Tech Showdowns in 2010 (2 of 3)

As consumers continue to adopt new technology and integrate it into their lives, competition for their attention will increase substantially. As such, 2010 promises to be an exciting year for digital innovation and adoption. Unlike competition in more traditional industries, competition for the digital hearts and minds of consumers competes on features far more than just price.

My top three competitions to watch in 2010 are Google vs. Apple, Google vs. AT&T, and Google vs. Microsoft. In today’s post, I’ll explore Google vs. AT&T.

Google vs. AT&T

Google and AT&T will compete on several battlegrounds this year as Google continues to expand into the communications industry. As Google approaches market saturation in its core business – contextual advertising – future growth will be driven by expanding into completely new markets rather than competing with Bing or Yahoo for incremental market share in traditional search advertising. The next big market for Google is serving ads to smartphones, and it is doing everything in its power to drive consumers toward increasing integration of mobile internet usage into their daily lives.

The core battle between Google and AT&T in 2010 will be around Google Voice, which provides users with a free phone number that includes free text messaging, voicemail transcription and advanced forwarding features. While not directly competitive with AT&T, Google Voice poses a real threat to AT&T’s core business in two ways:

  1. Google Voice enables consumers to substantially reduce their need for high-minute cell phone plans by forwarding their calls to a nearby land-line or a free VOIP service like iCall.
  2. Google Voice enables consumers to completely avoid long-distance charges from a land-line by initiating calls to their land-line via the Google Voice web interface.

When Apple briefly approved and then quickly rejected the Google Voice iPhone app, the FCC saw this as an anti-competitive move designed to protect AT&T, and launched an investigation into the matter.

While the disagreement du jour is whether or not Google should be subject to costs associated with the obscure practice of traffic pumping, the underlying issue at stake is net neutrality. Google appeared to be the early aggressor in this competition, but AT&T is fighting back effectively with claims that Google itself is subverting net neutrality by blocking calls to certain phone numbers in high-cost locales.

To further complicate the corporate relationship, Google and AT&T are apparently collaborating to launch Google’s NexusOne cell phone on the AT&T 3G network.

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