Are company freebies spoiling consumers?
The best things in life are free was a truism when nobody had anything. Now that everybody seems to have everything, more stuff is free. Ironic, I know, but true. There's so much in life and business for free these days that I wonder how much longer people are going to be willing to pay for anything.
Need directions, for example? Well, for $2,200 you could buy a pricey, built-in navigation system for your car, or you could save the coin and get them for free. Just type "from LAX to Holiday Inn Hollywood" (where kids eat free) into your mobile phone and then hit 466453 (Google on your keypad); within seconds, you'll get back precise driving directions in a text message. All for free, assuming you have Short Message Service (SMS) activated on your phone, which you probably got for free when you bought the service.
Google, along with Yahoo, are only the latest in a long line of many companies that have embraced the "give-it-away-for-free" business model. King Camp Gillette perfected this business model a century ago when he created the first disposable safety razor. After World War I, men disposed of the straight razors and have never gone back. It was Gillette's business model as much as his technology that sold consumers.
Today, the model works for thousands of companies that subsidize free cellphone giveaways and free checking-account offers with strategies to soak customers in some other way. But what Google and Yahoo have done is take the give-it-away-for-free concept to places only media companies and a few others have been able to go. Just as someone else paid for you to receive this column, so, too, has someone else paid for me to use Google and Yahoo every day for searches, stock quotes, driving directions, Yellow Pages, messaging, calendaring and news for free. I use each service every day and have for years. And in all that time, I have never paid either a single, red cent. Not even Microsoft, which gave me a free browser at one time, has figured out how to put one thing in my pocket without trying to take something else out of the other.
No wonder Google is the bane of Microsoft's existence. It could one day soon be yours, too, and not just because you hate to see advertising at every turn. No, it's because free stuff is getting better and more prevalent all the time. Take Sun Microsystems, for example, which recently decided to drop the price of key software components to zero in a bid to increase the use of its software. Not only can you now get a world-class OS from Sun for free, but you can get free development tools and middleware software, too. Sun is quick to point out that its latest gambit is nothing more than a way to stimulate usage for its products and create a following. Furthermore, its executives go on to say that Sun has no single business user in its vast customer database who relies on free versions of its infrastructure software; they all buy service contracts today.
But how long, I wonder, can that last? Its Star Office business productivity suite, for example, is being used by some who do not buy other products or services from Sun. Frankly, that should worry Microsoft more than Sun. Microsoft dismisses such customers as interlopers. Still, I wonder: What happens if and when customers--individuals and small businesses, especially--begin to change the way they value software and start relying on the software many vendors now believe they have to give away for free in order to stand a chance in the marketplace? Why not try Microsoft's free security service, or Yahoo's much improved messaging client, or Google's free Web-traffic-analysis service, Google Analytics? (It had a less-than-stellar debut, but reviews were complimentary about how well it compared to pricier alternatives.)
Why not, indeed? Today, many of the free software and services given away offer the functionality that commercial products had just a few years ago. Given the fact that customers don't upgrade as regularly as ISVs would like, you could make the case that the free stuff available now is as good as what some customers use today that cost them dearly just a few years ago. When they eventually upgrade, they might very well be interested in taking a serious look at the free stuff vendors offer as an alternative to fee-based products.
That will mean looking at a lot of advertising, obviously, but isn't that a small price to pay for free software? I'm willing to bet more customers will believe so over time. I wonder how many of us in IT will have to eventually give up Silicon Valley for Madison Avenue? At least there's some solace in thinking that if you can make it there, you can make it anywhere--anywhere free, that is.
T.C. Doyle is senior executive editor at VARBusiness. You can reach him at firstname.lastname@example.org.