Google bets on mobile market

Mobile is the next frontier for Google, but how will it straddle the line between partnering and competing with major cell phone operators?

Search giant Google is setting the stage for its biggest push yet into the U.S. mobile market, in a strategy that delicately straddles the line between partnering and competing with the major cell phone operators.

Last week, Google signed its most significant deal with a U.S. wireless operator to date. Sprint Nextel will integrate the company's mobile services with the carrier's new 4G WiMax network .

But in a move that could pit Google against wireless operators, the company recently announced plans to bid in the Federal Communications Commission's upcoming 700MHz wireless spectrum auction . Google is also continuing with its plans to build free citywide Wi-Fi networks in San Francisco and Mountain View, Calif.

The recent activity has many Google watchers speculating about the company's ultimate plans. Will it build its own wireless network using spectrum from the upcoming auction? Or will it strike more deals like the one it signed with Sprint Nextel? Will it come out with its own Google phone that will take on the likes of the Apple iPhone and other manufacturers like Motorola and Nokia?

Danny Sullivan, editor of Search Engine Land, says Google's moves in the wireless auction, WiMax with Sprint and its citywide Wi-Fi projects are all extensions to the company's existing business, enabling bandwidth for applications such as YouTube.

"They have real concerns that carriers will restrict access to their own services, and if they can't deliver those services they lose money," Sullivan said. "So if they can change the rules, or have the bandwidth themselves, they can go directly to consumers with that stuff. Now Google owns one of the big bandwidth hogs of the Web, YouTube. That sucks down a lot of the bandwith that's out there."

Google says its plans, whether they be to partner or to possibly compete with cell phone carriers, are all about providing Internet access.

"Mobile is the fastest and cheapest way to reach the largest number of people," said Chris Sacca, head of special initiatives at Google . "There are billions of people on this planet who still don't have access to the Internet. And we think mobile presents the biggest opportunity to get them on the Internet."

But the company has been tight-lipped about specific plans for building out mobile access. And now it seems to be hedging its bets between a strategy of partnership and one that puts Google in full control. So while it rails against the phone companies at hearings on Capitol Hill or within city halls, the company is also trying to strike deals with these same operators behind closed doors.

U.S. cell phone operators have traditionally viewed Google with some trepidation, not knowing if the search giant is a friend or foe. As a result, some--like Verizon Wireless and AT&T--have been reluctant to add Google's mobile services directly to their service menus.

Google has struck deals with large mobile providers in Asia and Europe, such as Vodafone and China Mobile, but Sumit Agarwal, product manager for Google Mobile, admits that wireless operators in the U.S. have hesitated when it comes to embracing Google as a partner. Still, Agarwal believes that U.S. cell phone companies will soon come around.

"There are billions of people on this planet who still don't have access to the Internet. And we think mobile presents the biggest opportunity to get them on the Internet."
--Chris Sacca, head of special initiatives, Google

"Our intention is to work with all our global partners to bring together all the services that provide huge value for mobile users," he said. "Of course, there is a natural resistance to change from some operators. But carriers are smart and savvy. They see the direction that they need to go, and they're willing to do it."

Since November 2006, Google has had a relationship with Sprint to integrate some of its mobile applications, such as mobile Gmail, directly onto the Sprint wireless menu. Google has struck similar relationships with other U.S. operators like Helio, Leap Wireless and Kajeet.

But this latest deal with Sprint takes the relationship a step further, integrating more pieces of Google's technology into the wireless service and providing a potential outline for future deals with carriers. For example, Sprint plans to combine its location technology with Google's search tools, e-mail and chat to provide location awareness for users.

This means consumers could use Google to search for a local coffee shop, for instance, without having to enter an area code. They could also automatically broadcast their whereabouts to friends when they are setting up a meeting using Google Talk instant chat service or e-mail on their phones.

"What we have on the cellular side with Sprint is a simpler and less sophisticated integration," Agarwal said. "But the new 4G relationship gives the applications more prominence. It's more user-centric and tailored for personalized use."

But clearly the biggest gamble that Google is taking with its wireless strategy could happen in January when the company is expected to bid on licenses in the 700MHz spectrum auction.

 

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