Google wants to own your mobile: Not going to happen. Yet.

Last week, Robert Scoble wrote:So, every month that Microsoft and Yahoo will be stuck in some courtroom arguing out why this is a good deal means money in the bank for Google as they close mobile phone deal after mobile phone deal.Forget the courtoom thing for a moment because it won't be the rainmakers that are in court.
Written by Dennis Howlett, Contributor

Last week, Robert Scoble wrote:

So, every month that Microsoft and Yahoo will be stuck in some courtroom arguing out why this is a good deal means money in the bank for Google as they close mobile phone deal after mobile phone deal.

Forget the courtoom thing for a moment because it won't be the rainmakers that are in court. I want to look at the mobile angle in the context of the Microhoo debate.

If Google was closing deals with Vodafone, T-Mobile, Verizon, Telefonica, China Mobile and the many other carriers around the world then I'd agree that it's in a supremely strong position. But as far as I am aware, it's not. Instead, we see Google closing music distribution deals. According to the Wall Street Journal:

Now, Google is preparing a counterstrike, according to people close to the situation. The U.S. search giant is in the late planning stages of a joint venture with a Chinese online music company that would permit it to provide free -- licensed -- music downloads in China.

People on Techmeme thinks this is a big deal. I spoke with Dale Vile, principal analyst with Freeform Dynamics and a long time observer of the mobile space. His view was unequivocal: "Anyone who thinks that owning a thin slice of the total mobile services market will make them a dominant player is plain daft." Why? Several reasons.

First, the real money is in bundled services and business applications. This is where Yahoo! has genuine strengths. As part of my research for this piece, I installed YahooGo! beta 3 which was launched at CES. I don't recall hearing a lot of noise about it but this is a genuinely cool and useful bundle of applications that happens to include email - one of the areas Scoble dimisses. As someone who has been an avid GMail and GoogleReader fan, I could be easily persuaded that Yahoo! Go has more than enough utility for my needs wrapped up in the best looking mobile protal interface I've seen. Check the CES video for a quick round up of features to see what I mean.

More important for both Yahoo! and Microsoft, Yahoo! Go beta 3 has cleverly embedded subtle advertisements that I don't find offensive or intrusive. Isn't this one of the places Microsoft wants to be? If Microsoft does win in its bid for Yahoo!, this would be one of the first apps bundles I'd want to be reviewing because as David Tebbutt, another Freeform analyst says:

It's interesting that when Yahoo!'s Jerry Yang was in London last October, he revealed a change of attitude in the company in favour of supporting developers rather than trying to do everything itself. This just happens to resonate well with Microsoft's approach.

Second, while Google may gain a position with its music play in the burgeoning Chinese market, it is the global carriers who control what happens in the wider mobile market. That's what Pat Phelan, CEO of MaxRoam believes. He should know because MaxRoam is disrupting the traditional mobile market with its 'go anywhere' at low cost service. Once the carriers realize the potential for these high bandwidth sucking applications, they'll want a piece of the pie. How will they do this? All they need do is throttle back bandwidth access in the name of coverage concerns and Google will have to negotiate for another split on whatever they're taking out of the deal. Sayonara freeloading on the Internet. Given Google's presence in the market place, you can be sure that carriers will be eying up Google's margins and pounding the calculators to reckon how much they can take.

But is mobile the Big Thing so many people believe? Opinion among the Irregulars was sharply divided. Anshu Sharma, who wrote a compelling argument in favor of Microhoo going after new markets said:

I was myself firmly in the mobile is overhyped camp till about a year ago when 2 things happened: I went to India and saw my dad, my sister, my handyman - all use a $50 mobile phone with text messaging for paying bills, checking back balance, reading news alerts, etc. These millions of new consumers will more naturally migrate to higher functionality mobile phones than to a PC. Second, I myself subscribed to a data plan and found it to be immensely useful from Google Maps directions to checking mail on the go. Yes, the percentage of "web" traffic from mobiles is probably in single digits but that's why its an open space for Microhoo and Google to fight it out.

Jeff Nolan was unequivocal:

GOOG is unquestionably dominant in one category alone, search advertising. Everything else is a toss up. And with all due respect to Scoble, the idea that mobile apps are the real end game is laughable and indicates a serious case of Valley Echochamberitis. Let's round it off and say that there were 2 billion handsets shipped last year alone, how many of those were data capable (from a practical use standpoint, in other words, I could actually use them for data as opposed to the technical specs saying I could)? Maybe 30 million? Apple shipped 4 million iPhones in a year and they have always said that 15-20 million handsets would be a blowout for them. Mobile web apps are simply not mainstream apps, they are enablers for a core service that is still provided through a browser. GOOG could own mobile apps and they would still be a minor business unit.

Both points of view are valid and much will depend on whether you believe Microhoo! will make a name for itself in what Anshu describes as 'blue-ocean' markets or whether mobile apps do come into their own in a big bang way. If you believe many commentators, it's game over with Google declared as the Internet (and almost by definition mobile) winner. I don't believe it's that simple and err towards those who believe there is enough headroom to allow several large scale players to do well. Regardless of the Microsoft+Yahoo!= Big Mess as characterized by Long Zheng, there are some genuine nuggets to be had which play directly to Yahoo! and Microsoft's potentially combined strengths. Let's not get too hung up on the downbeat hubris and concentrate instead on where this might score huge dividends. Even if there is merit in what Scoble said:

...put two turkeys together and you don’t get an eagle.

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