Google-Motorola and Land Value Capture

Value Capture

The analyst Horace Dediu writes in Harvard Business Review: Google's Strategic Mistakes Drove Motorola Buy:

It's an innovative, if not convoluted, business model: Building and giving away the plumbing so that homes are granted unhindered access to free Google utility services (whose meter readings are sold to the highest bidder). But it comes with more complications. … Instead, with Motorola, Google got a hold of the vehicle through which it can create and sell integrated products. The company is thus no longer just a plumber but also a house builder and real estate developer. It can now build showcases that demonstrate the value of its services. The challenge then is how it will sell plumbing to contractors while it also competes with them by building houses. Android's big bet has yet to pay off and Google just doubled down.

This is a really interesting metaphor. Replace plumbing with roads, Google with transportation agencies, and Motorola with land development, and you have the model of Land Value Capture we have been talking about. Like Google giving away the OS plumbing and make it back in advertising, states give away roads and transit lines to users, hoping to make it back (somehow) in tax revenue (maybe?). Google, following Apple's lead, has decided it needs to internalize the value chain to avoid the convolutedness of the market model they had created, which gave them large share, but few profits in mobile. We need to come to the same realization in transportation, in favor of more direct vertical integration of transportation and land use.

David Levinson

Network Reliability in Practice

Evolving Transportation Networks

Place and Plexus

The Transportation Experience

Access to Destinations

Assessing the Benefits and Costs of Intelligent Transportation Systems

Financing Transportation Networks

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This page contains a single entry by David Levinson published on August 16, 2011 4:07 PM.

Accessibility Futures was the previous entry in this blog.

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