Though earlier rumored, official announcements were made on July 2 that Google had acquired GrandCentral Communications. There has been little public press about this deal, but I believe that the value was in the area of $50 million. This is minuscule by Google’s standards, the business implications are far more important than the dollars involved in my belief.
GrandCentral has received a significant attention in the past few months, and is just one of many companies coming to market now with services and applications targeted at mobile users (among others GlocalReach, that I have mentioned earlier on this blog).
The GrandCentral application is built around the idea that people have multiple phone numbers, and it would be easier to manage them in a centralized manner (where as GlocalReach takes this a step further, see here). To do this, GrandCentral issues the caller a phone number to which all your phone numbers are attached. This allows people to just give out a single phone number, so callers do not have to keep trying multiple numbers to reach someone. Intuitively, this is a convenient service to use, especially since it is free. GrandCentral Inc was started in late 2005, and reportedly raised about $6 million. The company’s two founders were fresh from a successful exit with Dialpad Communications, which was acquired by Yahoo in June 2005. At the time, this deal was seen as a way for Yahoo to compete with Skype, as they had been late to market with voice. Thera are some parallels to what Google is doing here, and it stands to reason that the experience of GrandCentral’s founders was a key factor in this deal. It was during their recent second round of fundraising that Google recognized this opportunity and bought the company outright.
At first glance, it is easy to see how GrandCentral could complement Gmail and even GoogleTalk. Gmail would serve an inbox for voicemail across all your phone numbers, where messages can be played back (in MP3), forwarded, prioritized, deleted, etc. This utility makes Google much more interesting beyond Instant Messaging as a communications platform, and more importantly, helps drive voice traffic on to their network.
In that regard, GrandCentral would appear to be better off as the gatekeeper in a large and growing network, than to be a standalone offering that anyone can use for free. For GrandCentral to be successful, users must adopt new approaches. In order to make the service useful, users would have to add a new phone number to their letterhead, business cards, etc., and they must also get all the people who call them to get in the habit of using this single number.
The big question is what Google plans to do with GrandCentral. Aside from the complementary nature of GrandCentral described above, I believe there is something bigger and more fundamental to Google’s aspirations, which could be extend the Google advertising-driven business model from text and video to voice. Search provides the basis for a very profitable, self-perpetuating text business. YouTube does the same for them in video with an endless stream of free, user-generated content.
Google lacks such a generator in the voice space, and this is probally why they launched GOOG-411 in April 2007, which is a free directory assistance service meant to compete directly with toll-based 411 calls. The same logic applies to GrandCentral, because once their application runs on Google’s network, they will have access to a host of voice messages, generated either by the subscriber or the callers leaving messages.
Voice data may be of long-term strategic value to Google, and GrandCentral is a good way to begin to acquire it, but GrandCentral seems to bring only one piece of the unified communications pie, and it is not yet a revenue generating service, still operating in beta. Time will tell how and if Google will be able to make GrandCentral a central part of its grand plans to dominate the Internet.