Google is in the sweet spot of social networking: personalized data that can be lucratively cross-matched to other users, advertisers and businesses. It has the consummate search and personalization mechanisms, which it seeks to apply to the ultimate social device: the mobile phone.
Its so-called GPhone plan is not an entry into mobile phone hardware or service, but a move to put Google's technology in the hands of consumers, whose infatuation with interactivity and the cell phone is inseparable. Putting Google everywhere cannot help but have social networking and commerce implications. The real driver behind Google's interest in social networking is its lust for the biggest piece of the global ad pie. Social networking is a means to a very profitable end.
Google's search capabilities, maps and navigation, Gmail, reader and YouTube video sharing--as well as auction-based advertising and transaction mechanisms--have deep, compelling applications for mobile phones. They will make mobile phones, the world's dominant digital device, a more vibrant Internet access point to rival PCs. It is all part of the social networking infrastructure (codename: Maka-Maka) Google is building across all of its popular applications.
The dynamic multiservice Google platform could become the consummate global social network, cutting across all demographics. The value of Google's social network will be monetizing users sharing personalized communications, data, entertainment, maps, retail links and transactions. Google will seek to reach beyond chat to provide its interactive search and commerce on digital mobile devices. Achieving that in the next year would put Google ahead of MySpace (owned by News Corp.) and Facebook (backed by Microsoft), which are just beginning to develop their own ad networks into their social network infrastructure.
A key development in this social-networking revolution is expected today, when Google officially invites outside developers into its doors (not only its tepid social networking platform, Orkut)--and potentially thousands of niche players, such as LinkedIn, Friendster and Bebo via the OpenSocial alliance, which seeks to create universal software standards. The consortium will provide a unified rival (in reach and substance) to Facebook, while giving software developers access to the operating systems that interface with mobile phone hardware. That collaborative approach to creating new value has been at the heart of Google's innovation--and more recently, embraced by Facebook, MySpace, Yahoo and other major players. The only downside, and potential risk, is potential abuse of personal user information, as privacy concerns take a backseat to open access creativity.
Verizon, Sprint and other phone-service providers, as well as handset manufacturers, will benefit tremendously from association with a Google mobile phone service and software package, which is expected to be unveiled in two weeks and go to market early in 2008.
The impact would not be unlike the boost to sales and earnings Apple's iPhone has provided to AT&T. Still, wireless carriers are reluctant to loosen the stranglehold they have had on the mobile phone industry, allowing them to charge for services at every level and control the retail distribution of phones. Before any of these new catalysts come into play, social networking is on its way to becoming a $10 billion business. Analysts expect it to grab the majority of marketing dollars spent in all media within the next five years.
However, Google is not just relying on third parties for mobile market access; it is prepared to bet on and win 700-MHz spectrum in an upcoming auction. Google CEO Eric Schmidt, a director of Apple's board and a professed iPhone user, reserves comment on the GPhone, except to advocate for "multiple choices at the mobile platform level."
"The outcome is a platform upon which these new applications can be used in a mobile context, and to us, that is the holy grail," Schmidt recently told analysts. What he means is that Google is willing to open its platform to developers in exchange for creating new ways to generate advertising and transaction revenues from mobile phones and other similar devices that would rival the $49 billion spent annually on TV commercials. Gphone--like its pending DoubleClick acquisition and its new advertising Gadgets and widgets--are key components of Google's strategy to morph into the world's largest ad platform, eclipsing all other forms of media in the process.
Google's success at engaging and tapping into the needs of empowered consumers makes early analyst projections appear conservative. At least $1 billion of Google's estimated $27 billion in annual revenues by 2010 will be generated by the mobile phone market. There will be no limits to what Google reaps from commerce and transaction-based search mobile services, since the company is not bound to traditional definitions of advertising and commerce.
For Google, it's all about connecting with the targeted consumer to make a pitch that will be virally shared with countless friends, result in a transaction, and establish an entrenched long-term relationship. And Google is paid a share of something every step of the way. (This same concept is what is spurring the recent "instant getification" social networking trends at Ask.com and eBay.)
Google's ability to create value and seize control of reinvented markets has been at the very heart of its more than 700%-plus growth from a $4.8 billion to a $220 billion company since going public three years ago. Google's core services and technology are so fundamental to all things interactive, it can put itself in the middle of any trend or business and blow away competitors. The combination of Google's scale and agility, vast resources and consumer intelligence make it the $700-plus share gorilla in the media space. And its social-networking plan is just another step toward cyber-world domination.