Paul Quickenden sent me a link to a fascinating analysis of Google’s “cheaper than free” strategy, sharing its advertising revenue with companies (including telcos) building products using Google’s various tools and services. (This approach may also resolve the content vs search revenue debate, as well).  In effect, through Google search, maps, the Android phone system and Chrome operating systems, not to mention the growing richness of Google’s mail, calendar, office applications. Google sites, etc., etc., etc., why would anyone build their products and services using Microsoft et al, for which they have to pay?

Naysayers of these assertions will likely have the same retort – quality is key. They will argue that Google’s turn-by-turn apps are inferior to their well honed market leading products. With regard to Android, Google will lack the user interface or embedded software expertise necessary and will deliver a subpar product. Plus, because the Android OS will be so splintered, QA testing will be difficult and incompatibility issues will abound. In the short run, these issues will exist.

Despite these challenges, it would be a dangerous strategy for any of the many threatened players in these markets to hang on to this “quality” rationalization for very long. First, Google’s products will get better over time. The sheer volume of the Android phones in the market will give them new data feeds to complement their own mapping effort. Also, they can create UGC hooks for users to embellish their own maps (like in Google Earth), offering themselves further differentiation. With regard to Android, version 3 will be better than version 2 will be better than version 1. Microsoft knows this game well.

Another perhaps even more important factor is that when a product is completely free, consumer expectations are low and consumer patience is high. Customers seem to really like free as a price point. I suspect they will love “less than free.”

I suggest you read the whole article before bursting into comment mode. This isn’t so much about the changes for the end-user. This is more about the impact on makers and purveyors of products and services, and the platforms upon which those products and services are built. Google’s growing dominance will make Microsoft’s near-monopoly look trivial. I can hear the anti-trust lawyers sharpening their knives already.

PS. MS still has very powerful offerings in other areas (eg. .Net), not to mention huge familiarity and comfort within its installed customer base, so don’t write it off yet.

Disclosure: My family trust owns Google and Microsoft shares.