The technology editor of MarketWatch made a good point after Google (GOOG) released earnings. "Google’s quarterly results late Thursday show that the race to win that market (internet search ads) is over, in spite of Yahoo’s new search-ad features, known as Project Panama."
That leaves the only ray of hope for Yahoo! (YHOO) and Micosoft (MSFT) is the cell phone market.
Over one billion cell phones were sold worldwide in 2006. Many of these will never be used for search. Some are too inexpensive to run search technology. Some are in markets where handsets have no broadband connections. Some belong to people who don’t care about using their phones to access search engines. But, that leaves more than one or two phones.
Quoted in The New York Times, the head of Google made it clear where the next battle will be joined: “The biggest growth areas are clearly going to be in the mobile space,” Eric E. Schmidt, chief executive of Google.
While the "search over the phone" market is in its early stages in the US, in China, the world’s largest cellular company, China Mobile (CHL), has already teamed up with Google (GOOG). But, that leaves the huge operators in Europe and the US along with systems in developing countries like South America and India.
Google has two advantages in cell phone search. Its market share on the PC is due to its ability to bring back better search results and marry them more effectively with text ads. That does not change on the phone. And, Google has already shown how daring its is willing to be spending money to get into critical markets. Its YouTube and DoubleClick deals have shown that.
The fight for the cell phone may be in its early stages. The house may be betting on Google. But, Yahoo! and Microsoft are desperate. And, cornered badgers bite.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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