Competitive Intelligence

Google's Gmail Challenges Yahoo, Windows and Privacy Advocates

Google's recent launch of Gmail creates some interesting new competitive pressures on its top two rivals, Yahoo! and Microsoft, but in some surprising ways.

For Yahoo!, the obvious frontal assault on their users from Google is nothing surprising. Yahoo saw this coming a few months ago and took steps to break away – pretty successfully, I might add. Still, the competitive dynamics in Yahoo vs. Google align across multiple services and markets in terms of serving their REAL customers – that is, the advertisers seeking to capture the best qualified eyeballs, that constitute both firms’ real product. I read an interesting update piece on the rivalry at eWEEK.com:

It's curious why it took so long for Yahoo Inc. to discover that it was nurturing an adversary during all of the years that it hosted Google Inc.'s search engine.

Long before Yahoo finally switched search engines in February, Google was adding features to its own site designed to challenge Yahoo's position as a popular home of Web searches, news, shopping and community groups.

It's hard to believe that Yahoo would have remained committed to the Google search engine for four years if it had realized early on that Google would not be content to remain quietly in the background as Yahoo's search engine.

Now, Yahoo—and for that matter America Online Inc., the Microsoft network and the rest of the online services industry—is dealing with an increasingly vigorous competitor that is going to battle tooth and nail for market share. Web surfers have nothing to lose in this battle as Yahoo, Google and the rest try to outdo each other by offering new online services to retain users' loyalty.

Yahoo has gone to considerable pains to show that it won't miss Google search after making the switch to the Inktomi search engine, with its emphasis on product and technology Web searches. But when it comes to Web searches, Yahoo still lags far behind Google, which accounts for about 79 percent of U.S. search activity, according to Searchenginewatch.com. In comparison, Yahoo accounted for 27.7 percent even when Google was still its search engine.

Yahoo also revamped its news search by implementing an index that combines content from 100 news partners and 7,000 Web sources, which it says will let users access a wider array of content. Its earlier news search gathered information from 4,500 Web sources as well as its direct news partners.

While this seems impressive on the face of it, one has to wonder whether users are able to discern a difference in the quality of the content they retrieve when faced with a veritable avalanche of information, especially when most of the information is coming from the same set of sources.

Local search has emerged as the new competitive battleground for Google and Yahoo. But it remains to be seen whether it will prove to be a major new channel for advertising revenue, even if it proves to be a boon to users.

At first glance, local search doesn't seem like such a new or innovative idea. People have been able to do yellow-pages searches of local businesses and attractions for years.

But new features such as Yahoo's SmartView let users pull up maps highlighting the locations of businesses and attractions such as hotels, restaurants, theaters, sports arenas and bank ATMs. The maps display icons that users can click on to get additional information such as directions, prices, Web addresses, schedules or restaurant menus.

From a little farther down:

But the development of local search hardly comprises the majority of what Google is doing to challenge Yahoo on its home turf. Google's latest move is to announce a free e-mail service to compete directly with Yahoo, MSN, AOL and the rest.

The Google "Gmail" service reportedly will allow users to archive and search every e-mail they've ever sent or received. Google plans to sweeten the offer with 1 GB of free storage, far more than what Yahoo and other free e-mail services offer. Yahoo, for example, offers 4 MB of e-mail storage for free. Users have to pay for additional storage capacity.

With this powerful addition, Google's spare and uncluttered interface could prove an irresistible draw for Internet users, even those who have made Yahoo their default home page since the early '90s.

But, from Microsoft's perspective, Gmail represents a migration step toward computerless computing. By changing the model of where we store our files, Google does nothing less than diminish the need, not only for MSN's Hotmail and associated services, but for the very idea of owning a computer of one's own and the desktop OS to go with it. Over at SearchEngineWatch.com, Danny Sullivan considers the possibilities of the "Google Desktop":

Will Google's new Gmail free email system be just the first of many things we begin moving to a new Google Desktop? If so, Microsoft might have a lot more to worry about than web search.

Today, plenty of people download mail to desktop-based email programs. But Google might convince some of them to take up its email storage offer.

After all, even if you do have a great way to search through your desktop-based email, you might like the idea that all your mail is backed up, stored offsite and easily searchable from anywhere, to boot.

