Waze

The naysayers were wrong in 2006 — is this Google's latest genius move?

The rumors turned into official news earlier this week. Google has acquired Waze, a social mapping and navigation company. Most industry pundits are aware of speculation that Apple and Facebook also were interested buyers. Google emerged as the winning bidder. I think this solidifies their position as a forward thinking leader in mobile computing.

The computing industry is quickly shifting to mobile computing. Just look at Mary Meeker’s D11 presentation slides showing how the iPad has already overtaken volumes of notebook and desktop PCs (separately, not the combined number). Mobile is now so important that major new services are commonly launched as mobile-only. Waze, Vine and SnapChat are a few good examples.

Google has been a mapping leader ever since it first launched Google Maps. Remember MapQuest before that?  When Google Maps came out the interface was dramatically better! Directions were awesome. Satellite imagery was added. Google started mapping the world’s streets with super fancy cameras to create Street View.

When I was a kid we had none of this. We had paper maps and chicken-scratch directions that someone might give to you over the phone. No GPS, no mobile devices, no nothing. Here we are many years later and the paper map industry is all but dead.

I think we are at the very early stages of Google making money from its mapping assets. Yeah, you’ll see some sponsored ads, but I doubt this is a serious money-maker. It reminds me very much of YouTube, which Google also acquired in 2006 for $1.65 billion. At the time people thought Google was insane. They said YouTube could never make any money.

Boy, were the critics ever wrong. YouTube is now the No. 2 search engine behind Google.com and Google has added some incredibly rich tools for advertisers to promote videos or advertise on top of another publisher’s videos. YouTube is a video-based social giant.

When Google introduced its social network, Google+, in June 2011, people thought it would fail. And on its own merit maybe it would have. But Google leveraged its assets. In the last few months Google has single-handedly thrown a monkey wrench into the business of selling webinar services. How? You can now broadcast to the world live from a Google+ Hangout via YouTube. This could destroy services like GoToWebinar or WebEx. And all you need is a free Google account.

So what’s coming? I am not as smart as the guys at Google. But I suspect Waze will become deeply integrated into Google Maps, and it wouldn’t surprise me if this technology was also leveraged to make Google+ even more valuable as a social network. The more users Google has, the more money it can make either through advertising or other means.  

Waze is rumored to be as much as $1.3 billion acquisition. Google doesn’t even need to disclose the value because it is not significant financially. Google’s market capitalization is $288 billion, so Waze is a drop in the bucket. But just as Google showed us with YouTube, it is important to plant seeds early and nurture them into strong producers of food for your business. The difference this time is that Waze is mobile-first investment. We are at the beginning of a huge wave of mobile-first (or mobile-only) investments by Google, I suspect.

 
There are 72 comments

Tre Lawrence says:

Good stuff, Chris.

I remember the Youtube purchase, and there are some similarities with regards to the reactions now.

Gekko says:

i was just thinking about this the other day. Google bought Android, YouTube, and GrandCentral (Voice), among many others. and they cultivated and integrated them. very smart acquisitions that big companies like Microsoft missed.

icebike says:

Except its not the same.

Google didn't have a video sharing service when they bought Youtube .
Google didn't have even the hint of a phone service when they bought GrandCentral.
Google DID HAVE the worlds leading mapping service embedded everywhere when they bought Waze.

Waze won't lead to more reliable maps. It might lead to early notification of temporary traffic conditions or road closures.

But realistically, Waze is to Maps as twitter is to News. Often early, mostly wrong, risky to trust.

Impheatus says:

Google DID have Google Videos when they purchased YouTube.

icebike says:

You are right, of course, in fact they beat YouTube to market by one month, although the service was horrible and short lived.

jwyche007 says:

I think Google videos is still a thing...

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TheDu9du says:

Boo, Google Videos is nowhere near what YouTube is. Plus like 90% of the Google Videos linked you to was to YouTube.

bttfpromo says:

That's not the Google Videos I remember.

Back in the day, it was a video service. Much better than YouTube. Then Google bought Youtube, and Google made into a video search engine.

Beenyweenies says:

It's a defensive acquisition if nothing else, buying Waze keeps it out of the hands of competitors. That alone is worth the $1B to Google.

