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   Impact of Google and Yahoo on the mobile phone

   

   Carl Gunell, Jan 12th, 2006 @ 2:21pm

   
   

   The real issue is who will retain the revenues from the sponsored links and who will retain the associated revenues. Thus the impact of Google’s deal with RIM to embed its application or getting Motorola to put a Google button on its devices may not be fully understood. Google makes much of its revenues from sponsored links, and in a world where there are more internet connected mobile phones than internet connected PCs, it is easy to understand why the mobile internet are of extreme importance to both Yahoo and Google. But operators may be much better served by avoiding these relationships. With Google on the phone they are likely to retain 100% of the sponsored link revenues. A share of the sponsored links revenues may be of extreme importance to operators in an environment with declining ARPU. This is particularly true for the developing world where discretional spending is minimal with resulting difficulties to shift spending to services consumed on the mobile phone. Today, in many markets in the world operators are attempting a greater share of the Premium SMS revenues, in some cases up to 70% for a ringtone transaction to grow revenues. Obviously this is making the operators’ PSMS and WAP billing mechanisms too costly and will drive up the price of content and/or hamper user access to compelling content. Perhaps operators may be better suited to join forces with mobile Search and Suggestion engines developed specifically for mobile phones, such as JumpTap, where they can share in the sponsored link revenues and also share in the revenues from any resulting purchases. With both Yahoo and Google offering their own payment mechanisms the end result of adding Google to the mix will keep operators in the value chain, but completely out side the revenue chain (expect data usage)

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