You can download the full 25 page Briefing in PDF format here. The Executive Summary and Table of Contents are reproduced below.

Summary: An in-depth analysis of Google’s strategy and objectives overall and in particular in relation to the Telecoms industry, with recommendations of where to compete and where to cooperate.

Executive Summary

Google is not just a search engine, nor is it just a media or a software company. It is, first and foremost, a massive advertising brokerage, which uses two-sided business models to maximise both the creation of ad inventory and the accuracy with which it matches targeted ads to content. 

A major driver of Google’s success is its investment in infrastructure – it spends almost twice as much CAPEX as its closest competitor, Yahoo! The combination of two-sidedness and infrastructure has led to the creation of a business with immense market share, stable and sizeable margins, and strong cash flow.

Like many successful ‘two-sided’ business models, Google employs two out of three generic approaches to charging described further in the report – charging merchants for transactions and services. Its success is enhanced by synergies with its free enabling services for merchants such as Google Adwords and Google Analytics, and by the growing end-user market reach of new and acquired applications such as Google Maps, Google Voice, Gmail, YouTube and the Chrome browser.

The frequent criticism that Google is unfocused is dismissed. Instead, we argue, Google’s investments reflect:

• Google’s aims to increase the share of time that people spend on its sites, and the total time people spend on the Internet overall (at the expense of other media)
• a conscious strategy of experimentation
• a policy of creating capabilities for future development as a deterrent to competitors from entering businesses vital to Google’s success. We characterise these deterrents as ”submarines”.

We see two major areas of conflict between Telcos and Google: communication services and advertising. In particular, Google is probably the largest single strategic threat to operator voice and messaging businesses. Its ability to reinvent its own versions of operators’ supposedly “unique” capabilities should not be underestimated. Right now, Telcos’ have unrivalled raw data on consumer behaviour, but Google is seeking to build its own direct relationship with consumers as it makes a play for the mobile advertising brokerage business.

Even so, Google is the Telcos’ friend in the sense that its portfolio of user-friendly services is driving mobile Internet usage and new sales of mobile data tariffs.  We conclude that Telcos should adopt a policy of ‘co-opetition’, fighting fiercely in some areas and partnering in others.

We recommend that Telcos should co-operate with Google in these areas:

• Adopt, but customise, Android. Android is essentially an aircraft carrier for Google’s communications services, but Telcos can neutralise the short-to-medium term threat by customising this highly open platform. Android smartphones will also drive sales of mobile data tariffs and act as a counterweight to Apple and Nokia. But Telcos should be alert to any moves by Google to exert tighter control over Android.
• Telcos should work with Google to combine the impressive and hard to replicate Google Maps and Street View apps with Telcos’ location data and Call Detail Records (CDR) to produce compelling, personalised services. 
• As its revenue growth slows, Google may start trying to sell more services to consumers, which would help the whole Internet ecosystem move to a more sustainable business model. Telcos should encourage such a move, perhaps by providing white-label authentication and billing systems.

We recommend that Telcos should compete with Google in these areas:

• Telcos’ voice and messaging services need to at least match the ease-of-use and rich functionality of Google Voice.
• Telcos are well positioned to claim a major share of the mobile advertising brokerage business, but Google is unlikely to let that happen without a fight, so Telcos may be forced into head-on competition.
• Unless Telcos can provide faster and more accurate location information than Google, much of the value could be sucked out of the promising market for location-based services.
• Telcos need to ensure their networks and billing systems, rather than the Internet or a Google platform, underpin the nascent mobile payments and mobile banking markets.
• Telcos’ ‘Golden Asset’ underpinning many of the potential future business models is the wealth of customer data available through their Call Detail Records (CDR) and billing systems. Understanding consumers’ behaviour will be the key to victory in the voice, messaging and advertising brokerage markets. It is vital that Telcos recognise and value this data, and do not inadvertently permit Google to accumulate it.
• Neither should Google be allowed to attract a disproportionate share of the time and attention of mobile apps developers and thereby dominate the mobile apps market in the way that Microsoft came to win the PC software market.

Table of Contents

Understanding Google’s business

  Google – the infrastructure company

  Google: A Classic Two-Sided Business Model

Strategies for Two-Sided Markets

  Approach One: making money out of transactions

  Approach Two: sell services to the crowd

  Approach Three: charge for access

  The power of combinations

Criticisms of Google’s Strategy

  Social Networking: Has Google missed the boat?

  What about the dark fibre, Google Checkout, radio spectrum bids?

  Google Changes Sides?

Google versus Telcos: SWOT Analysis

  Who Knows What About Consumers

  Location: Searching for an Edge

  Google’s Communication Services

  Google Talk: Softly, Softly

  Google Voice of Doom?

  Wave goodbye to push email?

  Android: An Aircraft Carrier for Google Services

  More of a threat than an opportunity

  Google – The Extraterrestrial

  The Advertising War of 2011

Recommendations for Action

  Ignore, Fight, Partner?

  Conclusion: Co-Optition is the way forward