Google is one of the most successful companies in US history. It began as a research project at Stanford University back in 1996. Larry Page who was later joined by Sergey Brin postulated that Internet search could be done better. Not only did Larry and Sergey succeed in making search better – they turned a thesis into a $22 billion company. Over its' fourteen year history Google has entered a variety markets with products like Ad Words, Google News, Google Search Appliance and the Nexus One. Google, now, is getting into the electricity business.
In a press release on November 27, 2007 Google announced a strategic initiative to develop renewable energy. The initiative is called RE<C.
There has been tremendous work already on renewable energy. Technologies have been developed that can mature into industries capable of providing electricity cheaper than coal. Solar thermal technology, for example, provides a very plausible path to providing renewable energy cheaper than coal. We are also very interested in further developing other technologies that have potential to be cost-competitive and green. We are aware of several promising technologies, and believe there are many more out there.
-Larry Page
This past December Google submitted an application asking the Federal Energy Regulatory Commission (FERC) for the authority to sell electricity at “market-based rate authority.” Google makes the argument that it wants to manage the enormous energy requirements of its' data centers. That is a valid argument since it' s rumored that Google has at least 12 data centers in the United States. I say “at least 12″ since Google keeps this information secret.
“The Federal Energy Regulatory Commission is the agency with jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing and oil pipeline rates.” They explain that it is not uncommon for a company the size of Google to make such a request. The FERC currently has granted 1500 companies the authority to sell electricity; at market-based rates. Google has requested that the FERC approve the application by February 23, 2010.
Now you won't be getting your next electrical bill from Google. That will still come from your local utilities company. The authority Google is requesting is the ability to sell electricity wholesale. My educated guess is that Google will leverage this authority through RE<C and Google.org, to work with varies companies, universities and R&D laboratories – to produce various unsubsidized types of renewable energy.
The United States Department of Energy (DOE) explains that IT is a critical component to the information economy. IT over the past decade has grown at an exponential rate. To support this growth companies must build massive data centers; which consume great quantities of this country's electricity.
Information technology and telecommunications facilities account for approximately 120 billion kilowatt hours of electricity annually – or 3 percent of all U.S. electricity use. Moreover, rapid growth in the U.S. data center industry is projected to require two new large power plants per year just to keep pace with the expected demand growth. Without gains in efficiency, the industry would face increasing costs and greenhouse gas emissions, along with challenges to the reliability of the electricity service.
-United States Department of Energy
From what I understand Larry Page is truly concerned about Google's carbon footprint. I had a conversation with a Google representative a few months ago and she explained that Google is the 4th largest computer manufacturer in the world. Combine that with its' 12 data centers and Google stands to produce a massive amount of green house emissions; not to mention the monster electricity bill. It's no wonder Larry wants to find renewable energy sources.
As you’ve probably heard by now, this morning Google finally officially announced the first Google Phone: The Nexus One. Plenty of reviewers and geeks are fawning over the new device, but some are proposing that it won’t even make a blip on the radar for your average consumer. In fact, earlier this evening the Wall Street Journal quoted one analyst as saying, “Unless gives it a big push with marketing dollars, which they are not, consumers aren’t going to know the phone exists.”
I don’t think anything could be further from the truth. Google is going to put its marketing muscle behind this in a very big way to ensure that consumer awareness persists long after today’s launch. Granted, the company says it is favoring an online strategy as opposed to television for its campaigns (which is why the analyst quoted above doubted its chances), but Google can still plaster the Nexus One all over the web.
It’s already started. Visit the YouTube homepage right now, and you’ll see a fairly prominent link to the Nexus One official YouTube Channel, which is loaded with how-to guides and video walkthroughs. Google is also running quite a few AdWords ads for keywords like “smartphones”, “phone”, “maps”, and “android”. That’s not hugely surprising, though it is worth pointing out that Google is purchasing ads that compete directly against some of its partners.
I suspect this is only the beginning. Don’t be surprised if we see ads for the Nexus One on Google’s famously spartan homepage (this would be a very rare move for the company, but it set a precedent with the Droid launch). Likewise, we’ll probably see small ads pop up on various Google products, the same way the company often prompts users to try out Chrome. And there will likely be a big push on third party publisher sites.
Google has a lot riding on this launch. Sure, it would be nice for the phone to be a popular device in its own right. But, as many have pointed out, it’s the disruptive distribution model that’s going to have the biggest impact down the line. Google needs to show that this new online distribution model is something that people are willing to actually use.
As it stands now, that’s going to be a bit of a challenge. Buying a cell phone online will be a pretty foreign experience to most people (at least in the United States). That isn’t to say it’s a difficult experience. It’s just different. And it’s going to require plenty of ads and hand holding to get people used to the process, because they won’t have a sales rep standing next to them to help.
Also, keep in mind that Verizon reportedly spent $100 million to market the Droid in 2009. I doubt Google anticipates that the Nexus One will actually beat Droid in sales in the short term (given Verizon’s thousands of retail stores versus Google’s online-only storefront that would be very difficult indeed). But if three months down the line the Nexus One still represents a very tiny sliver of Android’s market share, you can be sure people will start calling the ‘Google Phone’ a failure.
I reached out to Google to see if they’d offer any specifics about their upcoming marketing plans. Their spokesperson wasn’t willing to share much, but they did reaffirm that Google’s spending would be focused primarily online rather than on television:
Because the Nexus One is exclusively sold online, our marketing plan will heavily focus on online marketing to educate users on the benefits of the phone and the new way of buying it. We are using a broad range of Google online advertising tools, which we believe to be the best way to run targeted and measurable advertising / marketing campaigns.
Unfortunately, we are not going into detail on our specific marketing plans for the future.
Update: Reader Damion Flynn has sent in this screenshot of the Nexus One ad accompanying this article in his RSS feed:
