Google Looking to Go Wireless

Success may be the only thing that slows Google down. With the market for web-based advertising becoming saturated and search-based revenues maxed out, Google is turning its attention to new prospects and opportunities. Already the dominant player in both markets, Google is now looking at the wireless phone space for its next major growth engine. According to market insiders, Google is currently in the market for a wireless company to carry Google and its assorted Google applications, most importantly Google Maps, Docs, Gmail, and Search.

This is not some fly by-night whim on the part of Google. They have already invested millions of dollars into the project and have already developed a prototype headset. With meetings with AT&T and Verizon already taken place, Google seems serious about leveraging itself in the wireless phone market. The only slowdown has been the possible conflict Google's entrance would have on the future of data-based advertising.

If Google enters the wireless phone space, web service would dramatically increase. That increase would allow wireless service providers to increase the number of subscribers as well as the data packages that they use. The problem comes in the profit-sharing that would take place in the mobile-ad market. Ads on cell phones are twice as profitable as other vehicles because they are highly personalized. Verizon has gone so far as to express concern about the large slice of search-based ad revenue Google is demanding. Basically, wireless service providers would have to cut Google a larger slice of the advertising they make via web searches performed on their cell phones because the web search would be Google's.

Beyond that problem, Google is pressing forward. They have already rolled out a mobile version of Youtube's video sharing service. With anything that Google does it has a goal. And that goal is to gain the power to negotiate ads on mobile phones. The possibilities include a free wireless service that is entirely ad-driven. In 2006, $1.6billion was spent on mobile phone advertising. That number is expected to balloon to $14.6 by 2011.

It is believed that Google has weighed the idea of entering the next auction for a wireless phone spectrum license. That is the license wireless service providers need to carry service with the Federal Communications Commission. Unlike AT&T, Verizon, and Sprint Google would have to invest several billion dollars as well as a number of years to develop its wireless phone operations. With the amount of time that such a move would take, look for Google to partner with an established brand and push its offerings that way.

It appears that another option Google has been exploring is something called the GooglePhone. Forgive the iPhone redundancy, but it appears to be a Blackberry like device. In the spring, Google was advertising for a phone manager position. And some have speculated that over 100 people had been hired in this new division. However, with not much movement, the project appears scrapped.

Unlike Apple who brokered an exclusive deal with AT&T to carry the iPhone, Google is looking for multiple agreements. In fact, Google has already had to back off of some of its demands in order for wireless service providers to consider the possibilities. With that sensibility, Google was able to strike a deal with Sprint that allowed it to push some of its service offerings onto Sprint subscribers. Sprint's subscribers that have the WiMax technology have bundled services from Google. Those customers that do not do not have the capabilities to use the Google-based services.

Google has sought to build phones that have built-in Wi-Fi technology to connect to hot spots in their communities. Additionally, Google wants to be able to use only the wireless service providers' fastest networks so that its services can run with some measure of speed and reliability. Also, with Google Maps, Google would like for the phones to have global positioning systems (GPS) so that Google can locate the exact positioning of the subscriber and give to the point directions to them.

Google's last hurdle will be convincing a wireless manufacturer to build a phone that wireless service providers will be willing to push. When ESPN/Disney launched a branded phone it was quickly scrapped because of declining interest. With those problems, look for Google to fall back to its core services. It has yet to build a piece of hardware and manufacturers would be hard-pressed to begin that process with Google today. If Google focuses on leveraging its web services, and bundling them in packages for every wireless provider, that will be the most effective point-of-entry into the wireless service space.