Now take things a step further. Imagine next year that Google provides anyone with 5 gigabytes, 10 gigabytes or more of storage space for personal files.

Got a ton of Word documents, spreadsheets and other material? Push it across to us, Google would say. We'll store it, index it and make it easy to retrieve what you want. This type of material Google already indexes from across the web and has done for ages.

As broadband expands, such an idea becomes more and more feasible. And with it, the idea that Microsoft might trump Google with "desktop" lock-in becomes perhaps less an issue.

This recent AP article takes a fresh look at the search wars from the perspective of Microsoft being on the defensive, because of how prominent Google and Yahoo have become as almost parts of the operating system, a "layer" as John Battelle puts it, above Windows, Mac OS or Linux.

Go even beyond this. Google's move might be a harbinger of redefining where our desktop lives, not just in terms of software-like applications that we interact with, but in terms of where we store that data.

Whether Gmail can overcome the concerns of privacy advocates remains to be seen. I personally believe viruses and spam have largely corrupted email communications and that differentiation, using methods such as targeted advertising to email readers, makes this interesting twist.

- Arik

AT&T Expands VoIP Service, Promptly Sued by Competitor Vonage

Just a few days ago, AT&T revealed plans to make its voice-over-IP Internet phone service more widely available - then promptly got punched in the mouth by competitor Vonage, with a lawsuit based on the name of the product. AT&T is certainly provoking a little, but I have to say, they’re finally learning to join ‘em, after years of failing to beat ‘em.

The service, known as "CallVantage," is available to residential customers in 11 northern and central New Jersey counties, as well as areas of Texas, including Austin, Dallas, Fort Worth, and Houston. AT&T hopes to offer the service in the nation's top 100 markets by year's end. As if waiting for the announcement, VoIP vendor Vonage filed a trademark lawsuit in U.S. District Court in New Jersey claiming CallVantage is confusingly similar to Vonage.

Here's an excerpt from eWEEK.com:

Vonage Holdings Corp. has sued AT&T Corp. for trademark infringement, alleging that the name of AT&T's newly launched VOIP service is confusingly similar to its company and product name.

In its lawsuit filed last week in U.S. District Court in New Jersey, Vonage alleges that AT&T is infringing on its name by launching a VOIP service named CallVantage. Vonage also is accusing AT&T of cyber squatting for having filed a series of domain names in February that it says are similar to those owned by Vonage. Those Web addresses include variations on "callvontage" in the .com, .net and .biz domains.

The lawsuit points to the growing stakes in the VOIP market as more providers enter the space. AT&T rolled out its residential CallVantage service at this week's Spring 2004 VON Conference & Expo in Santa Clara, Calif. It announced availability for New Jersey on Monday and launched the service Tuesday for parts of Texas.

Vonage of Edison, N.J., was founded in 2001 and first launched its Vonage Digital Voice service over broadband connections in March 2002. Brooke Schulz, Vonage vice president of corporate communications, said the company has spent three years building up brand awareness and had tried to resolve the name issue with AT&T before filing the lawsuit.

"This is really about confusion in the marketplace," Schulz said in an interview with eWEEK.com at the VON show. "We welcome them to the marketplace, but we want them to use a different name."

Officials at Bedminster, N.J.-based AT&T declined to comment on the specifics of the lawsuit but said they were confident of its outcome in their favor.

"We simply think the suit is without merit, and we do believe that we will prevail," AT&T spokesman Gary Morgenstern said.

The Vonage lawsuit is seeking an injunction to prevent AT&T from continuing to use the CallVantage name as well as a requirement for AT&T to transfer the disputed domain names to Vonage.

As a Vonage customer myself, I can say, it's pretty sweet - unless you're talking to someone while also sending a large upload... at which point call quality craters. This probably isn't fixable, and is only intermittently annoying. But, I personally hope AT&T has some success in defending itself in the VoIP market. Competition is good for consumers, as AT&T learned first-hand from competitors itself.

- Arik

April Fools Plague the Business World

Modern April Fools' Day pranks have come a long way since their humble beginnings with French school children.

