Google's path of trial and error

location based services

Ovum's John Delaney reckons Google is as much in the dark about what works on mobile as the rest of us.
There are basically two approaches that a business can take to planning the future. The first is to do a thorough strategic analysis of potential new markets, finding out how big they are, how attractive they would be to enter, and how suitable the current business is for doing that. The second is to try lots of different things and see which ones work.
The second approach is attractively empirical, but it does require a business to be able to absorb the cost of a lot of failures. There are not many companies whose reserves of cash are deep enough, and whose share ownership is diffuse enough. But there are a few. Google is one of them.
Undoubtedly, Google would demur from describing its strategic planning process as 'trial and error'. But when one looks at the sheer diversity of its recent initiatives, it's hard to avoid the conclusion that that's pretty much what lies at the heart of it. Consider: We have `me too' initiatives such as Gmail, Google Talk and Google Pack. We have nifty innovations such as Google Earth and Picasa. We have seriously disruptive ideas such as free metro wifi networks.
And then there's mobile.
Funded by advertising, Google's business relies most of all on the size of its user base. The sheer size of the mobile market therefore makes it an extremely attractive target for Google: worldwide, there are over four times as many connections to mobile networks as there are connections to the internet.
Google's approach to exploiting the mobile opportunity so far has followed the same principle as its more general approach to new markets: try everything. So we have seen:
Google going it alone. Google has had a WAP search page for several years, and has continued to upgrade it as the browsing capabilities of phones have improved, so as to provide as far as possible the same experience on the phone that users are accustomed to on the PC. More recently, Google has also added phone access to additional services, such as Gmail, Google News and personalised home page. So far, the only promotion of these services has been through the Google portal itself.
Limited, one-off deals with mobile operators. In Europe, the most important one to date has been with T-Mobile, which uses a specially adapted version of Google Search as the home page of its Web n Walk mobile internet service. The deal does not go beyond this, though: there is no ongoing joint development, no operational collaboration and no revenue sharing. Other operators have announced their intention to do something similar. Japan's KDDI, for instance intends to incorporate Google search into its mobile internet service during Q3 2006.
Formal partnerships with mobile operators. Actually, with only one operator so far, but Google picked the second biggest: Vodafone. The two announced a partnership in February 2006 whereby Google will replace the white-label search engine in Vodafone's Live! content portal. The service will return search hits on Live! first, followed by sponsored links, followed by other hits. Vodafone will take a share of the revenue generated by users clicking on sponsored links. The service is a joint development between Google and Vodafone, and the service platform will be hosted by Google. It may not be too long before we see Google doing something similar with the biggest operator of them all, China Mobile. The CEO of China Mobile HK has recently spoken intriguingly, if non-specifically, about talks with Google aimed at `turning cell phones into a new kind of Internet search engine'.
The current lack of uniformity reflects the currently immature state of the mobile internet itself. It may be that over time, we will see some rationalisation of Google's mobile strategy, as it becomes clearer what services and business models do and don't work on the mobile internet. One thing is certain, however, the company can't be content to remain where it is. Google rules search on the internet, and it may end up ruling search on mobile too. But search is at the mercy of users' fickleness. If a better alternative comes along, there's nothing to stop users switching to it immediately. Down goes your audience size, bang goes your advertising revenue.
The common thread running through everything that Google is trying is the fact that in future, it needs to rely less on search; more on stickier services and new sources of revenue.
John Delaney is a principal analyst in Ovum's consumer group
This article is taken from www.telecoms.com