And having a ready-made network of user reported traffic to tie into their existing Maps product is hardly worthless, it's one of the very few missing pieces in an already awesome product.

ConTejas says:

^This.

icebike says:

Except Google already gets better traffic reports just by measuring your phone's average speed. Turn on the traffic layer on your Google maps and you will see what I mean. You don't need Waze for this, and neither does google.

And Google traffic doesn't rely on people dicking around on their phone when they should be driving. Waze just encourages dangerous driving habits.

I just don't see where waze improves Google Maps plus Google Traffic, other then when a detour is opened due to a road closure. But even that can be sussed out by google.

I can see keeping it out of competitors hands.

wickedcontra says:

+1 buy the best weapons so the enemy cant use them!

bergeronjc says:

The DOJ should sue to block this purchase, they probably will too.

I see it as anti-competitive since there are currently only 7 - 8 map making companies. I fail to see any other reason why Google would buy them when their own maps are so popular.

Google would buy Waze solely to strengthen their maps program. GMaps is solid enough as it is, as many people know. Imagine how much more useful it is if it has live, up to the minute reporting on traffic conditions? I'd use it constantly even for my regular route to work, so as to avoid being late. Sue because they want to make their product better? I think that might be a bit much.

icebike says:

Google maps is already live up to the minute.

Have you ever flipped on the traffic layer in Maps? It is phenomenally accurate at telling the location and size of traffic jams, and that is not likely to be improved by adding Waze.

TheDu9du says:

That traffic layer doesn't tell you what to look for the reason of traffic, or that cops are checking speeds

ConTejas says:

Perhaps you've never used Waze? We're not talking green, yellow, red, or the dreaded red w/ black lines over the map. We're talking visible/hidden cop, dui checkpoint, last second alternative route do to an accident, etc. etc. I love the accuaracy of gMaps, and I've found Waze to be just as good with the added benefits of the social interaction. This is a match made in heaven for commuters. No doubt about it.

icebike says:

Seriously, how long do you thing that lasts?

The first thing google is going to have to strip out of Waze is real-time reporting or the cause of the slowdown.

With all the push for hands free driving do you really thing Google is going to encourage people reporting the location of every traffic cop. (Oh sure, Waze claims its hands free, but in fact its not, to be accurate, you have to be fiddling with your phone in the highest risk areas.)

jusuchin85 says:

I believe that this acquisition is a good thing not only in regards to the real time reporting of traffic updates or causes of slowdowns, but also provide traffic reports for countries that do not have this feature.

Currently in Malaysia, traffic reports are only generated in major cities and states. The rural areas such as my hometown does not have this. Waze showcases this, and that's primarily the reason why Waze is very popular over here. We are deprived of the Google Maps Navigation primarily because of this.

Not only that: many have overlooked that not all countries are having updated maps as much as how the US, Australia and most countries in Europe. Have a look at the screenshot of Google Maps below:
http://imageshack.us/a/img4/6614/screenshot2013061009582.png

and the one from Waze:
http://imageshack.us/a/img594/6880/screenshot2013061010000.png

These are screenshots from where I live. The roundabout has been replaced with a crossroad for quite some time, but Google Maps still showcases the roundabout. This is just one of the many examples I can give, and which I believe that Waze can provide to Google Maps. Nothing beats crowd-sourced maps.

Waze has leaderboards.

Nuff said.

ExtremeNerd says:

This is not anti-competitive at all. 7-8 major players is a thriving market. Go to any department store and find 8 companies which manufacture tortillas, or chips, or fish tanks. Anti-competitive regulations (Sherman Act) aims to prevent monopolies or monopolistic competition. This is why the AT&T/T-Mobile merger was denied. This would have effectively given two companies nearly 80% of all mobile subscribers. They could have used that power to raise prices significantly, and users would be (essentially) forced to pay.

This has nothing with to do with Google trying to buy a competitor. Waze has several features which Google maps currently lack, and would be more efficient than developing in house. Or, they could have several patents which Google wants.

bergeronjc says:

After researching it, I can only find three other competitors with GMaps. Navteq, Waze and Tele-Atlas owned by TomTom.

