Google Looks for Growth from Mobile Advertising

Google will be leading an effort to develop software that will make cellphones more like mobile computers with improved Internet access. Google is looking to transform the mobile industry in the same manner that the PC changed the world of computing in the 1980’s, according to the NY Times (11/6/07). In order to accomplish this goal, Google will provide outside software developers with access to their phone’s functions. They hope this will encourage software developers to create PC like programs and services for cellphones.
 
The Internet is Going Mobile
 
Google recognizes that the Internet is going mobile and they have aligned themselves with leading telecommunications and technology companies to make and market their phones. A group called the Open Handset Alliance expects to sell the Google powered phones in the second half of 2008, according to the NY Times. Critics point out that other companies have tried to form similar types of alliances and failed and that Google will face stiff competition from established players such as Microsoft, Nokia, Palm and Research in Motion (NY Times). In addition, the two largest cellular carriers in the U.S., AT&T and Verizon Wireless are not part of the alliance.
 
Increasing the Reach of Google’s Advertising
 
Google is looking to become the dominant player in mobile advertising, just like they have been the leader in online advertising. Google hopes that making it easier for consumers to access the web from their cellphones and making the experience more like that of a personal computer will increase the reach of their advertising. Google said it will likely share ad revenue with the wireless carriers, according to the Wall Street Journal (11/6/07).
 
Energizing the Mobile Industry
 
“Just like the iPhone energized the industry, this is a different way to energize the industry,” stated Sanjay Jha, COO of Qualcomm (NY Times). Mr. Jha also said Google’s efforts will bring more Internet features to moderately priced phones. By allowing outside software developers access to their Android software platform, Google also hopes they will create new types of devices that have both cellphone and wireless Internet capabilities. “As a result of the platform, you’ll be able to do amazing things on your phones that you’ve never been able to do before,” says Google CEO Eric Schmidt. (USA TODAY 11/6/07)
 
Diversifying their Revenue Base
 
Google is going up against some strong competitors, but they certainly have the clout and resources to gain a significant foothold in the mobile marketplace. Google’s surging stock price clearly indicates that Wall Street and investors anticipate that Google will be able to diversify their revenue base from new businesses outside of online advertising. In my opinion, mobile advertising has the potential to be as big as online advertising for Google. It will be interesting to see how Google’s venture into mobile plays out over the next few years, since it has the potential to transform the industry.