of other Google Services).
  3. Encouraging increased use of, and time spent on the internet (e.g. Municipal WIFI)
    • More people using the internet and more time spent online increases the number of people potentially viewing (and clicking on) the ads.
  4. Encouraging the increased use of other additional Google Services.
    • New Google features interlink and lead you to use other Google services, which in turn leads to exposure to more advertisements. For instance, you may start as a Google Talk user and because of its integration with Google Email may begin to use that as well.
An Aside – The ‘spider’ effect:

This kind of ‘spider’ effect I mention in #4 is actually remarkably powerful and could be the topic of an entire other article. But just as an example, I started using Google Apps for My Domain with my own personal website (it offered quick, painless, and cheap hosting). When I eventually decided I wanted to convert the site to a simple blog format, Blogger.com (another Google service) seemed like the natural choice. Then when I wanted to post pictures to my blog, I decided to use Picassa (still Google), and now finally I have started to use Google Docs for editing my blog articles. This is both scary and brilliant at the same time.


How does the incorporation of Grand Central technology fit in to this picture?

It seems to me that what the Grand Central technology brings to the table is the opportunity for Google to offer several new services which integrate nicely with the four goals mentioned above, resulting in the opportunity to further grow the revenue generated from Google’s core services – AdWords and AdSense.

Some potential examples of this could include:

  • Integration of Grand Central’s single voicemail service with Google Mail. This could lead to increased use of Google Mail both for personal users and businesses, meaning more time spent in GMail and thus more eyes on the embedded AdWords ads. Obviously this could also be a driver for new users of every other Google Service, per the Spider effect above.
  • Integration of Grand Central’s voice calling within Google Talk. This would allow calls to and from Google Talk to be routed via a choice of mobile, home phone, or computer IM/VoIP client. This feature could lead to increased user penetration of Google Talk and therefore more eyes on the embedded AdWords ads.
  • Provisioning of a Grand Central phone number that leverages users’ existing telephony devices, in combination with applications like “Google Apps for your Domain” and “Google Checkout”. This enables Google to offer a low-cost solution to small/micro business for their basic online needs (e.g., email, website, and even a phone number). The potential here is that it drives new online businesses and thus additional buyers of AdWords, as well as increased usage of existing Google services.

At a minimum, the Grand Central technology will enable Google to make an initial entry into the telecommunications market without tackling the immense barriers and costs of trying to become a full-on service provider (like a Verizon or a Bell Canada). Despite this lower barrier to entry, there are of course some significant limitations that may make people hesitate to adopt the service. Issues such as requiring an entirely new phone number to enable the service, and not being able to originate calls from this new number while on a mobile or fixed line phone, will certainly both act as barriers to adoption.

All this being said, the potential of all the shiny new services made possible with the acquisition of Grand Central, combined with the inevitable integration with Google’s existing services, could be enough of a lure to convince people to head over to Grand Central station despite any current limitations. Time will tell, but for now we can safely assume some new interesting services are going to be enroute very soon.