Google has been the market share leader in the search space for as long as anyone can really remember. But with the surge in smartphone usage, Google is being forced to rethink its business model to align with the attitudes and behaviors of people who use mobile phones.
To add fuel to the fire, Google is now facing increasing risk from strong competitors in the digital space; most importantly, Apple.
In perhaps an attempt to combat this threat, Google launched the Android operating system (OS) a couple of years ago, but has recently updated it to version 2.1 and wrapped it in a compelling smartphone package. Nexus One, launched in January 2010, is Google’s first foray into the smartphone market, and according to Wired, it’s a pretty strong entry.
In fact, less than one year ago, Gartner made a prediction that the Android OS will overtake Apple in just two years. Gartner is forecasting that the Android will achieve the number two position, along with 14 percent market share, by 2012. As per Ken Dulaney, in an interview with Computerworld: “The Gartner forecast gives Android such an enormous surge in popularity because of a variety of factors, but chiefly because of Google Inc.’s backing of Android and the range of cloud computing functions and related applications that Google will make available in coming years.”
This prediction has got to be an ominous one for the folks at Apple. It might have helped spur Apple’s entry into more of Google’s territory – mobile advertising, that is.
Although mobile advertising still has yet to truly take off, Google has held the lion’s share of whatever revenue there is through its mobile AdWords offering. But all of that could potentially be at risk with Apple’s introduction of iAd.
Through the acquisition of Quattro Wireless, Apple significantly upped its capabilities in the mobile advertising space, enabling it to launch its own mobile ad platform.
Apple’s platform focuses on interactive, dynamic advertising within apps, which contrasts greatly to the mainly text versions that are a mainstay of Google’s offerings. In fact, Apple CEO Steve Jobs contends that consumers will not get data from their mobile browser anymore; they are going to use their apps to get on-demand data. Hence, Apple’s emphasis on in-app advertising.
In an article by TechCrunch, Leena Rao notes that “Jobs is essentially saying that search is irrelevant on mobile devices, which seems to go against Google strategy with its Android platform.”
That said, Apple doesn’t appear to be completely walking away from mobile search. There has been speculation that it will replace the search engine on its phones with Bing. In fact, iPhone users may have noticed that the search button in the iPhone browser has already been replaced with “Search” versus “Google.”
In the mobile advertising space, Google is fighting back with its (pending FTC approval) purchase of AdMob, a leading mobile advertising network that Apple was actually trying to purchase a while back.
These are just a few examples of the ways that these two digital giants are going head-to-head. A fantastic article by BusinessWeek, “Apple vs. Google” takes a more in-depth look at Apple and Google’s rivalry, providing more context and detail around some of these issues.
This column originally ran on April 26, 2010 on ClickZ.
Every year, Google's well-oiled digital ad machine generates tens of billions of dollars in revenue, making the search giant the biggest single recipient of digital ad spend.
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