History says the Roman Empire set the beginning of the year on April 1. In 1582, Pope Gregory XIII ordered a new calendar (the Gregorian Calendar) to replace the old, but it wasn't until 1752 that the rest of Europe adopted the calendar. Those who still celebrated the beginning of the year on April 1 were "fools".

Under the new calendar, the French came to call April 1 Poisson d'Avril or "April Fish". To play a prank, school children would put a picture of a fish on their classmate's backs and scream "April Fish!"

Since then, Americans have adopted the practice, coming up with their own April Fools' pranks. April Fools' pranks have taken on a new dimension over the years with the invention of the Internet. Now not only close friends can be pranked, but the whole world can be fooled.

In 1994 an April Fools' prank caused an uproar on-line in an article entitled "Microsoft To Buy Catholic Church". The e-mail, in the format of a newspaper article, announced Bill Gates was trading Microsoft shares for the Vatican.

And, now even PR firms are getting into the act by telling us who was most foolish. For the second consecutive year, Michael Jackson has been named the country's most foolish individual in an April Fools' Day survey conducted by a New York public relations consultant. Janet finished second.

Of the 1,016 adults polled last month, 77 percent thought Michael had done something foolish in the past year. They were not asked to specify what they thought that foolish thing was.

We all know the reason for Janet's lofty position, though it must be pointed out that her breast-baring got her into the No. 2 spot by just one vote over Martha Stewart. Also in the top 10 of consultant Jeff Barge's fifth annual poll were Britney Spears, Rush Limbaugh, Paris Hilton and Rosie O'Donnell.

But, more interesting was an article in the Houston Chronicle summing up Google's Gmail launch and the widespread belief the announcement might've been a hoax:

It's not like Internet search service Google can't laugh at itself, but when an April Fools' joke got out of hand today, a real business plan was rumored to be a Web hoax -- and that was no laughing matter.

Privately held Google Inc. had Web message boards buzzing today over whether a new e-mail product, announced on Wednesday and meant to challenge Yahoo Inc. and Microsoft Corp , was actually an April Fools' joke.

Google's announcement was questioned because of the U.S. No. 1 search service's unconventional sub-heading on a press release and because it also posted a fictional job listing seeking engineers for a "Google Copernicus Hosting Environment and Experiment in Search Engineering (GCHEESE)" lunar outpost.

Google's free e-mail service called Gmail, which will offer significantly more storage than Yahoo or MSN, "is not a hoax," said Jonathan Rosenberg, Google's vice president of products.

Google's unconventional March 31 press release announcing Gmail helped set Internet message boards alight because the sub-heading read: "Search is Number Two Online Activity -- Email is Number One: 'Heck, Yeah,' Say Google Founders."

"It is April Fools' Day. We were having fun with this announcement. We are very serious about Gmail," Rosenberg said in an interview.

Still, the Web was buzzing with speculation.

"It's going to go down in history as one of the biggest pranks ever pulled," wrote one message poster at Slashdot.org, which bills itself as a news provider for nerds.

That view was countered by others who noted the relatively low cost of storage and Google's registration of Gmail.com.

"The real joke was an advertisement for a job opening in 2007 at their lunar facility," another Slashdot poster wrote.

That recruiting ad - which can be viewed by clicking on the Google.com link "Want a job that's out of this world?" - details the benefits of working at Google's "Googlunaplex" location on the moon.

"The notion that we're actually opening a lunar office is consistent with the spirit of April Fool's Day, and, yes, it is a joke," Rosenberg said of the ad, posted around midnight Greenwich Mean Time today.

In fact, Google's informational site about Gmail, at www.gmail.com, was up and running Thursday during a test period with a small group of users.

According to Whois.net, an online service for researching domain name registration, Gmail.com does belong to Google.

Financial news Web site, the Motley Fool, was the one that stung me, when I read the headline on Yahoo! Finance this morning - "NYSE's Morning Mishap":

Ringing the bell at the opening of the New York Stock Exchange has been a Wall Street tradition for more than 80 years. CEOs, U.S. presidents, celebrities, and foreign dignitaries have all participated in this time-honored ceremony. Except this past Wednesday morning, it wasn't the opening bell that was heard. It was the opening belch.

- Arik