Google: the Wal-Mart of businesses.

Earlier this week I wrote about the shifting economics of digital information. Then, yesterday I read a really interesting article on Gizmodo about a feature of Google's new Android operating system and how the feature (among others) is going to "destroy" companies. Here are some of the salient details you need to know:

• Just like your computer, your cell-phone has an operating system on it. It might be Windows Mobile, Symbian, iPhone OS, or one of several others. It's just the background "brain" that allows your phone to do whatever it does.


• Google has developed their own operating system called "Android." Sounds cool, huh?


• Like Apple, they've said to the world, "Here is the code for the system. Play around with it, and we'll sell the cool apps you make and give you most of the money from those sales."


• Since it's Google's operating system, it interfaces really smoothly with nearly everything else Google offers.

The issue Wilson Rothman, the author of the Gizmodo post, has is NOT with the operating system, or even Google, per se. Rather, he argues that Android's Googlemaps capabilities is an example of Google's ability to "destroy" companies "that [trade] in data or packages it for public consumption." He points to companies like TomTom and Garmin who charge a pile of money for users to get access to their maps. Rothman compares the potential loss of income here to "the devaluation of the office apps that make Microsoft rich." Google's free office suite now has lots of people asking, "Why would I pay Microsoft a bunch of money for software I could get legally for free?"

My issue with Rothman (not personally; I really like his articles) is his use of very loaded words like "destroy." Well, really it's with the notion that the demise of a company that sells communications data is a bad thing, if that demise is caused by a company who gives that same data away for free (or close to free).

An analogy: Wal-Mart destroys Ma & Pa businesses when the giant company moves in to a new market. It's an argument we've all heard before. Movies have been made about it. Now, I'm not a fan of Ma & Pa losing their business. I love Ma & Pa; I want them in my community. But I can't argue with the benefits Wal-Mart provides to that same community. Those benefits include LOTS of jobs (with decent insurance coverage) and products at lower prices. Ma & Pa have to close up shop because they have to charge too much for those same products; it sucks for them, but many more people benefit from Wal-Mart's presence.

Sidebar: I know that this Wal-Mart argument is not water-tight. I also know that arguing in favor of Wal-Mart in this way makes me sound like some fiscally-conservative prick, which I swear I am not.

My point is that companies who trade in data, ANY data, have the right to charge for it just like the grocery store has the right to charge me for bananas (or any other delicious edible). However, if I can legally obtain bananas (or data) more cheaply, I'm gonna spend less money. Every time. Wouldn't you do the same?

Companies like TomTom, Garmin, Microsoft et al have made lots of money selling products they spent lots of time/effort/capital to create. Google comes along and says, "Our revenue stream is kinda focused elsewhere, so we can just give some products away for free (or cheap), so that you - the user - will like us. It turns out the technology is already in place or can be developed by us on the cheap, so ZOOM away we go." Then, companies who previously sold those margin-rich products say, "Aw, dudeman. We were making money off that stuff. Now what're we gonna do?" Like Ma & Pa, it sucks for those companies, but how many more people are now saving money because Google stepped in? Lots.

Although, yeah, TomTom has to lay off folks, so now I feel bad about that. Hmm. I dunno, what do you think?