Google Grab

Advertising is only part of Google’s gain with mobile phones.

Much has been made about Google’s mobile advertising potential in deploying Android, their free Linux-based mobile operating system. Google will indeed make a(nother) boatload money through advertisements on cell phones. But this is only part of the Google strategy. The other components should worry competitors more.

Let’s stipulate a few things in order for the market dynamics to be clear:

  • Mobile devices are the prophesized unified communications portal (servers be damned).
  • Due to constant availability, mobile devices will become the first option for most people for discovery and use of information.
  • Unifying the end user experience while roaming and at the desk creates commitment by the customer/user.

Therein lay the competitive threat from the G-Phone. For years now Google has created end user services (search, maps, photo galleries, office apps, more). The services are generally cost free for the users. These applications have mobile counterparts and most (soon all) are bundled on G-Phones.

In other words, Google built the backend to mobile services before offering mobile phones.

Contrast this with Apple and the occasionally-on Mobile Me. Apple delivered a fancy handset and later added server-side applications that crashed often enough to cause the news media to suspend their Apple Adulation long enough to question if massively scaled server operations were Apple’s forte. Alternately Google has built an empire on centralized services and now is creating the mobile experience to extend it.

Sure, Google gave away mobile apps all along and you can run any of those apps from nearly any mobile handset (thanks to Google testing those apps using the services of another Silicon Strategies Marketing client DeviceAnywhere). But Google prioritizes access to these applications by bundling them onto G-Phones. Since the unit cost to handset makes for G-Phone system is zilch, handset vendors have a great incentive to adopt Android, put G-Phones in the hands of their customers and thus make Google apps the defacto mobile standard.

Slick.

Now here is where things get a bit scary … scary enough that the Federal Trade Commission will eventually investigate. Once enough people adopt Gmail, Google Office, Picasa, etc. for their application of default, Google track almost every moment of your life (turn off the cell phone camera when you and your sweetheart go to bed). Google will have a direct intelligence spread superior to the U.S. government.

Perhaps the CIA will be more interested in Google than the FTC.

Google has executed a classic blocking maneuver that will feed their core advertising business. By making mobile and desktop a contiguous environment they drive a wedge between users and all application competitors. All things being equal, who wouldn’t want to use the same apps in the office and in a restaurant? Microsoft can’t compete because they won’t give away Window’s Mobile to handset makers or port mobile apps to non-Windows handsets. Symbian will not compete as there is no central server backbone for applications.

Slick.

After the markets finish sinking, buy Google. Their mobile advantage will take Google stock even higher.


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