Google shares break US$700 on reports of wireless talks

Google's stock topped US$700 for the first time on Wednesday, as reports about its mobile software plans heated up.

Google's stock broke through the US$700 mark on Wednesday, after press reports that the search engine giant is in advanced talks with US wireless carriers over adoption of mobile phone software Google is reportedly developing.

On Tuesday evening, Reuters and The Wall Street Journal, quoting anonymous sources, reported that Google and Verizon Wireless are making progress in drafting a mobile partnership.

On Wednesday morning, the Journal expanded its story, reporting that Sprint Nextel is also at the negotiating table with Google.

Earlier on Tuesday, the Journal had reported that Google will soon announce details of its mobile phone platform, which, according to the paper's sources, Google will deliver in mid-2008 and which will allow outside developers to create mobile applications.

At issue is Google's need to make it easier to deliver online services like Web search through cell phones, and, consequently, extend its online ad reach to the mobile market. The market is tiny but is expected to grow quickly in coming years.

Google already provides services for mobile phones via different methods. For example, Google has created mobile versions of some of its Web sites, which can be accessed via mobile browsers. It also has some deals with carriers to integrate Google services into the menu of features these telecom companies offer to their mobile subscribers. Finally, Google has also developed mobile applications that people can manually download to their cell phones.

Rampant rumors and speculation about Google's mobile phone strategy have been around for the past six months or so, and at one point included reports that Google would go as far as make actual handsets, something that it apparently has no plans to do.

The Kelsey Group recently forecast that mobile search and display advertising in the U.S. will hit US$33.2 million this year and grow at a compound annual rate of 112 percent through 2012, when it will total US$1.4 billion.

Kelsey Group also expects the number of mobile Internet users to grow at a 20 percent compound annual clip in the U.S. through 2012, when there will be almost 92 million people going online via their cell phones.

Worldwide, mobile ad spending is expected to reach US$1.5 billion this year and grow to US$11.3 billion by 2011, according to market researcher Informa Telecoms & Media.

Other Internet companies like Yahoo, AOL and Microsoft are also busy retooling their online services and applications so that they can be used on cell phones.

However, these Internet companies are finding that delivering online services and applications via mobile phones isn't as straightforward as doing it via PCs.

In the mobile market, Google, Yahoo, AOL and Microsoft have to play nice with a variety of gatekeepers, like mobile carriers, handset makers, mobile software developers and, last but not least, government regulators like the U.S. Federal Communications Commission, which auctions off wireless spectrum and sets rules for its use.

In July, Google jumped headfirst into a regulatory melee in the U.S. when it very loudly urged the FCC to radically alter the rules of the game in the mobile market.

Google argued in favor of so-called open-access requirements for the winners in an upcoming auction of very valuable wireless spectrum, locking horns along the way with big wireless carriers like its now reported potential partner Verizon.

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Juan Carlos Perez

IDG News Service
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