Analyzing Google's Mobile / GPhone Opportunity
Citi's smart Google analyst Mark Mahaney lobs in a detailed analysis of Google's mobile opportunity, which he considers one of the company's two major future growth drivers (the other being video advertising. Mark has apparently not yet bought into Google founder Larry Page's crazy vision of Google as an Internet search and Green-Power conglomerate. Neither have we.)
Key Points
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Key Points
- Near-term Google mobile opportunity overrated. Crappy mobile experience, limited consumer use, etc. Hopefully (but not definitely) this changes with 3G/4G and iPhone-like phones...
- Long-term Google mobile opportunity underrated. Mobile search could be major catalyst for local search, which has been a disappointment for a decade.
- Mobile search market could eventually be as big as PC search market: Mark puts global PC Search Market at $21B in '07, driven by 35 monthly searches per PC. Just one monthly search per each 2010-estimated 4 billion mobile phones would generate mobile search revenue of $2.3B. Only 9 monthly searches per mobile device would create a market just as big as today's PC Search.
- Mobile especially important in international markets, where PC penetration is low.
- Translation: Rapid adoption of mobile search could double Google's revenue base in a few years.
- Winning the spectrum auction would cost Google an estimated $6.6 billion
- Building a national network would cost an additional $5.5 billion to $7 billion
- Together, these would consume all cash on balance sheet.
- Results of spectrum auction won't be known until March.
- Fear that Google will go insane, spend all cash, and become capital-hog telco may scare bejesus out of investors until then. (No, Mark didn't put it quite that way)
GPhone Pics!: Open-Source Bug Can Run Android
Smart-Phone Sales Soar: iPhone Grabs 27% of Market
More GPhone Coverage
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linqiong
the "crappy mobile experience" and "limited consumer use" do not apply here, as cellphones are for most people the primary internet gateway.
On top of that, the Google maps for South Africa are of exeptional quality, much better than for Europe (excluding large cities)
There are only 3 cell phone companies, so there is little fragmentation, and their infrastructure is first class.
in my opinion, Google is using the south african market as a below-the-radar testing ground for its mobile strategy and i have no doubt they'll get it right...
I dont understand this. You are analyzing the gPhone so there is no "near term" to be considered overrated. The gphone is Q2 '08. And when it arrives, it will, I presume only run on 3G/4G and iphone like phones. So are you saying that the non-existent phones are overrated? Or are you saying that when the phones get here they will be overrated at some point in the future?
My take - android is a big deal. It is not currently overrated but underrated. Ignored actually. No one knows anything about it. But they will. Because they have take gps/location based stuff and built it into the core of the OS. And then they have made a platform that is actually programmable. And they actually want to make it easier to develop for than apple does. So they will usher in a raft of applications that people havent thought about yet. It's hard to over estimate how big a deal that is.