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Monday, January 09, 2006

Competing With Google : Beware Of Huge Costs & Efforts

Dare Obasanjo writes, Google tends to create initiatives that are either much more expensive for their competitors than them to provide (e.g. giving users gigabytes of storage space for email but limiting sign ups on the service) or would be detrimental to their market share to compete with (e.g. allowing non-Google clients to access the Google Talk servers). For every dollar Google spends on some of its efforts, its competitors are forced to spend five to ten dollars. Here is a back of the envelope calculation that illustrates this point. He points out that for 5 million email users it provides 12.5 petabytes storage@ 2.5 GB/user, whereas Yahoo provides for its 219 million users 210 petabytes of storage. Google has forced its competitors such as Microsoft and Yahoo! to spend orders of magnitude more money on storage which distracts them from competing with Google in the places where it is strong. More importantly its competitors have to provide from 10 to 20 times the total amount of storage Google is providing just to be competitive. This is often the dilemma when competing with Google. On the one hand, you have customers who rightly point out that Google is more generous but on the other the fact is that it costs us a whole lot more to do the things Interesting. Here's making scale or lack of it working to its advantage - looking at it the other way, Google imagines, innovates and delivers without feeling encumberred by past investments, methods or competitors.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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