Markets are filled with competitors within a single industry segment that do a great job for their customers in very different ways. Target and Wal-Mart illustrate this well. Each retailing giant prides itself on its unique way of servicing its customers: Target for its collection of exclusive brands, Wal-Mart for claiming to have the lowest prices.
Each executes its strategy in spectacular fashion, given their global growth and impact on once-dominant competitors such as Kmart, Mervyn’s, and Circuit City. That does not mean, however, that they could combine forces to become “Tarmart” and grow even more formidable as one entity. They do things so differently, and their diehard customers almost certainly have shown their loyalty based in large part on those differences, that a mash-up almost certainly would result in the demise of one of these two retailing models. The result, from the customer’s point of view, would either be more Wal-Marts or more Targets as one company completely absorbed and subsumed the other.
Google’s acquisition of mapping competitor Waze could be just discordant as the hypothetical Wal-Mart purchase of Target. That’s because these tech stars also go about their businesses with what seems like very different approaches, making a merger that does not compromise their core identities and does not alienate their customers a challenge.
Since its inception as an independent company, according to Wikipedia, in 2004, Google Maps has become one of the world’s two most powerful and popular mapping platforms, Nokia’s HERE Maps being the other. (Disclosure: I work for Nokia.) Google Maps’ website says it does this by combining information from:
- Google web search results
- Data submitted directly by local business owners
- User submitted photographic content
- Street View imagery
- Third-party sources (e.g. the Yellow Pages)
Google then crunches all this data to produce what is arguably one of the best maps services available in the market. Google’s approach is all about command-and-control, using what it considers to be the most precise data to make its maps more and more intelligent over time.
Waze also provides maps, but in a very different way. That’s because Waze crowd-sources its maps, relying on a 30 million member community to build maps information. Waze clearly has instilled an esprit de corps among its users/data providers, who rally around Waze’s slogan of “Outsmarting traffic, together.”
How does one unite top-down with bottoms-up mapping? I’m no engineer, but to me, this sounds like a tough task, even for Google. As a marketer, I can imagine the challenge of keeping Waze’s community happy knowing that its information might feed Google Maps, a product many in this community almost certainly see as a rival. That’s why I expect Google to leave Waze as an independent entity and not make a serious effort to combine the two services.
That means that Google acquired Waze for some other reason. My theory: so no other company could do it instead. Apple’s maps have experienced well-documented deficiencies, and social media titans such as Twitter and Facebook lack their own mapping capabilities. Building one’s own native maps platform takes a lot of time and money, so the barriers to entry are high. Because maps represent a significant potential advertising and licensing-based revenue stream, and because Waze already serves a significant installed base, the company likely had many suitors.
Now that it is off the market, these firms will have to find another solution.