Google (Finally) Finds Its Voice

Google (Finally) Finds Its Voice

For people who spend a lot of time thinking about disruptive innovation, there are few companies more interesting to watch than Google. The many ad-supported online services it's been rolling out over the years have disrupted everything from libraries to snail mail to word processors, and the image it's acquired in the popular imagination as a sort of Anti-Microsoft--a young, nimble, innovative, un-evil kind of company--doesn't hurt either. Maybe now it's time to ask: What isn't Google disrupting out in Mountain View? Well, now that we've had some time to reflect on the mid-March release of Google Voice, it looks like one answer is phones.


First, some background. Back in 2007, Google ( GOOG - news - people ) acquired a small but fascinating company called GrandCentral for about $50 million, and it has reworked and expanded GrandCentral's innovative menu of features to create Google Voice. Although at the time there was some concern that GrandCentral would enter (and possibly never emerge from) what Slate's Farhad Manjoo called the "Google Black Hole," it's clear that Google has made a healthy investment creating a slick service with plenty of interesting features.

The new service, which should soon open its doors to new, non-GrandCentral users, assigns users a new, single phone number, and that number rings all of your phones at once. Google Voice offers some neat technological advances to help users manage phone calls: features available through the site include voicemail storage and computerized transcription, Gmail-like SMS storage (you can send SMS messages through the site as well), call blocking (it even plays a recording to tell persistent callers your number has been disconnected), conference calling, and the ability to place calls (although the calls are placed via your phone, so you won't save any minutes). In a nutshell, Google Voice makes managing your telephonic life a little easier.

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So what does it all mean? Google has indicated that Google Voice will be free for users (except international calls--more on those below) and won't include ads, so there is little doubt that it will attract a healthy user base, but I'm not sure how much of an impact the service will have, either for the market or for Google itself.

Big-Picture Market Implications
Internet-based telephony (VoIP) has been getting a great deal of attention in recent years, and leading services Skype and Vonage ( VG - news - people ) have certainly had more than their share of attention from the media and from other companies. (Skype was acquired by eBay ( EBAY - news - people ), of all companies, in 2005). Commentators have said that Google Voice could be threatening to both these companies and to more "traditional" telecoms, but four factors make me skeptical...

First, it's not clear that the VoIP industry is a particularly attractive industry to enter, or that incumbents are doing at all well. Since its "most successful IPO in years" in 2006, Vonage stock has done nothing but decline (from above $12 a share to less than 50 cents a share). Skype, on the other hand, is a fairly popular way to make free computer-to-computer video calls and has certainly done a fine job accumulating and pleasing users, but as a revenue generator for eBay it's been very disappointing, and persistent rumors of a sale have been floating around for more than a year.

Second, VoIP's woes aside, Google Voice's Internet-based calling features don't seem to be particularly attractive and seem designed to supplement, not replace, existing phones. Sure, you can initiate calls through the Web site, but unlike Skype, Google Voice routes those calls through your cellphone or land line, so you're still basically using your old phone company and won't save any minutes (although it's worth noting that international calls are quite cheap if begun through Google Voice). Unlike Vonage, Google Voice can't actually replace your phones; it just makes them easier to use.

Third, Google Voice's success will depend on consumers' willingness to adopt it--and the fact that Google is demanding consumers change their telephonic habits may impede that adoption. Google Voice would shift the experiences of checking voicemail, sending text messages, and even making calls from the phone itself to the computer, and unless consumers see a substantial benefit, they will not be motivated to make that change. On the other hand, many of us have demonstrated our willingness to make big changes to our communications habits (certainly, carrying phones around with us everywhere was a big change), so this obstacle may not be so problematic.