September 12, 2006 4:00 AM PDT
Search comes to mobile phones
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As mobile search technology evolves, both the operators and established search companies like Google and Yahoo realize there is potential in paid search for mobile phones. Google is already testing ads on its mobile search interfaces in the U.S., U.K., Germany and Japan.
Some carriers have struck deals with Google and Yahoo to provide search tools. Google has deals with Vodafone and T-Mobile. Yahoo has also struck a deal with Orange and last week announced that its mobile search engine will be embedded in some new Nokia handsets.
But rumors have been circulating recently that Vodafone may be looking to get out of its deal with Google, which was announced at the European tradeshow 3GSM in Barcelona, Spain, in February. Some reports indicate that Google is getting half of the revenue from keyword searches and at least some of the associated advertising revenue generated. Vodafone fears that its cut of the revenue stream could be cut even further as Google introduced advertising-based search. Google has denied these rumors.
Whether the rumors are true or not, they highlight a serious problem for mobile search. Carriers who choose to go with a branded search service like Google risk losing control of the advertising revenue that comes from the search applications. They also risk diluting their own brand by using a search tool that is powered by the search brand. This is one reason why mobile operators in the U.S. have often opted to build their own search tools with the help of less-well-known companies dedicated to mobile search.
"In America, carriers want their brand on everything," McCabe said. "They want to control the revenue and that's why many have gone with 'white label' solutions."
In the white-label approach, operators put their own brand on the search tool. This way they can own the customer and provide more personalized search results. Alltel, the largest regional mobile operator in the U.S., said Tuesday it will use technology from JumpTap to build its own mobile search tool. Alltel is the first carrier JumpTap has announced. McCabe said JumpTap has also signed up two Canadian carriers, a top U.S. operator, and one mobile virtual network operator, or MVNO.
Creating their own search tools also means carriers can use customer data that they've already collected to fine-tune the searches and provide users with more useful links, McCabe said. Google and Yahoo use algorithms that do not use this personalized information.
On the other hand, search tools from Google or Yahoo may give subscribers a wider array of search results. If carriers control the search tool, they may steer subscribers onto their own sites in search results.
"The problem with operators controlling search is they might not offer the results that subscribers really want," said Ray Anderson, CEO of Bango, a company that helps content owners generate revenue.
Regardless of whether carriers develop their own search tools or partner with a well-known search company, most experts agree that search will become crucial in growing the use of the mobile Internet and spur much more e-commerce activity from mobile phones.
"The more things people are able to do with their mobile phones, the more indispensable they will become," Gillott said. "Today people select a service provider based on coverage, price and customer service. But once those things are all equal, search could become a differentiator."
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