BY REINHARDT KRAUSE
INVESTOR'S BUSINESS DAILY
Google, (GOOG) the online search titan, is fighting for a piece of the nascent cell phone search market. Global mobile search advertising revenue is expected to reach $1.5 billion by 2011, up from virtually nothing today.
Yet the firm's muscle won't guarantee success. In some ways, it may hurt.
Many wireless firms cringe at Google's mighty brand. As mobile advertising revenue grows, carriers plan to steer it in their own direction, not Google's.
That's why the Mountain View, Calif., company aims to make friends of wireless phone companies and hammer out revenue-sharing pacts with them.
Wireless firms can't ignore Google's popularity, says Dipchand Nishar, director of product management for Google Mobile. He concedes there's plenty of competition in mobile search.
"(Wireless) carriers are going to explore different options for themselves," Nishar said. "This is a business. And companies form relationships that make sense for them.
"I'm confident that Google has a big role to play."
Wireless Internet differs from online searching. There's typically no easy-to-use search button on mobile phone screens, unlike personal computers.
And in wireless, phone companies rule — or try to.
Wireless firms dictate how most mobile phones sold to subscribers are designed. And they control phones' home pages, or portals, which guide customers to music, games, news and restaurants.
A walled garden of sorts, these portals are designed as much to bring in revenue from partner sites as they are to shepherd users. Wireless firms fret that Google's search engine will direct their customers to content or information outside their domain.
Advertisers are warming to mobile phones as a way to tout their brands. Mobile ad revenue will jump to $11.3 billion worldwide by 2011, up from $871 million this year, says Informa, a market research firm.
It forecasts that search-related mobile ad revenue will climb to $1.5 billion in 2011, up from just $3 million this year.
Wireless firms worry about Google's mobile goals because advertising drives its business, says Nicky Walton, an Informa analyst. That could put the search giant at odds with the carriers' own business plans.
She expects Google to sign revenue-sharing deals with wireless firms.
But Google and phone companies are jockeying for negotiating power, she says.
Google has partnered with a few wireless firms, mainly outside the U.S.
In April, Google began testing mobile text ads in Japan with KDDI, the country's No. 2 carrier.
Google has also partnered with Vodafone (VOD) in the U.K. and Deutsche Telekom's (DT) T-Mobile unit in Germany.
In the U.S., though, none of the big wireless firms features Google as the search engine on home pages.
Instead, cell phone users must bookmark Google's Web address in browsers or send a short text message to Google.
SMS Vs. Voice Directory
Google and Yahoo (YHOO) have touted SMS-based searches as an alternative to paid voice-directory services from phone companies.
With SMS-based searches, users send the service a text message with their location and what they're looking for.
The service then sends back a list of results, often with phone numbers the users can click to call directly.
SMS searches appeal to young cell phone users, says Charles Golvin, an analyst at Forrester Research. Via SMS, Google sends mobile users everything from driving directions to weather forecasts.
In most cases, carriers get a cut, charging a few cents for every SMS sent and received.
"A younger audience that has grown up online will find a way to get to Google on mobile," Golvin said. "The carriers can't dream of completely dislodging that relationship."
But in September Verizon Wireless, a joint venture of Vodafone and Verizon Communications, (VZ) debuted its free Get It Now search service, using technology from search startup Medio Systems of Seattle.
Subscribers can search for downloadable multimedia content from Verizon, including games and ring tones.
Medio's service allows ads to be placed near search results.
AT&T -owned (T) Cingular is reportedly working with another mobile search startup, JumpTap.
Both Cingular and Verizon Wireless declined to comment for this story.
"Carriers want to own the mobile experience. That includes monetizing search in all of its forms," Golvin said.
Wireless Search Leader
Nishar, speaking about Verizon Wireless' decision to go with Medio, said: "This is a wide open field and there are many competitors in this space."
Still, Google ranks No. 1 in wireless searches, just as it does in online searches, say two research firms, M:Metrics and Telephia.
Aside from mobile ads, Google stands to garner revenue by prioritizing sponsored links on search results, says Jerry Rocha, a Telephia analyst.
Analysts say local search is one area where Google will likely butt heads with wireless firms. That's because phone companies have a long history of making money from yellow-page books.
Phone companies now offer local directories online and via mobile phones.
Verizon Wireless charges $1.99 per day or $3.99 monthly for access to its Superpages directory.
Rocha says wireless users might find Google search a better option to look up local restaurants via ZIP codes.
"If Verizon is pushing Superpages as something they sell, they really don't want Google to give it away," he said.
Startups abound in mobile search. They include 4Info, Promptu and V-Enable. Several startups are developing voice-based mobile search.
That's a feature Google also plans to deliver.
Cingular inked a deal with Tellme Networks for its voice recognition software, which the carrier will use to power an enhanced 411 service to offer Internet-style searches in addition to standard phone directory info.
Yahoo's Go For Mobile
Feisty startups aren't Google's main worry in mobile search. Yahoo is making a big push with its Go for Mobile service.
Yahoo on Oct. 4 said it's testing an ad-sponsored search system for mobile phones in the U.S. Search results will include links that take customers to paid advertisers' sites.
Cell phone maker Nokia (NOK) puts Yahoo's search engine and Flickr photo service on its high-end multimedia phones.
"From the Nokia point of view we need to play in all areas, even in terms of creating our own Internet experience (on phones)," said Tero Ojanpera, Nokia's chief technology officer.
In August, Yahoo forged a deal with Motorola (MOT) to embed its search and mail service on some smart phones. Google also has a phone deal with Motorola.
Google and Yahoo are racing to develop a wide range of mobile applications.
The strategy is aimed at bolstering their core search businesses.
Telephia has ranked Yahoo Mail as the most visited site by mobile consumers.
In August, Yahoo inked a mobile search pact with Go2 Systems, a local directory firm.
In July, Google unveiled a mobile version of its personalized home page.
Under-The-Radar Acquisitions
It also updated the Google Maps for Mobile feature to include satellite imagery and live traffic updates for 30 U.S. cities.
Google has made several mobile-related acquisitions, including Neven Vision in August. The startup has visual search technology.
In 2005, Google purchased Dodgeball, a mobile social-networking service.
Google has snapped up three other mobile startups: Reqwireless in early 2006, Android in 2005 and Zipdash in 2004.
While Google would like to forge deals with U.S. mobile firms, Nishar says it's well-positioned globally.
In emerging markets, he says, mobile phones are more common than PCs.
Google is said to be talking with China Mobile (CHL) about a deal.
"This is a long-term investment from our standpoint," Nishar said. "And we are a global company. In many markets, the mobile paradigm may be more important than the PC paradigm. That needs to be kept in mind."
No comments:
Post a Comment