Google's (GOOG) opening salvo in the battle to dominate mobile connectivity--hinging on its control of user data across its own ecosystem and the branded sites of marketers--highlights the tradeoff between user privacy and information. And it will be the catalyst for a new wave of revenue streams and business models that will fortify the global economy.
Google will have immediate and far reaching impact as it leverages its data across its own Gmail, services like YouTube and Android-based mobile devices.
With all the fuss over Facebook's imminent $75 billion-plus public filing, new features, such as Timeline, are being grossly underestimated as unique platforms for reinventing interactive advertising and social media services through the magic of collecting and using user profile data. Even newer Google platforms and features, such as Google Wallet, Google+ and Google Buzz ,are already entrenched enough to be triggering new forms of commerce.
While federal regulators and other adversaries see only privacy and competitive practice concerns, smart players will respond to the new order of business. Rule No. 1: it is acceptable to track and metrics on user behaviors and preferences if they can expect relevancy in return.
Google's argument -- that it can accurately identified and cater to individual interests and needs by assembling and mining more user information -- is not just posturing. With virtual sharing and convenience cornerstones of the digital world, more time and energy may actually be spent exploiting rather than fighting access to user behaviors. But the process surely will be facilitated most by Google's ubiquitous reach and consumers' love affair with mobile devices.
For instance, the explosion of tablets, smart phones and other connected devices, which are lightning rods for Google Wallet, will help to transform online advertising into a measurable response between consumers and companies. Quite simply, these options thrive because enough connected consumers want them.
Tablets will accelerate Google dominated mobile search and e-commerce trends, such as mobile couponing, online retail, voice search and the consolidation of the morphed local deals industry that includes Google Deals. Efficient Frontier indicates that 77% of mobile retail traffic comes from tables and conversion is three times higher on a tablet than on a smart phone.
A new Pew report said the share of U.S. adults owning tablet computers as well as e-book readers doubled over the holiday season to 19%. The number of Americans of any age owning at least one of these devices jumped to 29% from 18%. As prices decline and functionality and compactness of devices improve, adoption rates accelerate.
JP Morgan forecasts the global tablet market will grow 55% to 99.3 million units in 2012 and grow 33.5% to 132.6 million units in 2013. While Apple's (AAPL) iPad remains the clear leader in this space, Amazon's Kindle Fire can be a credible No. 2 player, given its low price point and tie-in to the Amazon ecosystem.
The same interrelated dynamics will also work for Google as it launches its own branded device as its Android platform reaches critical mass. Accelerated adoption of all mobile devices will drive online advertising growth through use of apps, SMS and other mobile platforms -- all of which inevitably lead to Google.
Although the entire Internet sector benefits from the rapid adoption of tablets, Google will see the biggest gains with 90% share of mobile search. JP Morgan estimates Google's 2011 mobile gross revenues were $2.3 billion, up 163% over the prior years and accounting for 6% of Google's total gross revenues. Google is expected to exceed 90% mobile growth this year to nearly 10% of its total gross revenues.
Consolidating and leveraging user information will give the dominant search engine an even more decisive edge over competitors . It becomes a one-stop-shop for target marketers and content providers. According to a recent Yankee Group survey, 39% of consumers' smart phones are Android based, or double that of every competitor except for iOS.
Pushing out relevant ads and information to individual consumers based on word triggers from their searches and even social media or email exchanges might be a little alarming, conceptually. But the practice has been going on for some time, and consumers never complain when they are getting more of what they seek.
The advent of Google TV this year imbedded into popular television consoles will bridge the gap between mobile and in-home use of electronics, and provide a ubiquitous interface for sharing and accessing content and communications. This development will spill over into every facet of digital experience, accelerating transactions as revenue-generating extension of every business.
The value creation will be enormous.
Yuri Milner, co-founder of the mail.ru group and a major investor in Facebook, Zynga (ZNGA), Twitter and other Internet companies, told Andrew Ross Sorkin on CNBC from the World Economic Forum that he predicts over the next decade, 25 companies each with a $25 billion market cap and 50 companies each with a $10 billion market cap will emerge in the connected consumer Internet space. And when they do, we'll be wondering about what all the fuss was over Google.