Google Rises to the Occasion - 4 Now

This past week, Google's stock rallied after reports indicated that the current downturn in the US economy is not affecting Google's bottom line ability to generate online ad revenues. As reported by AFP:

Analysts credit Google's unrelenting focus on helping people find what they want on the Internet and then matching search results with online advertising they are likely to click on.

Google makes the bulk of its cash from "pay-per-click" advertising, and the company reported 5.19 billion dollars in revenue during the quarter while the US economy was rife with talk of recession.

"Google's business model is making sure advertising hits the mark," Global Crown Capital analyst Martin Pyykkonen told AFP.

While there is still much to be said about the prospects of the US economy, it is noteworthy that US ad revenues for Google were surpassed during the first quarter by international ad sales, specifically Europe, and that Google lost at Yahoo's expense, according to ad agency tracker and service provider SearchIgnite. But this does not by any means indicate that we are out the woods when it comes to the fickle tastes of web surfers and the volatility of the online advertising market.

Quoted today in the New York Times, front page editor Streeter Seidell of highly lucrative site CollegeHumor.com:

[The New York Times] said of us in 2007, “No one can accuse this site of not understanding Web video.” So we sure seem to know what we’re doing, huh?

To be honest, though, we don’t. Nobody in the online content business truly does.

The taste of the Internet user is as idiosyncratic as it is fickle. What is popular and funny one day could be clichéd and boring the next. (“Chuck Norris is so tough” jokes, anyone?) There are certain common traits of viral content that loosely guide our selections — it should be short, easily understood, universal, nostalgic — but for every hit sharing those qualities there are millions of similar failures, not to mention stuff that simply defies explanation.

This uncertainty in the online advertising market might bode well for Yahoo!'s latest positive data that might indicate a strengthening, especially against Google, and thus might increase Yahoo!'s bargaining power against Microsoft's buyout offer. As well, this past week, Yahoo! and Google formed a partnership of sorts around what amounts to Google AdSense ads appearing next to Yahoo! search results.

All of this indicates more and more that while Google, Yahoo!, and possibly Microsoft will continue to dominate online advertising revenues, the advertising pie - a limited pie even in good times - may be shrinking or let us say, not growing, in the next year and perhaps beyond, depending upon economic growth in the US and abroad.

It also indicates that there is no substitute for quality, and while the latest widget might create an online herd sensation and bring in dollars quickly, sustainable models will depend upon sustainable, quality content that is consistently in demand. In the end, the good news for content creators, including writers, artists, designers, musicians, and reporters, is that consistent quality will be rewarded over the long run, albeit, short run groundswells might create short-term profits that are enormous.

Mobile Communication and Developing Countries

Today's Sunday New York Times (April 13, 2008) featured a piece in the NYTimes Magazine on the role that mobile communications - cell phones in particular - play in the developing world. The story focused on the efforts of Nokia 'ethnographer' Jan Chipchase (UK citizen) who travels the world to observe and record the peculiar uses of cell phones in developing countries - from Ghana, to Uzbekistan to Tajikistan and parts of Central and South America. Reports the Times:

"Several companies, including Intel, Motorola and Microsoft, employ trained anthropologists to study potential customers, while Nokia’s researchers, including Chipchase, more often have degrees in design. Rather than sending someone like Chipchase to Vietnam or India as an emissary for the company — loaded with products and pitch lines, as a marketer might be — the idea is to reverse it, to have Chipchase, a patently good listener, act as an emissary for people like the barber or the shoe-shop owner’s wife, enlightening the company through written reports and PowerPoint presentations on how they live and what they’re likely to need from a cellphone, allowing that to inform its design."

Clearly the 3.3 billion cell phone users worldwide and growing - faster than the growth of Internet subscribers - is testimony to demand by people all across the world, including developing countries where annual incomes are as low as $300 per year. Whatever the arguments may be about the metrics of comparisons between such annual incomes in developing versus developed countries, the fact remains that even in lower income economies, cell phones and voice communications appears to have a substantial value associated with it. One such value is theorized to be a kind 'just in time' transactions economy.

