Google Eyes Mobile as the Key to 2011

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Google is driven by search and has dreams of driverless cars, fiber to the home networks and other innovations. But the company believes this year’s immediate strategic initiatives are all about mobile, according to CEO Eric Schmidt. Writing in Harvard Business Review, Schmidt said 2011 comes down to three priorities for Google: developing fast wireless networks, building up mobile payments and increasing the number of inexpensive smartphones around the world.

These initiatives by themselves aren’t surprising if you’ve been following along. But with Schmidt explicitly saying these are the main priorities for Google this year, it puts its various mobile efforts in better context. And it shows how much Google plans on competing in the coming years in mobile.

  • Schmidt says Google needs to focus on developing fast networks like LTE, which are capable of 8-10 megabits per second download speeds, a 10x leap over 3G.  He said the boost in speed will usher in new applications, mostly entertainment and social. It’s unclear if Google actually plans on helping build out 4G networks or is just trying to encourage their development.
  • A second priority is mobile payments, which Google has pushed lately with the addition of NFC support in the latest version of Android. Google is also looking at building its own mobile payments system, something we’re likely to hear more about this year.
  • Third, Google is looking at increasing the availability of inexpensive smartphones around the world. As we’ve noted before, Google has a big opportunity as Android moves down market in less-developed countries. With component prices coming down and manufacturers building cheaper Android phones, this will be a big play for Google.

Google has already seen a lot of success with its mobile efforts. Android is outpacing its rivals in sales, and is poised to be the top smartphone platform. But it’s clear Google isn’t just looking to sell more phones; the company sees it can make money through mobile payments, faster mobile searches and applications. Payments, in particular, could be a huge business for Google if it can position itself as a dominant player.

The emphasis on mobile also offers a hint as to why Google was anxious to get a deal on network neutrality done. With so much riding on mobile, Google was probably eager to compromise on the issue, which deals with how operators can discriminate on traffic moving across their networks, in order to get some rules in place before it waded too deeply into the mobile market where the rules were non-existent.

Google is still primarily a search business with mobile a small but significant fraction of the pie. But as Schmidt has said before, mobile holds a huge promise for Google. “If we have a billion people using Android, you think we can’t make money from that?” asked Schmidt last year. It appears Google is anxious to find out.

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