Talk Is Cheap

Every time the Googleplex delivers another beta baby into the world, you can almost hear the ‘Do No Evil’ crew cheering as the Yahooligans groan. Their latest offspring is Google Talk, a product that straddles the converging technologies of Instant Messaging and voIP. No real surprises here, but perhaps some more glimpses of the master plan.

If you are a portal, chances are your favourite parlour game is feature matching. Google buys Blogger, MSN launches Spaces. Yahoo moves into music and media, while Google seeks to dislodge Yahoo users from their core services in mail, search, toolbar, personalised home page, and news. Product development as New Economy Cold War.

But there is a kind of insane logic behind it. Although media analysts tend to get excited about page impressions and unique visitors, most of the lock-in power behind online media giants today is tied in with registered users. Getting people to give you an email address is one thing, but giving them a reason to come back every day is why communications and messaging platforms are so integral to portal strategy.

All of the portal players use their registered messaging users to drive adoption of other strategic product lines. MSN integrates its Messenger service with its blogging tool while Google requires you to create a gmail account in order to activate Google Talk. AOL has the biggest share of the messaging market in the US, but is well behind in terms of other services. Of all the players, Yahoo is probably the most advanced in terms of the deep integration between its various services and a powerful user identity management system.

Of course, there is a delicious irony in the fact that the portals of the world need to give away messaging to keep users, while Telcos give away almost everything else to hang onto their communications revenues. Inevitably the two business models must converge, but perhaps not in the way both parties would expect or prefer.

Portals would love a slice of the lucrative Telco dominated voice market. Already, Yahoo has started charging for voIP calls via its instant-messaging client. They acquired internet telephony services company Dialpad in June. But the real market leader in this space continues to be Skype, which by all accounts is being shopped around town for an astronomical acquisition price.

VoIP is a classic disruptive technology, but with a twist. The way most voIP players commercialise their networks is by providing integration with the Telco legacy system. Talking to your other friends on Skype is free, but if you want to terminate calls on the old fashioned telephone exchange, or want a normal phone number that connects to your Skype account – that's when the cash register also starts to ring.

Eventually that business model breaks down when there is just one data pipe which carries a bit of everything. The owners of the pipe, which may or may not be today’s Telco operators, will take a cut for transport, while portal and platform operators will make money from bringing users to the system and advertising.

That raises the interesting question about whether there will be a convergence of messaging and talk platforms. After all, the fact there is a pretty standard international phone system is the reason that the network as a whole is useful to people. At the time of the launch of Google Talk, Skype announced that it was opening up an API for developers. That announcement was in response to Google’s claim that its entire messaging service is built on an open instant messaging and voice over IP service built using Jabber/XMPP technologies.

So does all the fuss about platforms really matter? Maybe to third party developers – but as anyone knows who has used a cross platform like Trillian before, it is easy to message people on other platforms, but you miss out on all the clever integration and services which come with a portal specific service.

Ultimately that is the paradox of many network based systems. In the long term everyone benefits from an open platform, a clear standard, and total interoperability. The short term is another story. The most strategic game to play is to keep your registered users close, and your competitor’s users even closer.

Comments

[Jerry]

Talk may be cheap, but voice is still the killer app at the telco cash register and switching out from skype et al into the POTS will cost. That is why telcos are primarily legal entities with cartel control over choke points like ENUM.

One take on the game behind the game is that google talk was only released to deflate the purchase price of skype. After all, skype needs google much more than google needs skype and nothing like the real thing to drive the point home. Corporate Finance plays?

And word is google has been buying up dark fibre too...

Calling the collision between portal and telco business models "convergence" is the understatement of the century.

If google pulls it off, its a smart strategy and its sheds the one trick pony label too..

In the worlds of Ali G: Respec

[Jerry]

And some comments on Jabber...
http://www.russellbeattie.com/notebook/1008597.html

[Alborz]

Hmmm, I am surprised you didn't mention that Google's entry into the IM stage is about 5 years too late. It is hard to see Google actually being able to catch on to the likes of Yahoo and AOL. MSN with its integrated service into windows still ranks below both Yahoo and AOL, so you have to wonder what Google will have to do to get users onto its network.

[David Martinez]

Google never ceases to impress. I already have a dedicated Vonage (voIP) phone and fax
at my home office for $25 a month, over $60 less than having one analog connection
through my local telco. I get my web connection through my cable provider and
man it is fast. Screw the telcos. The only thing they were good for was setting
up the infrastructure for the internet anyway. OK, analog phones were cool for 50
years but that's about it.

Here is my first take on Google talk...
http://www.seidon.com/google-talk-review.php

[Green Data]

Frankly, I haven't downloaded Google Talk yet. I cannot find any interesting features in it. It has VoIP; however Skype and YahooIM do it. Its protocol uses clear-text communication and not cipher-text one as Skype. It's not integrated in Blogger or so. I don't know about the searching capabilities in it and if someone can search for other users or even search in his/her previous chat history. Any ways I am looking for more users to download it in order to get their feedback before trying it myself.

[Alpay Erturkmen]

everybody should note that this Google Talk is beta. And everybody should note that Google was alsi very late at entering the free e-mail service. Yet the situation is clear. Please, do not jump to conclusions.

[ds]

its nearing the end of the world.

[dr dre beats headphones]

It is well known that beats by dr dre headphones Sale Online become more and more popular.