Android has quickly become a force to be reckoned with in mobile, as anyone following Mobile World Congress in Barcelona this week can tell you. Google has recognized that the future growth engine of the Internet is the mobile web — and the ad revenues that it generates — and it’s effectively laying the foundation for those revenues with the growth of its mobile operating system. And that’s making carriers very nervous.
Android was designed as a tool to make the mobile web accessible and enable Google to take its search and advertising business to the wireless world. And the platform continues to gain traction at an impressive clip. AdMarvel this morning became the latest mobile ad business to join the Android bandwagon, unveiling a toolkit at MWC designed to help developers deliver ads through their mobile applications. The new Opera Software subsidiary joins fellow mobile ad firm Smaato, which last week announced support for Android, as well as Greystripe, AdMob and a host of other competitors looking for a piece of the Android advertising pie.
That pie is getting bigger very quickly: AdMob recently said ad requests from Android devices had doubled in just two months, while Smaato reported Android’s clickthrough rates surpassed those of the iPhone in January. ComScore echoes those findings, indicating Android’s smartphone market share more than doubled from the third quarter of 2009 to the fourth quarter of last year. Those figures will surely increase, too, thanks to the fact that Android is now shipping on 60,000 handsets a day, as Google CEO Eric Schmidt noted in his keynote speech yesterday in Barcelona.
That remarkable traction has spooked network operators, which fear Google may already control too much of the mobile advertising market. Vodafone CEO Vittorio Colao yesterday told MWC attendees that regulators must intervene and boost competition “before it’s too late,” claiming Google holds up to 80 percent of the mobile search and advertising market in Europe. Colao’s comments came a week after Telefonica Chairman Cesar Alierta said the telco might charge search engines for network use, citing the dominance of Google and other prominent web sites.
Those fears are justified in light of a report released yesterday by iSuppli. The market research firm said Google may actually reshape the industry, replacing calling plans with ad revenues as the foundation of the business.
“While all the facets of this multipronged strategy will not be successful, it is clear that Google is pushing toward the strategy of monetizing mobile search by leveraging its leadership in Internet search with relevant location-based services and mobile advertising,” Dr. Jagdish Rebello of iSuppli said in a prepared statement. “iSuppli believes that if the company executes this strategy correctly — by working with and not against the rest of the mobile value chain — the wireless industry will be well positioned to unlock the next trillion dollars of value by the end of this decade.”
That would be a huge win for all sorts of players in the value chain, from handset manufacturers to app developers to major media brands. But it might leave carriers on the outside looking in.
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