So that means there are only four players in the digital map making arena.

Google buying Waze would reduce it to 3 players. That is incredibly anti-competitive. It should not be allowed and I hope the DOJ sues to stop it.

I am a Google fan through and through but I am all for competition in the marketplace. Google buying Waze in no way ups the competition in the marketplace, it does the opposite. It stymies competition and impedes on innovation just by sheer market presence.

Embluss says:

You forgot apple maps, bing maps, openstreetmaps, and no doubt many others. Your argument is bunk.

bergeronjc says:

Apple Maps runs TomTom which uses Tele-Atlas. Bing Maps runs Navteq. Mapquest runs Navteq. Nokia Drive runs Navteq. Garmin runs Garmin which most every airplane and marine GPS unit uses (I forgot to include that big one).

Take out Waze and you are left with Google, Garmin, Navteq, Tele-Atlas. Only four companies.

OpenStreetMaps is non-profit. It does not compete with Google, Navteq, Garmin and TomTom.

Timelessblur says:

I suggest you check your facts again. Apple is using tom tom for its starting data but it is moving onto it's own system so it is a separate company. Add to it waze did not exactly sell its data for maps so they are not removing it as a company. It only compete with Google like how apple and bing maps did.
Also open source and free things like open maps is considered a valid competitor.

brendilon says:

Just because OpenStreetMaps is non-profit doesn't mean it doesn't compete against Google et al.

BTW, Nokia actually OWNS Navteq and Mapquest runs off of both Navteq and OpenStreetMaps.

There's OpenLayers, which is often run with OpenStreetMaps, but is actually separate.

icebike says:

Correct, and also Garmin gets mapping data from Navteq.

Garmin has never had their own mapping data they are all about devices. They could switch sources to Google in a heartbeat.

In any event, four providers is enough to ensure competition.

TheDu9du says:

Yo momma is so fat Garmin had to ask Navteq to help them fit her in their maps.

Sorry in advance icebike, i had to do it. Please don't take it personal.

bplewis24 says:

Sounds like Navteq is a monopoly that needs to be stopped. Somebody sue!

/s

ExtremeNerd says:

You have to look at the bigger picture. Competitors of Google Maps isn't just phone software. They're also competing with TomTom, Garmin, Hummingbird. Many of the features in these traditional GPS companies are in Waze, and missing in Maps.

You also need to keep in mind that the Sherman/Clayton Act are typically exercised when competition is significantly lessened in necessity markets: Standard Oil, Ma Bell AT&T, US Steel. A GPS is not really considered a necessity.

eric.atx says:

How about MapQuest, Garmin, and Magellan?

bergeronjc says:

MapQuest uses Navteq and so does Magellan.

Garmin uses Garmin maps.

wendemi says:

Google being a big company doesn't mean it should stop growing. Would it still be anti-competition if a company like Tom-tom or Apple had bought Waze to make their services better?

Diskoman says:

Reducing the number of companies competing in a market is NOT inherently anti-competitive. In fact, the very fact that Waze was able to start up and compete effectively prior to the buyout shows that the barriers to entry in the GPS software market are not insurmountable. In addition, Google isn't engaging in any restrictive practices, nor are they using predatory pricing or price fixing. There simply is no restraint of trade going on here. Being a large (or even the only) player in a given market is not automatically anti-competitive!

Thanks, Great summation of the facts.
If Wave can start a company out of nowhere, and compete with the big boys then it's hard to say this will create a monopoly.

Also if all the other mapping apps or stand alone GPS's use only a small number of map companies to provide their mapping info, and do so without restrictions, then there isn't a monopoly.

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still1 says:

read this. http://www.ft.com/cms/s/2/c4cc6606-d43f-11e2-8639-00144feab7de.html#axzz...

waze purchase don't need doj approval because the revenue in US is lower and its a foriegn comopany but it could face scrutiny but that unlikely

bergeronjc says:

But the DOJ could sue to block it.

DanSan says:

is that all you know how to say?

brendilon says:

Apparently. I don't think he understands what anti-competitive means.

bergeronjc says:

Of course. I'll bet if I posted this on an Apple fan site I would get everyone agreeing with me.

