Why Mobile Matters to Google

New Citi report out from analyst Mark Mahaney explaining why mobile matters to Google (GOOG). Pace some points I made on CNBC this morning, Mark argues alongside me that Google's spectrum bid makes sense, even if it doesn't really want the spectrum itself. It is a useful club to drive some wireless company behaviors, like Verizon's (VZ) recent (maybe) opening up.

At the same time, Mark does a nice job of diving under the rhetoric and coming up with some useful models (with explicit assumptions) about what the impact will be on Google's P&L over the next few years.

For what it's worth, I think the mobile ad market revenues will be larger than Mark thinks by 2010, but that is more of a quibble. Directionally, he gets to some interesting places and puts that wireless spectrum auction in proper context -- far from a wild duck foray, it's exactly what Google should be doing right now.

Comments

[omodes123]

It is clear that the wireless market will be much bigger than these assumptions. And exactly how does the 15% cannibalization figure come about? Google's presence is virtually non existent in this market right now. If nothing pans out they could minimally lease spectrum. I would like to see google build a relationship with Sprint which reinvents that company as a wireless data provider. It seems like sprint has been sort of going in this direction with WiMax clouds and G4 networks anyway. I would like to be able to purchase a phone with a separate voice channel and data channels so I could choose the best data network versus the best voice network as separate plans and not the all in one bundle. Personally, that's where I think things will be going.