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 Thursday, May 08, 2008
The conquest of the desktop network ended once Google passed 50 percent of the search market. To grow, they need to roll into broader lands beyond their empire. Editor's Note: Google's investment in Clearwire is not only a signal of significant change on the horizon for the wireless industry, it's also a sign advertising is about to change, too. Also interesting is that every one of AT&T and Verizon's mortal business enemies have teamed up against them. The implications are pretty huge, actually, so prognosticate with us in the comments section. Firms that measure Internet traffic agree: these days, Google owns two-thirds of the US search market. Yahoo sits in a distant second place spot, with Microsoft and the rest of the search world trailing far behind. The struggle for search supremacy probably ended once Google scaled to reach peak performance for queries, however many years ago that happened. Google is a verb, much to the dismay of the search advertising company's marketers and brand experts. Some may wonder why we call Google a search ad company instead of a search engine. Google defines itself this way, in its SEC filings. Their contextual ad business pumps nearly all the revenue into their coffers, billions of it each year. Search ads are the business, which they do well. And yet, even Google witnessed a slight cooling of profitable clicks on ads. All part of the strategy, as CEO Eric Schmidt would aver; Google wants fewer clicks, wants them to be quality clicks for robust keyword bid rates, wants people to perceive value at every landing page where a click leads them. That's a good thing, but not enough of one, not when an entire frontier of millions upon millions of potential ad clickers wander around every day with wireless, web-capable devices. The Internet on mobile devices is ok, if you're into text. Add in images, maybe some video, and the typical person will need a side order of patience while waiting for the content to arrive. People put up with slow on wireless because it's the same everywhere, at least until the big dogs Verizon and AT&T roll out their 4G networks.
Google wouldn't mind being in front of those two. As they explained on the official Google blog, their investment in Clearwire, which is absorbing Sprint's WiMax initiative, represents an investment in the future. "We believe that the new network will provide wireless consumers with real choices for the software applications, content and handsets that they desire," Larry Alder wrote at Google. As a frontrunner with one of the world's top brands, Google poses the most likely choice for people hitting Clearwire's network. Google did some groundwork already, gaining a deal with Sprint to be the portal for Xohm, the WiMax effort Clearwire will absorb. The big G will be a presence on WiMax, without question. Put aside the talk of openness and Android for the moment. Remember where Google gets about 99 percent of its revenue. If a low cost entry into a high-speed Clearwire-operated WiMax network is going to happen, it will be with Google providing some of the cushion. Google can afford to help its Southeast Asia hardware developers make Android-powered devices less expensive; Google can't afford not to do so. Reaching people with a connection, content, and ads means providing the way to stay connected. The investment in Clearwire by Google shows the next step toward doing that. Who knows? If it works, Google could be on the way back to those $700 per share days they enjoyed not too long ago. If that happens, it will come not just from having ads in people's pockets. WiMax's range provides a broadband option that should reach areas currently underserved by existing cable or other broadband providers. See, WiMax may open up a lot of customers to using the Internet more often. Faster access leads to greater demand, which we have seen over the past decade. Imagine a whole new market of customers gaining regular high-speed access for a minimal cost, and the opportunity that presents to advertisers. That should excite hard-working business owners. The next economic recovery could come on a wave of expansion, with Google providing some of the rush as they help WiMax expand to its audience. For more information about Google's foray into wireless, check out Abby Prince's WebProNews video report.
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