Why “free” is the millstone round Google’s neck

Posted on October 8, 2010 by Ian Betteridge

The launch of Google TV is, I think, exposing a hidden challenge for the company. It’s best express in this comment on a GigaOm story by user ‘lz430′:

“My jaw dropped when I saw the price. Indeed, it’s Google and I love Google and everything they’ve connected and done thus far. But as others have commented, $299 is way too much, especially coming from a company that offers 95% of it’s products for free!”

In the minds of lots of consumers, Google = Free. This will make it very difficult to break out into the paid-product market, because potential customers see Google services as something they shouldn’t have to pay a premium for.

You could see this in the expectations for the Nexus One, where a substantial number of people expected Google to subsidise a smartphone down to the $99 price point, despite this being essentially impossible if the company wanted to turn a profit (something I ranted about with much profanity in my guest appearance on Angry Mac Bastards).

Google has established a great brand, but it’s a brand based on its products being free. It will be interesting to see if it can ever make the transition into being a brand people pay for.

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  • RichardL

    Wait! Are you just confused? Google doesn’t sell the Logitech Revue. Is there some information that Google has some sort of special business partner interest in the Logitech Revue? Isn’t it just a continuation of Google’s open-source “Communist Conspiracy”, the exact same model as the Android OS? Logitech sells the Logitech Revue. The $300 for the Revue goes to Logitech. Is that so hard to understand?

    Do people really not understand that the contract they sign with their cell carrier where they have to pay $55 to $70 per month for two years is why they are paying $200 for their $600 or $700 iPhone or Android phone? (I think people are smarter than they look, and they do understand this.)

    Yes, $300 for an Internet-TV-computer is CRAZY in the middle of a recession. There are people living on the street. Yet people are willing to throw $500 to $830 at an iPad for which they have no real purpose. (Oh right. You can check your email, Twitter, and it’s a great ebook reader. But dont’ you already have an iPhone and aren’t those ebook thingees $140 now? I guess there’s Angry Birds HD — That’s gotta be worth $500!)

  • http://www.technovia.co.uk Ian Betteridge

    “Google doesn’t sell the Logitech Revue.”

    No, but it’s “Google TV” and there are expectations which go with that brand. Note that it’s not “TV with Google”, which would carry different expectations.

    “Do people really not understand that the contract they sign with their cell carrier where they have to pay $55 to $70 per month for two years is why they are paying $200 for their $600 or $700 iPhone or Android phone?”

    I’d recommend you read http://techcrunch.com/2010/09/10/google-nexus-one/, and, if you have time, dig into some of the discussions and forum posts pre-dated the Nexus One’s launch. Yes, there were plenty of people out there expecting a $99, contract-free phone subsidised by advertising.