By Banning Ads from Glass, Is Google Changing Its Business Model?

Yesterday evening, Google made a big announcement to developers who hope to sell third party apps to Google Glass users: Not only will developers be prohibited from serving or including any advertisements, they "may not charge end users any fees or collect any payments" while they're downloading or accessing these apps, either. In short, no ads. So how, then, does Glass expect to earn big?

Google is, after all, first and foremost an advertising company. Some sources have claimed that Google makes as much as 96% of its revenue from advertising, so the announcement means the search giant is finally upending its longtime business model in a big way. And it makes us to wonder: is the company is really expecting enough costumers to shell out $1,500 for the goggles to make the new technology a profitable venture?

Well, there are alternative opportunities for revenue that isn't ad-based. For instance, it's already been confirmed that Glass will be able to connect via Bluetooth to smartphones, including iPhone and Android. As a result, it can grab data from the phones it's plugged in to, as well as from wifi. Glass cannot be used to make phone calls, so we don't expect a monthly data fee to be involved. Rather, serious Glass users will likely have to pay for cloud storage space--especially as the frames themselves can only store about 12GB of data. Apple charges $100 a year for 50GB of Cloud storage, and this is probably a fair comparison point for Google. If Glass users are constantly taking photos or videos (like Wall Street bigwigs who want to control their crazy traders) then Cloud storage is a serious potential revenue source.

Again, Glass does not want to charge users for third party apps, nor does it want those apps to display advertisements. To attract developers, Google has created its 'Glass Collective', an initiative that pairs mega-investors like Kleiner Perkins and Andreessen Horowitz into sharing seed investments for Glass software and hardware developers. This is an attempt to spark more development deals and bring them to the public at a faster rate, while still not charging users for third party apps. While this Collective plan demonstrates that Glass is a lucrative enough project to attract the wealthiest investors who will pay money to developers, this probably isn't likely a way in which Google will amass revenue in the long term.

We also have to ask, when and if Glassers are checking their Gmail inboxes, aren't advertisements an inherent part of the email service? We expect Glass to change the interfaces of familiar services, but is Google really willing to risk losing its largest source of income? Just because Google doesn't trust app developers with the Glass user experience, it doesn't mean it won't sneak in some elegant in-house ads itself.

But maximizing revenue isn't really the point of the Glass project—it's producing a high-profile luxury tech product that will boost the company's reputation and stretch the boundaries of AR. Google Glass is starting to look a bit like the Chevy Volt of internet technology: a game-changing development that, for the time being, is more of a PR colossus than a profitable project.