After Google also announced in April to be in negotiations to acquire ITA Software there seem to be signs for a revolution in the travel sector. It seems like these giants of digital business want to conquer the travel market, however, in somewhat different ways.
In their own words, Google’s success is based on the developers’ brilliant ideas. With the search engine and the online ad-sales being their only financial main pillar problems regarding the company’s rate of return might arise. The money earned by online ad-sales is reinvested into the company’s free of charge strategy to enter new markets. Due to this strategy Nokia was recently forced to offer their navigation systems for free, as Google does. Uniquely aggressive Google sweeps from one market to another and forces established suppliers to cut prices and minimize their margins.
In contrast, Apple is still only one of a few still able to actually sell their digital products instead of giving them away for free. In return they ask for complete repression of customers. Apple always seems to be one step ahead in terms of innovation and design. Good branding makes the customer sacrifice performance, flexibility and accept the premium that they pay.
Thus, at present, all aggrieved parties have to choose between Google’s for-free-anarchy and Apple’s to-pay-empery. Both of them seem to collect what they can get and might possibly even attack the established business model of GDSs at some time in the future. It seems that Google and Apple might have taken their first steps in requesting market share.
Control over the digital citizen
How should anyone behave now, whose business model is directly or indirectly threatened to fall by the wayside because of these ongoing power games? Google and Apple fight for control over the digital citizen, including its consumption preferences, demographic data, present location and credit card information. These two digital giants’ future is as open and limitless as the internet and digital business itself. It would be fatal for any existing player to exclusively rely on one of the two market entrants. Therefore, it is important to not underestimate the disruptive effect Google and Apple could have on a whole industry. Just ask anyone in telecommunication, navigation or the music industry.
Is it once more going to be an outsider revolutionizing the travel industry instead of the ones already established? Both Google and Apple have the required funds, the needed infrastructure and the will on their disposal, to influence the travel industry significantly.
They are aware of travel distribution’s importance and could make capital by leveraging their popularity, market power and IT knowledge. The iTravel app discovers and, at the same time, solves weaknesses (e.g. waiting time, waste of paper, security issues) that appear within the check-in process. With technology being an enabler, distribution could shortly be controlled by those parties that are actually concerned. Once Google and/or Apple dominate the digital travel sector and the belonging devices, they might soon even control the distribution process. By this means, it is merely a matter of time until a reorganization or even a revolution of the travel sector can be achieved.
Image by rangizzz