Report: Google’s Mobile Strategy

1Executive Summary

Mobile communication is one of the most complex engineered systems imaginable, encompassing hardware, software, networks, services, applications, app stores and other pieces, all of which must be carefully integrated and managed to work as expected. Given all the interdependencies, user experience is often determined by the weakest link in the chain. Over the last 2-3 years, advances in key links — network speed, UIs (user interfaces), devices, and applications — have improved significantly, fueling a “virtuous spiral” and unleashing pent-up demand among users.

Despite these advances, operators continue to control much of the mobile value chain.  As observed in other industries, incumbents’ efforts to maintain their position and maximize ROI have slowed innovation.  As a result, while the industry is on the cusp of new and exciting developments, mobile is still in its infancy, not unlike television in the ’50, before color sets, cable, satellite and DVRs appeared and transformed the media landscape. Our view is backed by a recent widely publicized study that likened mobile — in terms of usability and user experience (UE) — to the Internet circa 1994. More evidence supporting this view is presented in a subsequent section.

Many individuals outside the industry also believe mobile is ripe for innovation. As Eric Schmidt, Chairman and CEO of Google, said in 2007, “Consumers deserve more competition and innovation than they have in today’s wireless world.”

We believe that Google, along with other companies challenging the status quo, will shift the S-curve of innovation and adoption forward, enabling advances to happen sooner, faster and on a wider scale than would otherwise occur. By definition, disruptive innovations are usually at odds with incumbents’ interests. As a result, the legacy mobile business as it exists today is likely to be transformed significantly. Building on the earlier GigaOM Pro research note, “Will Google Lead the Way in Mobile App Innovation?” this research note describes elements of Google’s current mobile strategy and outlines areas where Google is likely to focus in the future.

Relevant Analyst

Phil Hendrix

Founder and Director Institute for Mobile Markets Research

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