Is mobile really a sure thing for Google?

With half the world's population soon owning a cell phone, the opportunity to reach more people on the Web via a mobile device is huge. Research firm Gartner predicts that worldwide mobile advertising revenue will grow from less than $1 billion last year to $11 billion in 2011. Google has already been adapting its Web search, mapping service, and advertising tools to work on mobile phones. And it's even bidding in a U.S. auction of wireless spectrum and developing software for mobile phones.

The company has also spearheaded the Open Handset Alliance--which advocates open standards for mobile software--in an effort to coordinate its work with that of handset makers, chip developers, application developers, and cell phone operators.

Because Google has dominated search and advertising on the traditional Internet, the expectation is that the company will also take the mobile market by storm using the same tools and the same strategies. But shoehorning its existing Web tools and applications onto a tiny mobile phone isn't going to be easy. If Google is not careful, it may find itself chasing some new, innovative start-up that figures out how to out-Google Google in mobile.

"In some ways Google is now the incumbent," said Farhad Divecha, director of the search and mobile marketing firm AccuraCast. "Their search products and advertising tools aren't the best right now, so there's a good chance someone could come in and do it better."

Back to basics with search
Google first came on the scene a decade ago with a new search algorithm that could serve up better and more relevant content to users than had ever been done before. So while other companies, such as Alta Vista and Yahoo, had been in the search business for years before Google came along, it was this giant leap forward in the user experience that catapulted the company to success.

It is not surprising that search was one of the first tools that Google adapted for cell phones. And by most accounts the tool works fine. When used with the Google Maps application, mobile users can even search for local restaurants and get directions to each establishment.

But critics of Google's mobile search tool say its results aren't always as relevant as results from a desktop Google search. Another common complaint is that Google provides search results from regular Web pages and tries to trans-code them for mobile phones. Often these sites don't render well on certain phones.

Yahoo Go, a similar application, is considered more robust and more user-friendly than Google's search tool.

"Yahoo has been far more aggressive than Google in doing business development relationships with handset makers around the world and thus has more direct handset and carrier deals," said Greg Sterling, principal of Sterling Market Intelligence. "Of the two companies, Yahoo is probably farther along in some respects than Google is."

Google is also limited in the information it can gather about a subscriber's usage patterns and location because carriers are unwilling to share subscriber data, said Jorey Ramer, founder and vice president of corporate development for JumpTap, a company that provides mobile search and advertising software used by mobile operators to develop their own search services.

JumpTap, which is currently working with 16 carriers around the world, is able to access this user data because it collaborates directly with these carriers, Ramer said. Google, on the other hand, could become a direct competitor to carriers, including Verizon Wireless and AT&T, if it wins spectrum licenses in the 700MHz spectrum auction now being conducted by the Federal Communications Commission. What's more, Google's business model depends on its consumer brand and its direct relationship with consumers. Ceding too much control to Google makes carriers nervous because they don't want their services to become commoditized.

"Carriers appear less likely in the near term to partner with the portals (such as Google) because they know what they will have to give up in exchange," said Brian Cowley, chief executive of mobile ad provider Ad Infuse.

Tracking advertising
Google has also adapted some advertising products to mobile, including its AdSense program, which matches ads to a site's content, and AdWords, which matches key words in ads with search results. These services work well on a mobile platform, according to Google. But the problem is that their results are difficult to track, which means advertisers or Web site owners may not be able to tell the effectiveness of their advertising campaigns.

One reason is that "cookies"--the little digital tags that are left on a computer when someone searches or clicks on a Web page--expire much sooner on cell phones than they do on PCs. Sometimes they are even blocked entirely by certain carriers. And most handsets are shipped with cookies disabled by default. Without these digital tags, it's hard to track clicks.

On Wednesday, a company called Bango, which facilitates billing for mobile-content owners, announced Bango Analytics, a tool that provides detailed data on mobile advertising campaigns.

"Google can tell an advertiser how many clicks they've gotten," said Martin Harris, senior vice president of sales for Bango. "But they can't say who or where the clicks are coming from. This makes it difficult to track and see how well an ad campaign is performing. Bango can provide the detailed information, because we've been working with carriers for seven years doing billing."

Google admits that not all of its services and applications work perfectly in the mobile environment. But the company believes that the market is still young, and it is working to improve its products.

"Broadly speaking, things that work on the Internet don't translate perfectly into mobile," said Dilip Venkatachari, a director of product management with Google's mobile team. "There are some issues. But we are very proud of the search and advertising experience we've created for mobile."

Venkatachari believes that Google is well positioned going forward because of its experience on the Web.

"The mobile channel is no different than any other channel that we work with," he said. "We can deliver a compelling user experience by bringing our core DNA and what we've done in the traditional online world and sharing that with mobile."

Moving slowly--but still dominant
In an effort to help bridge the gap between the mobile and desktop Internet experiences, Google is developing Android, a new open software platform for cell phones. The idea is that this new software platform will allow Google to more tightly integrate its applications in handsets and services. And should Google succeed in its bid on wireless spectrum, that spectrum could eventually be used to build networks that allow connectivity from any device.

But even these efforts are not going as smoothly as the company may have hoped. In November, Google released an early version of its Android software development kit. Some developers have complained that the software is overly buggy and not ready for prime time. Google said on its blog at the end of January that it had updated the software development kit based on developers' feedback. And it extended the deadline for its Android Developers Challenge to April 14 to give developers more time with the updated software. Google has set aside $10 million in prize money for developers who create programs for the new platform.

Android phones are expected to hit the market later this year, and some early prototypes will be on display at the Mobile World Congress in Barcelona.

There have also been reports that Google is hitting technical snags in developing new mobile applications. Last summer, The Wall Street Journal reported that Google was developing a search tool to help consumers find and buy ringtones, games, and other mobile content. The company was supposedly in talks with large content owners, but so far no such service has been announced. Google declined to comment on these efforts, saying that it does not comment on rumors.

Google's critics say this is evidence that the company is vulnerable when it comes to mobile.

"Google is struggling in mobile at the moment," Bango's Harris said. "They are very desktop-centric. They understand the Internet better than most. And they've created this expectation that they can shift everything to mobile. But you can't just lift the technology from the Web and simply put it on a mobile device. It just doesn't work that way."

That said, Google still dominates in search and advertising both on the Web and on mobile. Consumers know the brand. And even when Google's search application isn't easily accessible from an operator's menu, consumers still find it.

"The threat that someone could outdo Google is there," said Divecha. "But how realistic the threat is is questionable. Google doesn't have a great search tool, but the problem is that nobody else does either. And for someone to overtake Google, the technology advancement will have to be more than just incremental."

CNET News.com's Elinor Mills contributed to this report.