Just because Google does something does not mean it is good.

ExtremeNerd says:

Just because one company purchases another doesn't mean it is bad.

You have every right to take action if you feel wronged by this. The anti-trust acts are there to protect the consumers. Feel free to do what you need to do.

brendilon says:

It's got nothing to do with fanboyism, it has to do with you simply being wrong.
There isn't a monopolistic environment out there for these services. If anything, it's less monopolistic now than it used to be. Google used to not charge anyone for Maps API usage, since they had the best system and it was free, everyone used it. Two years ago Google started charging heavy users and lost a lot of business to other services as a result. They knocked their prices down, but the damage was done and they lost a lot of users. It's a very healthy market and Waze is a pretty small portion of that market.
So, do yourself a favor and do some real research before you start spouting silliness about getting the DOJ involved. The maps market is much healthier, and less essential, than many, many other markets in the US.

heathroi says:

Exactly.

NoNexus says:

*sigh* guess I actually have to side with you on this one. You finally are correct in what you are saying.

The DOJ has no smoke and certainly no fire to even sniff around this

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brendilon says:

Victory is mine!

Don't worry, you'll be right when you disagree with me someday... :)

TheDu9du says:

I thought fanboyism had to do with Samsung. Was I wrong?

And I bet if I said the iPhone 5 is the best smartphone on the market, almost everyone there would agree with me.

Your argument is completely ridiculous.

If Google was trying to buy Garmin, for example, then I think there would be legitimate competitive concerns. But for a small niche company like Waze, I can see this being a nice integration into Google maps. It could be another layer, like Google Latitude (which was briefly popular and then died). Google already has traffic notices on maps, it can only get more accurate with customer data added to the mix.

big_Drew says:

"I see it as anti-competitive since there are currently only 7 - 8 map making companies."

I thought you were being sarcastic, then I realized your post was meant to be serious. Also, an antitrust investigation would be launched by the FTC, not the DOJ.

hmmm says:

Does youtube make google more money than it costs to operate? I see the Waze purchase as more of a way to keep it from Apple and Microsoft than to add any value to Google.

still1 says:

youtube has $4 billion in gross revenue and $711 million in profit.
By 2020, Morgan Stanley believes Youtube could hit $20 billion in gross revenue and $5 billion in operating income.

NoNexus says:

And neither of those companies wanted it. The only other one thinking about it was Facebook and that fell through. They could have been bought anytime in the last several months

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Jay Evans says:

Think targeted electronic billboard ads. Waze knows where you are, Google knows what your likes are. What you will see on the billboard you are passing is determined by the group data of Waze/Google drivers.

icebike says:

Yes, because there is only ONE driver on any given road, and Google did't know where you were until they bought Waze.

Come on!

TheDu9du says:

I gotta say this nonsense of electronic billboard ads targeting one user or pool of users seems like the dumbest thing, unless that one user is Carlos Slim, Gates, or Buffet.
Not like you don't got a 4 to 5 inch electronic billboard in your pocket.
"Wait! If you're driving you're not looking at your phone, you're looking at billboards"
aha...

_X_ says:

I don't see it as significant as Youtube nor parallel to the Youtube purchase. Google had no idea how to use Youtube let alone make money from them. They just saw potential and they bought it. It took them years to understand how to make money from it and know they are making loads of money. Youtube was a market all on it's own. And there wasn't and hasn't been any serious competitor to date.

Now shift this to the Maps market. Google has been in the maps/traffic for years. They understand this market well and have known competition. I personally use both Waze/GMaps and say they are both very similar. However Waze is more invasive, they have adds pop up during navigation and other incentives that generate revenue for them. GMaps does not.

For those that are already use to Waze google can easily switch the ad system and plug in their own and start making money of of Waze right away. That in addition to all of the social media data Waze collects from it's users.

icebike says:

Exactly.

This is more akin to buying up little search engines or Ad companies than any similarity to Youtube.

