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Google's ambitions going mobile

newsmaker Deep Nishar, Google's director of product management, sees mobility as the next new frontier of the Internet.

Google--the premier online company in the traditional Internet world--has for the past year been focusing its attention on the mobile market.

The company has steadily introduced new services designed specifically for the small screen. In January, it released the Google Personalized Home, which lets people access Gmail, news, RSS feeds and other information from their personalized Google home page on mobile phones and PDAs. The service is free in the U.S. and works with any phone that contains an XHTML-capable Web browser.

This summer it launched a downloadable Java application for Google Maps, enabling cell phone users to get information about local restaurants and movies theaters as well as live traffic information on the map.

And this month, it improved its mobile Gmail client to allow quicker access to the application. At the same time, Google has been busy developing partnerships with mobile operators, such as Sprint Nextel and Cingular Wireless. It's also been testing new business models, like text-based mobile advertising, and more localized advertising.

With nearly 3 billion mobile phone subscribers in the world expected by the end of 2007, Google sees great potential for extending its presence throughout the world using the mobile platform, said Deep Nishar, director of product management for Google. CNET recently chatted with Nishar by phone from his office in California to get the scoop on the company's mobile strategy and to get some insight as to how the emerging mobile market might evolve in the next couple of years.

Q: Google has been making a lot of mobile announcements lately. What exactly is the company's strategy when it comes to the mobile market?
Nishar: Our strategy is predicated on three things. The first is that mobile devices are very personal. People carry them wherever they go. And unlike the home PC, people don't share their mobile phones. So it's very important to make the service very personalized.

That's why we've launched Google Personalized Home and mobile Gmail. So people can get this data on their mobile phones all in one place without going to a bunch of different sites.

The second big category we are focusing on is location-based services. People take their cell phones with them everywhere, and they generally are looking for information in the context of a location. When you're on your mobile device and you type in the keyword "movie," you're likely searching for a movie theater because you want to go see a movie. But if you typed in "movie" on your desktop at home, you may be searching for more general information about movies. With Google Maps, we can show you the location of the nearest movie theater, the times of the shows, and even let you purchase tickets from your phone.

Given that our mission is to organize the world's information, it's important to make sure our applications work everywhere in the world.

But right now, users have to type in their location or a ZIP code, right?
Yes, but the next step is to interact with advanced cell phone technology, like Global Positioning Systems or GPS, so that the device knows where you are. We're already doing that with Helio's new phones. The whole point is to make the user's life simpler.

What's the third piece of the strategy?
In mobile, a one-size-fits-all solution won't work. Given that our mission is to organize the world's information, it's important to make sure our applications work everywhere in the world. But you can't assume that products popular in one region will be popular everywhere.

SMS is a good example. It's very popular in Europe and is gaining popularity in the U.S. But people in Japan don't use SMS; they use mobile e-mail. So it wouldn't make sense to launch an SMS-based search application there because people won't use it. So we need to make sure our services can be accessed globally, but the product execution is local.

So how does Google expect to make money from the new mobile applications it's developing?
We are already testing text-based mobile advertising in Japan and several other countries. And so far the testing is going quite well. So that's one avenue for us to make money. But I think that mobile is still a new medium. The number of people accessing data applications on phones is still relatively low. As usage increases, I am certain there will be other business models that emerge.

Eric Schmidt, Google's CEO, said earlier this month that he believes mobile advertising could make cell phones free for consumers. How would that work exactly?
What Eric was alluding to is that it's in the best interest of mobile operators, content developers and application providers like us, to make sure that everyone who wants a mobile device has one. Unlike the traditional Internet, the mobile market is based on a well-defined ecosystem. Mobile operators set pricing on content and provide access. Device makers select operating systems. And then you have service providers like Google that offer applications.

So the entire ecosystem will have to figure out different ways to get mobile devices into users' hands. It won't be just mobile advertising. But the market is still nascent, so we don't know what it will be yet.

Google's success in mobile relies on the consumer's willingness to adopt and use the mobile Internet. So far, relatively few people are surfing the Net on their phones. Why do you think the mobile Internet has been slow to catch on?
Growth of the mobile Internet has been different in different parts of the world. And I think we can look at the differences in business models to understand why it's popular in some places and not in others.

For example, in Japan, data usage is very high compared to other places like the U.S. If you dig deeper, you find that the business models aren't as open in the U.S. as in Japan. Phones in the U.S. are still primarily used for voice calls. But I haven't seen voice minutes priced any higher here. I think the mobile operators understand this, and they are looking for new ways to encourage use.

What do the mobile operators and others in the mobile "ecosystem" need to do to spur adoption?
We need to define the real value of what we're offering consumers. Data services aren't just about getting the latest ring tone. That's entertainment and doesn't become a core part of a user's life. When I show friends and family the things you can do with Google Maps, like live traffic updates, they are like, "Wow." We need to make sure more people have these "aha" moments.

Do you think that pricing is affecting adoption of these services?
Price is something that always lingers in consumers' minds. There have been studies that show when data is offered for free as part of a trial that 50 percent to 80 percent of users stop using the service once they have to pay for it. But I think that users pay for what they value.

Data services aren't just about getting the latest ring tone. That's entertainment and doesn't become a core part of a user's life.

For instance, I don't think you can get people in Western societies to pay for news headlines. On average, most people are within 30 to 40 minutes from some kind of technology that delivers the news for free. So you're going to be hard-pressed to get people to pay for it.

So I think that service providers need to be smart about how they price content and services. You can't charge for every bit of content. But you can charge for things that provide a real value to consumers.

I agree with you on that point. But one of the reasons I'm not a big mobile Internet user is because I don't really understand the carrier's pricing method. And I'm nervous I'm going to be charged an arm and leg for just experimenting and trying new services. Do you think that's also pretty common?
Yes, I do. There are two hurdles operators must overcome. First they have to make consumers understand the value of the service, so they're willing to pay a fee for using it. And then they also have to provide transparency in pricing. This is a distinction that not many people understand.

Most consumers understand they are being charged for the use of a data service. But they don?t really know how much. Mobile operators are starting to recognize this, and they are coming up with more simplified pricing structures.

Google has announced partnerships with several carriers. But all of Google's mobile applications can also be accessed directly from the mobile Internet. Has that created tension between Google and mobile operators, who are reluctant to give up control over what applications their subscribers are using?
In general, I think whenever a new service comes onto the market and a new way of doing business emerges, mobile operators question how it will play out. We've experienced a lot of good will among mobile operators that we've worked with. But I admit that some of the discussions were difficult at first. But at the end of the day, the operators are smart people. And they know which way the market is going. They have to look at us as a partner to enable these new services and a wave of new innovation.

So what's next for Google in the mobile market?
I can't share specific details with you about products we haven't announced. But I think if you look at our strategy, several obvious things fall out. For example, I think you'll see us do more with location-based services, like developing more locally flavored products.

Will 2007 be the year of mobile for Google?
I think that 2006 has already been year of mobile. We really started investing in mobile in the latter part of 2005. And we're already seeing the fruits of some of that labor. In 2007, we really hope to keep innovation chugging along and provide some great new products.