Internet players’ move to mobile is new frontier for all


Google Inc.’s Internet dominance has grown in recent years as the competition – well, what passes for competition – continues to plod along. But for the long list of Web-based players moving to the new platform, wireless is the wild, wild West.
The Mountain View, Calif.-based developer owns the search market in the United States, powering more than twice as many searches as the second- and third-ranked sites combined (Yahoo Inc. and Microsoft Corp., respectively), according to recent figures from comScore Inc. And the company continues to turn Internet traffic into cash, pocketing $1.25 billion in profits on $5.37 billion in revenues during the most recent quarter.
Yahoo, meanwhile, continues to struggle as it fends off come-ons from Microsoft and battles with activist investor Carl Icahn. The perennial runner-up rang up $1.8 billion in revenue during its most recent quarter, posting a net income of $131 million.
And Google has effectively leveraged its front-runner status as it expands to wireless, according to Nielsen Mobile. The behemoth accounted for 61% of all mobile searches in the first quarter of 2008, Nielsen found, more than tripling Yahoo’s output. MSN was last among the three providers with a mere 5%; lesser players such as AOL, go2 and went unranked.

Wide-open spaces
But a closer look signals a wide-open space for anybody who can build a better mousetrap. Only 44% of Google users rated their satisfaction with mobile search at eight or higher on a 10-point scale, and only 40% of Yahoo users were similarly impressed.
And while Google holds an impressive lead in mobile search, its presence on the mobile Internet in general is less imposing. Yahoo’s mobile site for e-mail drew the most U.S. traffic of any wireless destination in May, according to Nielsen Mobile, drawing 14.2 million unique visitors and outpacing Google’s search page by 64%. And while Google finished a distant second with 9.1 million uniques, the gaggle of sites that finished just behind includes The Weather Channel (8.6 million), MSN Hotmail (7.9 million), Gmail (7.5 million) and ESPN (6.5 million).
Much of that traffic, it seems, can be attributed to varying strategies. Like AOL in the early days of the Internet, Yahoo has made strides with downloadable applications and Internet sites that effectively serve as a branded deck, taking consumers by the hand as they surf on their phones. Not only has Google taken a less paternal approach – employing, unsurprisingly, mobile offerings that largely mimic the PC-based Web – it has forged strong alliances overseas in markets such as Japan (with NTT DoCoMo Inc.), China (China Mobile) and Europe (T-Mobile and, separately, Opera Software). Meanwhile, smaller players such as The Weather Channel and ESPN have leveraged on-deck placement to lure users.
Yahoo’s strategy may prove short-sighted: Apple Inc.’s iPhone is ushering in a wave of multimedia-centric devices with big, bright screens and better user interfaces. The Web-friendly phones may spur users to drop the training wheels and embrace the mobile Internet without a branded deck. But while network operators are losing their grip on mobile surfers who’ve learned to eschew the carrier deck, branded portals remain firmly atop the charts when it comes to drawing traffic. And traditional Internet destinations are effectively bringing their weight to bear in wireless.

It’s all about e-mail (for now)
“Portals, with brands such as Yahoo and Google, were the most popular category of mobile Web sites as of May 2008,” Nielsen Mobile’s Nic Covey wrote. “Thirty-six million unique mobile Internet users (89% of the mobile Internet audience) accessed portals over the mobile Internet. E-mail is the next most-visited category with 26 million unique users,” or 65% of the total audience.
Those figures are sure to shrink, though, as consumers grow accustomed to strolling through the wireless Web on their phones. Analysts expect search services to increase in popularity as the wireless Internet, grows, and established online social networking communities are already finding an audience in mobile.
A recent M:Metrics study found that community and commerce destinations are luring U.S. smartphone users to spend an average of four-and-a-half hours per month browsing the Web wirelessly. “Consumption is quickly evolving from brief transactions, such as checking the weather or flight status, to time-intensive interaction with mobile Web sites,” M:Metrics’ Mark Donovan said at the time, “even without an iPhone.”
Plenty of other Internet companies are making waves in wireless, of course. Comcast, an Internet service provider, has joined forces with Sprint Nextel Corp.’s recently announced alliance that will employ Google’s user interface and other offerings. And EarthLink Inc. continues to play on the periphery with its efforts in municipal Wi-Fi and former investment in the flailing Helio business.
But perhaps the most immediate questions regarding the Internet-based players surround Android, Google’s open source platform slated to come to market in the next several months. The company has built an impressive coalition of mobile and Internet players in its Open Handset Alliance, and while
it has struggled to please its developer community, code writers have praised Android’s flexibility as a software platform.
Even if Android enjoys success as a mobile operating system, though, several crucial questions have yet to be answered. The advertising dollars that are expected to power the mobile Internet have yet to be realized thanks to ill-equipped handsets, and a lack of analytics and other deficiencies. And marketers have yet to find the best ways to approach mobile users without annoying them. So as the world of wireless collides with the Web, both industries are a long way from determining the winners and losers.

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