Google the leading company for search advertising online is purchasing AdMob, one of the leading mobile advertising networks for $750 Million.  Google had previously entered the mobile advertising space with the acquisition of DoubleClick in 2007, but had not gained a majority share in the display portion of mobile advertising.  Google also did not differentiate between serving ads on a mobile phone vs. selling ads on the internet.

 The purchase of AdMob gives Google a good position in the mobile display ad market for web sites and mobile applications. It also allows them to target mobile phone users based on content, geography, wireless operator, and type of handset.  The acquisition shows that Google has come to the conclusion that mobile is a subset of the internet that must be treated by its own inherent characteristics, like small screen size, location capable (in some and a growing number of cases), type of handset, and advertising at any time.

AdMob was a leader in the mobile advertising space and has a strong geographic reach to many parts of the world including places like India, South Africa, and Eastern Europe as well as a strong presence in the developed countries like the US.  The purchase was made at a good time when the market was relatively small to avoid possible anti trust restrictions.

 The price of $750 Million was high considering the current revenue generated in the mobile advertising business and estimated revenues of AdMob. But the cost is small if it gives Google a strong position in the future mobile advertising business. We estimate the worldwide mobile advertising business to be $13.5 Billion in 2013. This is primarily driven by the increase in smart phones and data plans.

 For more information on mobile advertising please view the following report:

 http://www.gartner.com/DisplayDocument?doc_cd=169243

 Smartphone continue to gain traction

 The importance of smart phones and OS loomed large as Verizon announced a deal with Google to use Android phones as part of Verizon’s handset portfolio.  The lack of an iPhone and the need for a highly consumer friendly phone with a strong applications portfolio was probably the main motivation. The fact that Verizon will have some control over the look and feel of the phone UI was also a plus for them. Features like having the main app store being the Verizon applications store as an example. The deal also offers another strong option outside of Blackberry for smart phones.  Samsung also announced an Android phone called Moment.

 For more information on smartphone trends see:

 http://www.gartner.com/DisplayDocument?doc_cd=171459

 Carriers focus on wireless data

 There is growing trends of carriers offering applications stores and full service browsers to compete with smart phones.  In the applications store front and application develop platform area there are a number of companies talked about their solution including Qualcomm with Plaza, Open Market, and Zed with MPC (Mobile Content Platform). Each of these companies comes from a different angle.  Qualcomm with BREW had developed a fairly closed ecosystem with a complete storefront, applications development program and carrier billing integration, and is expanding this with Plaza for more OSs. Open Market comes from the billing integration angle and Zed comes from the content delivery angle.

 Opera was showing off its tiles web browsing UI and talking about its deal with AT&T. The general gist of the conversation was that carriers are looking for fully functional browsers to compete with smart phone browsers, and they need this capability to get additional wireless data subscribers as expectations have been raised.

 Funmail is offering a service that allows you have MMS type capabilities with SMS. These pictures with a message can be easily sent to Facebook and to Twitter. It can be advertising based or sold on a monthly subscription.  This seem to be appealing to the express yourself generation of younger people. The MMS functionality off of an SMS message will make it more usable.

 Application News

 Apple announced that they were going to allow Skype on the iPhone. This will probably have limited impact on voice usage as it will be used primarily by Skype fans, which already are forced to purchase voice minutes with the iPhone contract.  In addition the AT&T voice network is likely to work better than Skype on the AT&T data network.  As the wireless data networks get more robust, and this service is offered on more smartphones it will begin to have an effect.

 Sidebar showed an interesting applications platform where the user has content that match his profile pushed to him and also receive alerts that this content has arrived. This is being done on the Andriod phone but not on the iPhone, where you must call up the applications to get the data downloaded.  It has some interesting implications for content delivery, profile advertising, and m-commerce targeting. 

 For more information on top applications see:

 http://www.gartner.com/DisplayDocument?doc_cd=171017

 Other Devices

 FLO TV showed off its new FLO TV Set which will be out at Christmas and selling for $249.99 with TV service at $8.99 a month. The viewer can watch from 15 to 18 channels. The TV has a good picture, performs well, and is priced right but it needs something more to make it very attractive like DVR capability where you can also watch your favorite recorded movie or show and must see sports content like local sports.

 Nokia had a nice looking Netbook which it plans to put on sale this Fall/Winter in Best Buy. AT&T announced it will be selling this Netbook with a contract for $299.

 Also in the alternative device category is wireless digital picture frames, where a price is charged for the number of picture downloads. This is expected this Christmas season.

