Andrea Bauer

Google Inc. showed off its nearly completed mobile software system to about 3,000 computer programmers Wednesday, hoping to cultivate more services and advertising for people on the go.

Although brief, the demonstration at the Internet search leader's annual developer conference in San Francisco represented the most extensive public look so far at "Android" — an open-source platform being designed for "smart" phones and other mobile devices that surf the Web. Android was first announced nearly seven months ago.

The bells and whistles unveiled Wednesday included: a way to unlock phones by drawing a specific shape on the touchscreen instead of entering a password; bookmarks for favorite Web sites on the device's home page; a "compass" tool that automatically roams with the phone while a user looks at photographic images of a city map; a magnifying tool to zoom in on Web content; and a mobile version of the video game "Pac Man."

The demonstration relied on touchscreen technology similar to Apple Inc.'s iPhone, but Android can also be tailored to work with a tracking ball, said Andy Rubin, who is overseeing the project.

While acknowledging the work on Android is nearly done, Rubin deflected a question about how much longer consumers will have to wait for a phone powered by the new software. Sticking to the timetable Google has used throughout the project, Rubin said Android will hit the market some time during the final six months of this year.

Several handset makers, including Samsung Electronics Co., HTC and LG Electronics Inc., are among the 34 partners that Google has recruited to help launch Android.

Google also hopes programmers will create a wide variety of products that will run on Android. That's one of the reasons the Mountain View-based company chose to flaunt the free software at the developers' conference.

By making it easier and more appealing for people to access the Internet on their cell phones, Google believes it eventually will make more money from the ads it shows next to search results and other Web content. The company also is starting to show more video advertising on its YouTube subsidiary, which already is a staple on the iPhone and received a special button in Wednesday's demonstration of Android.

Google is expected to generate more than $20 billion in advertising revenue this year, but most of that money will come from ads viewed on personal computers.

With about 3 billion mobile phones already on the market, some analysts believe Google could pull in nearly $5 billion annually from the mobile market within five years.

Google is also trying to boost its profits by selling more software services over Internet connections to businesses, universities and government agencies.

The company also wants to make it easier for outside developers to create applications on the Web. Even if those applications aren't on Google's Web site, the company figures it is bound to get more search requests — and more advertising opportunities — if people are doing more things online.

In April, Google handled nearly 62 percent of the search requests in the United States, according to comScore Inc.

Google's success so far is the primary reason Microsoft Corp., the world's largest software maker, spent several months trying to buy Yahoo Inc. before withdrawing its oral offer of $47.5 billion 3 1/2 weeks ago when the two sides couldn't agree on a price.

Microsoft currently is discussing a smaller deal with Yahoo but hasn't ruled out the possibility of renewing its takeover attempt.

To help developers introduce more online products, Google last month began offering free computing power and storage on a limited basis under a service called "App Engine."

Google opened App Engine to all comers Wednesday and disclosed plans to begin offering extra capacity, for a fee, later this year. The service will remain free for up to 500 megabytes of storage and enough computing capacity to support 5 million monthly views of a site's Web pages.

Each additional gigabyte will cost 15 cents to 18 cents per month. Google estimated a user would pay $40 to $50 per month for enough capacity to support up to 10 million page views per month.

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Posted by Mobile Innovation at 12:15 PM | Permalink

According to the latest research on smartphone markets from ABI Research, Nokia has maintained its leadership position with a 56.4% share of the 70.9 million units shipped in 2006. Nokia sold 40 million smartphones in 2006, compared to 28.5 million in 2005. Motorola also had a strong 2006 and occupied the second position with 8.5% market share, driven by the success of its Linux-based devices in China, most notably the MING.

At the same time, Symbian's strong position in the smartphone operating system market is under continued and increasing threat.

According to mobile wireless research analyst Shailendra Pandey, "The key in differentiating smartphone products still lies in the physical design, and the look and feel of the user interface. The right combination of size, form factor, operating system, and bundled applications will determine the success of a smartphone." In addition to the usual features, consumers are now increasingly seeking smartphones that have touch screens, MP3 players, Wi-Fi and/or Bluetooth, fast processors, and lots of memory as well as an expansion card slot.

Posted by Mobile Innovation at 11:44 AM | Permalink | Comments (0) | TrackBacks (0)

Today, Yahoo filed a presentation detailing its three-year financial plan that management gave to its board of directors in December, before Microsoft’s unsolicited bid. These rosy projections should be read in the context of that ongoing battle and Yahoo’s attempt to get a better price out of Microsoft. But this presentation also sheds some light on where exactly Yahoo sees its strengths.

Yahoo is projecting revenues after traffic acquisition costs (TAC)—i.e., what it shares with other Websites that run Yahoo ads—to grow from $5.1 billion in 2007 to $8.8 billion in 2010.

How does it plan to grow revenues by 73 percent over that period? Here are some slides from the presentation (which you can find here at the SEC’s EDGAR Website, or just search for Yahoo).

Yahoo argued to its board that it could exceed Wall Street expectations and accelerate revenue-growth to 25 percent in 2009 and 2010 and increase its operating cash flow from $1.9 billion this year to $3.7 billion in 2010:

Notice that for these projections to come true, Yahoo needs to increase its operating cash flow margins to 42 percent from 33 percent. That seems overly optimistic, especially now that the economic outlook is so uncertain.

To justify its projections, Yahoo is counting on better clickthrough rates on its search, display and video ads.

This next slide captures how that strategy has played out over the past couple years, with initiatives and deals categorized as either helping to build Yahoo’s audience or monetize that audience. (Notice the emphasis on Yahoo Buzz, Open Search, and Mobile—these are the things Yahoo is highlighting as growth drivers to its board. With mobile, in particular it feels like it does not get enough credit, and in another slide it notes that it has more than 600 million mobile subscribers have used its OneSearch product):

It sees its big opportunity in display advertising, where the top 10 players still control less than a quarter of the market and there is a lot of room for ad rates to go up:

At the same time, it believes that it can continue to close the gap on its revenue-per-search, which it estimated to be 60 to 70 percent lower than Google’s at the end of 2007 (so it still has along way to go, see comScore data here on comparable clickthrough rates):

Yahoo’s overall strategy boils down to two things: attract an even bigger audience, and sell that audience to advertisers:

Finally, Yahoo is not timid about investing in the future. It wants to nearly double capital expenditures to $1 billion by 2010, with 70 percent of that going to “innovation and production infrastructure” (not that they have much of a choice there. Google’s CapEx in the fourth quarter—$678 million—was more than Yahoo’s for the entire year):

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Posted by Mobile Innovation at 12:09 PM | Permalink | Comments (0) | TrackBacks (0)