Problem is, many customers can't figure out how to access all that information. That's where companies like Google and Yahoo, along with a slew of start-ups such as InfoSpace, JumpTap and Medio, see a big opportunity. These companies are developing tools that allow users to search for content. And they're starting to test search-based advertising to help generate revenue.
"When there were only 10 ring tones and a handful of other sites on the carrier deck it was simple," said Iain Gillott, an analyst with iGillott Research. "But now there's 10,000 ring tones and it's really hard to find what you want. It's like walking into Wal-Mart with only the aisle numbers to guide you to what you want to buy."
Mobile search and the advertising business models that have been proposed to support the service are sure to be hot topics discussed during the Cellular Telecommunications & Internet Association's (CTIA) semiannual trade show here in Los Angeles this week. The CTIA Wireless IT & Entertainment show begins Tuesday and runs through Thursday at the Los Angeles Convention Center.
As revenue from their, mobile operators are counting on mobile video, music downloads and other data services to make up the revenue difference. But so far, most of the 190 million wireless subscribers in the United States have not downloaded content onto their phones or surfed the mobile Internet looking for content.
Mobile tracking firm M:Metrics said that only about 15 percent of U.S. wireless subscribers, or about 28 million people, downloaded some type of multimedia content during a three-month period that ended in July. And the Yankee Group estimates only 18 percent of wireless users in the U.S. have, with 6 percent saying they consider themselves regular mobile Internet users.
There are likely many reasons that explain why American wireless subscribers aren't downloading content and surfing the mobile Internet. The services and content may be priced too high. Users may be uncomfortable with the small form factor on the phone. Some experts also believe that people simply cannot find the content they're looking for quickly.
"Surfing the mobile Internet is still hard," said Eric McCabe, vice president of marketing for JumpTap. "The wired Internet didn't really start to explode until search tools like Google made it much easier to find things online."
Experts warn that creating search applications for mobile devices is completely different from creating them for the PC. Smaller screens, rudimentary navigation tools and tiny keypads not optimized for typing all make mobile search very different from its wired equivalent.
Users are also more impatient when they're using their mobile device to access information than when they're sitting in front of a PC. They don't want to wait for screen downloads, and they aren't willing to look through dozens of search results on multiple pages to find what they want.
Controlling the content
But the biggest challenge for mobile search is likely not the technology but figuring out an appropriate business model. In contrast with the wired Web, in the wireless world the operators themselves control what content users can access.
Most mobile operatorsfilled with the carriers' own content that has been supplied through deals they have made with news organizations, record labels, TV networks and other content producers. Carriers generate revenue by charging for subscriptions to packages or premium content. They also get a cut of revenue when users download content from their decks.
Some carriers allow subscribers to leave their decks to surf the mobile Internet and purchase content, but they still control access to outside content.
"At the end of the day, the carriers make the business decisions," Gillott said. "Some will continue to be very restrictive and others will be more open to accommodating outside content and outside brands."
As mobile search technology evolves, both the operators and established search companies like Google and Yahoo realize there is potential in paid search for mobile phones. Google is already testing ads on its mobile search interfaces in the U.S., U.K., Germany and Japan.
Some carriers have struck deals with Google and Yahoo to provide search tools. Google has deals with Vodafone and T-Mobile. Yahoo has also struck a deal with Orange and last week announced that its mobile search engine will be embedded in some new Nokia handsets.
But rumors have been circulating recently that Vodafone may be looking to get out of its deal with Google, which was announced at the, Spain, in February. Some reports indicate that Google is getting half of the revenue from keyword searches and at least some of the associated advertising revenue generated. Vodafone fears that its cut of the revenue stream could be cut even further as Google introduced advertising-based search. Google has denied these rumors.
Whether the rumors are true or not, they highlight a serious problem for mobile search. Carriers who choose to go with a branded search service like Google risk losing control of the advertising revenue that comes from the search applications. They also risk diluting their own brand by using a search tool that is powered by the search brand. This is one reason why mobile operators in the U.S. have often opted to build their own search tools with the help of less-well-known companies dedicated to mobile search.
"In America, carriers want their brand on everything," McCabe said. "They want to control the revenue and that's why many have gone with 'white label' solutions."
In the white-label approach, operators put their own brand on the search tool. This way they can own the customer and provide more personalized search results. Alltel, the largest regional mobile operator in the U.S., said Tuesday it will use technology from JumpTap to build its own mobile search tool. Alltel is the first carrier JumpTap has announced. McCabe said JumpTap has also signed up two Canadian carriers, a top U.S. operator, and one mobile virtual network operator, or MVNO.
Creating their own search tools also means carriers can use customer data that they've already collected to fine-tune the searches and provide users with more useful links, McCabe said. Google and Yahoo use algorithms that do not use this personalized information.
On the other hand, search tools from Google or Yahoo may give subscribers a wider array of search results. If carriers control the search tool, they may steer subscribers onto their own sites in search results.
"The problem with operators controlling search is they might not offer the results that subscribers really want," said Ray Anderson, CEO of Bango, a company that helps content owners generate revenue.
Regardless of whether carriers develop their own search tools or partner with a well-known search company, most experts agree that search will become crucial in growing the use of the mobile Internet and spur much more e-commerce activity from mobile phones.
"The more things people are able to do with their mobile phones, the more indispensable they will become," Gillott said. "Today people select a service provider based on coverage, price and customer service. But once those things are all equal, search could become a differentiator."