This 'just in time' economy manifests in a number of ways. One is the Grameen Phone model whereby a $150 phone 'kit' sold to primarily women, were then turned into a phone service for lease by the surrounding community whereby the women would quickly recoup their microloans used to finance the operations. Michael Mace, blogger on mobile phones, calls this 'spontaneous society' and makes a case for this growth based on the more 'realtime' centric societies.

Another example of a 'just in time' practice enabled by the cell phone is the idea of micro payments using the telephone as 'wallet.' This can involve a small purchase, or the payment of a debt. But the phone plays a critical role in such 'online' banking, and the article points out that estimates are generally high for growth in this area especially since 'latent demand' in rural parts of the world - including Africa - for banking services are so high, we will likely see a further rapid expansion of mobile phone purchases as this deman gets filled by users who want more than a leased line.

It is this 'just in time' thinking that will likely transform the developed world as well. Whether it is the kind of transportation system that depends on mobile communication verification of user credentials to 'ride share' or use a particular public transportation system; or the growth of mobile-based banking; it is clear that transactions will likely play a key role in mobile communications everywhere. What is not so clear is the separation between advertising-based models and membership/subscription based business models. If the Web of today (2008) is an indicator, then advertising would appear to be the safer bet. Yet, given the transactions-oriented use of 'just in time' mobile economics, it is not entirely clear that the advertising model will dominate mobile phone communications. Rather, it may be secure, branded, 'trust based,' subscription services.

Big Seven Mobile Broadband Developments in the Next Five Years

Some of these already exist in some fashion or other; but usually not in a wider sense whereby there's a critical mass or a price point that makes this feasible. Here are my top picks for broadband mobile possibilities in the next five years:

1. Bluetooth 'smart' keyboard for an iPhone-like device. 'Smart' here means that the keyboard is big enough for clunky hands like mine, but maps back to a screen shot that highlights the relevant activity -- such as typing letters and words, or browsing with a mouse, etc.

2. Wimax or LTE and/or 700 MHz and/or broadcasters 'digital spectrum' networks that build on the existing Wifi infrastructure such that 'campus' environments are broadband wireless areas outside and indoors; and connected to larger urban and regional 'meshes.' Key interoperability agreements amongst the big telecom wireless providers (Verizon, AT&T, Sprint, T-Mobile) and wireline broadband providers - Time Warner, TCI, Comcast, Cox, Verizon (wireline), AT&T Cable, and others; leads to an acceleration of device innovation coupled with software apps on standard and stable mobile platforms. (I know, dream on).

3. Rapid advancements in security and identity management for major efficiency applications for mobile-based transactions. For example, 'shopping' in advance using a browser; and then picking up the groceries or other items in a drive through that avoids long lines and the items are pre-packaged for pick up.

4. Again, security and identity management advancements enable secure medical records for patient access and increasingly self management of these records for greater efficiency, reliability, and opening up new choices for patients who can seek feedback based on 'digital examinations' of records. In the longer run, mobile devices may be able to offer greater patient monitoring and sometimes diagnosis. But for immediate economic gains for all, the key is to tie identity management with standardized patient records. This creates new efficiencies for the industry and new opportunities for patients.

5. Municipal and informal transportation ride services. From GPS and real-time updates of a specific bus, train, plane, or related car for reliable and efficient travel that avoids driving; to mobile networks that are based and trusted verification processes and that allow travelers to 'hitch' a ride to virtually anywhere at nearly anytime with someone in the network based on some type of 'credits' or even monetary transfers. Additionally, it would be wonderful to see mobile communications provide daily biking commutes across cities whereby GPS and real-time prompts create efficient 'mass' rides -- efficient in that vehicular traffic is minimally disrupted and bikers are much safer riding as a 'mass.'

6. Reliable and standardized institutional and inter-institutional calendaring from mobile to Web to print.

7. Advanced voice recognition for voice and video, Web transactions, and for retrieving data.

I'm sure there's more ... but I guess those are my big seven broadband mobile wishes in the next five years.