Skype is good for primarily making international calling and in toll call areas around the world. But the minutes of paid traffic it gets is a drop in the bucket in terms of total worldwide paid traffic. Skype’s free PC to PC traffic estimated to be 8 to 10 times its paid traffic is still niche compared to worldwide voice traffic. This business will grow and be profitable but not enough to warrant the investment.

The investors are looking toward the future and the future is in smart phones or what a smart phone is namely a mini computer.  Voice as always worked best on a phone and especially a phone you can carry around and Skype for the most part has not been able to capitalize on this capability.  What the investors and eBay need now is the opportunity to work with more rouge carriers like “3” which adds Skype to their service offering or have carriers rollout 4G networks which will allows VoIP traffic due to lower latency.  The first opportunity is more immediate but harder to accomplish due to carriers revenue interests. The second opportunity will require patients but maybe worth waiting for as it can provide a voice service that people are willing to pay for and which is below what the carriers are charging for voice and there is an opportunity to offer messaging as well with a built in contact list.

For more thoughts on Mobile VoIP please link to:

http://www.gartner.com/DisplayDocument?doc_cd=166429

3 UK wants subscribers to use their service for voice, text and data and are willing to forego the cost of Skype calls, because they will make it up with other services.

3 UK also know this will be a differentiator because the other operators do not want to offer Skype.

Offering this service can be thought is a similar fashion to in network mobile to mobile calling in the US. Carriers are willing to incur the network cost it creates loyalty. A plus for 3 UK is that Skype takes care of the final leg with a call connection.

Overall this is semi impactful and mostly related to heavy users of Skype. This incident will not become a force until most of the operators adopt the Skype service. But it is a good way for 3 UK to get some noise in the market especially in a poor economy.

For more information on the future of Mobile VoIP and 3^rd Party providers please reference:

Emerging Technology Analysis: Mobile Portal VoIP, Global Consumer Communications Services. By Tole Hart and Akshay Sharma ID: G00166429

There is a strong push by the operators to offer qwerty keypad or touch screen phones to all segments of the market in order to sell data plans.

Carriers are also looking to develop and foster their own applications stores, and sell feature phones which give customers many of the service that can be offered on smartphones like social communities.

There is a strong carrier push behind netbooks as per AT&T recent bundling plan annoucement and we expect to see more news in this area.

There is a growing battle around the address book and a number of companies are offering their own services or white labeling carriers services.  In many of these services the address book is linked to social networking sites, instant messaging, email, and Twitter and provide activity status. The companies battling in this space that were talking about it at the show include. Nokia (Ovi), Yahoo, Apple, Good, and Miyowa.

FLO TV, formally Media FLO, is still in the process of building out market presence by increasing the number of markets served and increasing the number of handsets with its capabilities.

Skype introduced its VoIP service via WiFi on the iPhone but it still lacks access via the wide area network via most handsets which will limit its overall adoption on a mobile phone.

Neustar introduced the concept of universal barcodes. Currently there are at least 5 major 2D barcode manufacturers in the world which require different software to read.  This has added some confusion from brands who are looking to use this technology to interface with customers. Neustar’s plan is to allow one software to read all of the 1D and 2D barcodes and to allow 1D barcodes to be read as if they are 2D barcodes. This technology has the potential to be a key customer interface technology via the mobile phone.

The Nokia N97 had a sleek form factor and screen which stayed upright as the user types on the keypad. It also allowed for many of the smartphone features that customers are looking for like, email, mobile communities, instant messaging, games and applications from the Ovi Store.

There was some interest in mobile books via smartphones by a company called Shortcovers. Books can be downloaded to the iPhone, iTouch, Blackberry and Andriod devices.

Lastly, LogMeIn, leaders in remote access to PCs, now allows access to your PC via an iPhone.

There are a number of reasons why Amazon wants to do this. It most likely gets an additional channel subsidy for offer this phone as T-Mobile is gaining a highly valued voice and data subscriber, also the G1 services has a direct widget to sell Amazon MP3 which Amazon wants to promote, and it wants to promote the overall use of the internet on a mobile phone which will be beneficial to the company.

T-Mobile is willing to sell the phone at the lower price because it wants to add high value customers in the face of recession as well as competitive products like the iPhone and Palm Pre (which is coming out later this year).

What this does for the market is to provide a highly functional smart phone in the market at a consumer friendly price. The pricing of unlimited wireless data at $24.99 a month which is high for the average user and a more user friendly unlimited data pricing will be the next step to drive this market like per day or advertising sponsored pricing.