'We are not your enemy' Google chief tells mobile operators
Google’s chief executive Eric Schmidt urged the mobile industry to embrace the mobile Web instead of seeing Google as the enemy, in his first speech to the world’s biggest wireless industry fair.
Schmidt said the industry stood at an historic moment when the computing power of mobile phones, attractive services and networks that could handle them had come together, and said Google was driving network traffic to the benefit of operators.
“It’s like magic. All of a sudden there are things that you can do that didn’t really occur to you... because of this convergence point,” he told a packed auditorium at the Mobile World Congress in Barcelona.
“That time is upon us -- right now, right here, for this year and at least the next many years,” he told the audience of operators, telecoms gear vendors, and observers of an industry that generally views Google with suspicion.
Google has recently made overtures to other industries who consider it a threat, including newspaper and book publishers, and advertising agencies.
In telecoms, Google has raised hackles by launching a free smartphone platform, Android, selling its own-branded phone directly to consumers without the mediation of carriers, and announcing plans to build a super-fast broadband network.
It has also been seen as a problem by some operators, who are having to invest to upgrade their networks to meet the huge demand for data services required by users who are spending more and more time on the mobile Web on sites from Google and others.
Google announced two new features: one that translates images of text in foreign languages captured by a camera, such as restaurant menus, and the addition of German as the fourth language supported by Google’s voice-recognition technology.
Schmidt’s remarks were met with scepticism and some hostility from an audience already worried about economic recession and the prospect of becoming “dumb pipes” that merely carry valuable content, including free Internet calls.
“I’m talking about Google stealing operators’ talk minutes,” said one questioner, when asked by Schmidt to clarify his concerns. Schmidt shot back: “It’s not our objective to steal your minutes.”
Later, in a roundtable with journalists, Schmidt explained why he believed the two industries needed one another.
“We need them to go ahead and invest these enormous amounts of money at great risk and, in return, they need us to continue to build powerful new reasons to upgrade the connections and get a new phone,” he said.
“Find a way to say yes, not no, is our thesis.”
Google’s core business is in helping online businesses to attract vast audiences to which it can sell advertising.
“We want to have a little bit of Google in everybody’s transaction with the Internet,” Schmidt said.
He added that, eventually, other means of making money than advertising, like selling software to large enterprises, would become significant. Google has email, document-management and other subscription services for business users.
If Google can execute this strategy, it stands to rewrite the rules in the $1 trillion wireless industry.
Jagdish Rebello, director and principal analyst at iSuppli, argued that Google has a strategy of working with the mobile chain rather than against it, which will help it succeed ultimately.
“During the past three years, Google has continually targeted the mobile communications industry with a series of initiatives,” said Rebello. “From offering free Wi-Fi services, to developing a free and powerful open operating system for smart phones—Android—to offering free maps and turn-by-turn navigation services, to introducing a Google branded phone—the Nexus One—the Internet search giant is revolutionising the mobile value chain in an attempt to unlock new value and to expand an industry desperately searching for the next inflection point.
“While all the facets of this multipronged strategy will not be successful, it is clear that Google is pushing toward the strategy of monetising mobile search by leveraging its leadership in Internet search with relevant location-based services and mobile advertising,” Rebello added. “iSuppli believes that if the company executes this strategy correctly – by working with and not against the rest of the mobile value chain – the wireless industry will be well positioned to unlock the next trillion dollars of value by the end of this decade.”
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