Google’s Map API is Stuck in a Commodity Driven Market

We were surprised to read about some recent changes to features and pricing for Google’s Map API. In a post authored by Molly McHugh on the Digital Trends blog, Google Maps strikes against new competition with API price cuts we learned that, despite a recent round of feature improvements, including “better 3D, more immersive Street View technology, and other incremental improvements” Google Map API product marketing opted to reduce the street price of its product by a whopping 87%, from $4.00 to $ .50 per 1,000 map loads.

For a company as large as Google to display this level of product marketing ineptitude is discouraging and, certainly, not the type of event that inspires our confidence in the company. Rather, this type of mistake leads us to more skepticism about the long term strength of the present market leader of the search engine advertising market. As we have written elsewhere in this blog, the most respected expert on competitive positioning for commodity markets is Michael Porter and has been for quite sometime. Michael Porter’s “5 Forces” are based on several important assumptions that Joan Magretta has summarized in her book “Understanding Michael Porter”, Harvard Business Review Press, 2012.

It is not difficult to see the problems inherent to Google’s product marketing strategy for its Map API when you note Magretta’s point that “The real point of competition is earning profits, not taking business away from your rivals. Business competition is about the struggle for profits, the tug-of-war over who gets to capture the value that an industry creates.” (Magretta, “Understanding Michael Porter, p61). We have to ask “How much profit remains when prices are slashed by 87% and developers are hired and tasked to create a rich new feature set?”

We hope that Google has taken the steps to lower production costs for this software product to an absolute minimum, else where is the justification for such a steep reduction in cost to the consumer? We also hope that Google has carefully carved out a specific niche for the features that they have added to their product. But with mass market promotion of the new feature set, we question the strength of Google’s position vs. other market competitors. All told, the marketing communications that we reviewed on this product raises more questions than it answers, many of which are less than flattering about Google.

If you are considering modifications for current products in highly competitive enterprise IT markets and would like to avail of more of an understanding of industry leading product marketing techniques, please let us know. Telephone Ira Michael “Mike” Blonder at +1 631-673-2929 to further a discussion. You may also email Mike at imblonder@imbenterprises.com.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved

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