7.5. MAKE IT FREE

Google has a history of entering businesses in which other companies are engaged, but offering the service free. This is possible, due to the colossal revenues Google collects from relevant advertising. "Frankly," says Eric Schmidt, "the free service model with free advertising is still the best model."[] The advertising itself isn't free, of course, but it is reasonable.

Over time, Google has challenged almost all the major players in the software and Internet world, and truly frightened the competitors with the freebies. Google's productivity programs, which operate from the Web, are a direct attack on Microsoft. Microsoft isn't the only company that feels compelled to take a defensive stance where Google is concerned. Google Base—a collection of software—threatened craigslist, eBay, Monster, and Tribe.net. Google Books frightens authors, publishers, bookstores, and especially Amazon.

Some of the complimentary programs don't seem to have much impact. Google offered a free coupon program to its advertisers, linked to product and services searches using Google Maps. Few companies use the service.

In many cases it isn't clear why Google is offering the no-charge services. Google Voice Local Search, activated by calling toll-free 1-800-GOOG-411, has no apparent advertising attached. At best, it seems like an experiment in voice-activated search.

Even so, Google's cost-free programs create buzz and goodwill. Just in time for the 2008 Beijing Olympics, Google announced ...

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