People would do well to look at what google has acquired over the years, and notice that most of it has been disassembled, incorporated, and disappeared.
Start looking here: http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google

See how many of those products bear any resemblance to their original. A few, but not many. Maybe that's good, maybe not. A lot tend to get killed off after a brief fling with Google. Google Voice (Gizmo/GrandCentral) is probably next to go under the knife. It has no significant revenue.

brendilon says:

Voice does not provide significant revenue. But neither does hangouts or Currents or many other services.
What those services do is contribute to a holistic ecosystem of Google services. You maintain the smaller systems which provide little to no revenue because they keep users in the ecosystem as much as possible so they use services that provide more revenue.

elchepe says:

Google voice might not have significant revenue on its own, but it will not be completely killed. It's pretty obvious that it's going to be folded into Google Hangouts, and I for one would like nothing more than for that to happen.

icebike says:

Google voice in Hangouts is not important, unless you are thinking only of the text message aspects.

Google voice is an answering machine for the most part. It doesn't have to be in hangouts to do that job.

Google voice will be important when Google grows a pair big enough to allow you to complete voice calls with nothing but a data connection from the carriers. When they throw open the flood gates and take all Voice directly to voip world wide. But it won't do that without a revenue stream.

Until then its a mildly interesting product for people who can't afford a nationwide calling plan, and nothing but an answering machine for the rest of us.

TBolt says:

>> The computing industry is quickly shifting to mobile computing.

I am getting SOOOO tired of this statement -- it's repeated over and over again all over the Internet. If the term "mobile" includes laptops, I can almost -- just barely -- agree. However, most of these bloggers are obviously speaking only about tablets & smartphones. I have yet to find one real video editor, or one real graphics artists -- ANYONE who does anything more substantial than send emails all day long -- work solely on a tablet+smartphone.

ChrisFricke says:

Agreed. I support around 2500 office workers. They all still have PCs/laptops. Some of them ALSO have mobile phones, netbooks, laptops, and even tablets. That's not a shift but an expansion of services to allow greater flexibity (in theory).

I would say that there has been a shift IN FOCUS towards mobility because that is the current growing method of getting work done that requires new ideas, behaviors, policies, technologies, and support methods in order to be useful and safe for people to use. The new challenges facing "mobility" were largely already tackled in the desktop space years ago so it's not newsworthy.

This focus and general excitement on the "new shiny" by journalists and bloggers gives the impression that the PC is dead. Kinda like how the "cloud computing" craze has people thinking that the local datacenter - or even IT in general - is also "doomed" or going away.

Awake says:

In the long run this may prove to be a great move by Google. I still say the smartest business transaction in general to date, is when Google acquired Android.

jwyche007 says:

I remember all the haters on CNBC and stuff squawking their dumb asses off about how YouTube had never made any money and this was a bad deal. Wall Street needs to stfu and learn that Google never makes dumb moves when making acquisitions.

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ocluke says:

When a company like Waze is acquired for $1.3 billion with very little revenue to speak of, they're being acquired for the intellectual property (patent portfolio), not because Google isn't capable of building what Waze has created. They obviously had some patents that could cause a problem for Google and their goals for maps.

brendilon says:

A very valid point. However, the social community aspect also has value, that's part of why FB was looking at it.

icebike says:

Actually the social community aspect is a big liability. Huge bunch of whiners with no revenue stream.

The value here is keeping Waze out of the hands of the competitors.

big_Drew says:

I think Google is mostly interested in accurate real-time traffic and the social media component. These are features, if implemented well, that could decide which navigation app people choose. People will settle for what's preinstalled, to a certain point. Google maps needs to be significantly better than iOS's native maps if they want to compete on that platform.

I find Waze to be a great stand alone service, I think it would be equally great to have a Waze layer integrated into Google maps as well.

Since Google Now uses GPS and Maps info, it would be really slick for a Now panel to alert you of an up coming traffic jam / slowdown from the live Waze information. Perhaps even suggest an alternate route

When I travel..

If I'm the driver
Google Maps is my Navigation.
Glimpse is sharing my whereabouts

If I'm the passenger
I am posting on Waze

Gearu says:

Only a matter of time before we see news teams using this to find collisions to report on, before other channels' teams get there.

The possibilities from there are rather endless.

Gamer_Radar says:

The destruction of Waze has begun...

Google destroyed YouTube. I enjoy vimeo instead

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Gearu says:

No that was Vevo