Google’s Britches Getting Bigger

There is an undoubtedly heated debate going on that pits the iPhone 3G – current king of the mobile mountain, with Android- the Search Engine in Shining Armour. But this public battle royale is taking place mostly amongst onlookers and analysts – not amongst the companies themselves.

HTC has announced their Touch Diamond phone which is a full touch screen phone worthy of much praise. Most people would expect it to go head to head with the iPhone in terms of product offering and target audience. Want to know what HTC thinks?

The iPhone 3G will have a “limited impact” on sales of the Diamond according to HTC CEO Peter Chou. Not only that, but IntoMobile reports that he said he welcomes the competition and that there is room for everyone. Does Google feel the same way?

Google CEO Eric Schmidt spoke at a Syracuse University Newhouse School event in San Francisco saying, “Both Apple and Google believe that the mobile space is going to be very large.” All this sounds like ho-hum public relations talk so far, doesn’t it? Not so fast.

The Sydney Morning Herald says Schmidt reiterated an extremely important point: “his belief that advertising on mobile devices eventually will emerge as Google’s biggest source of profits.” Seeing as how Google’s total revenue last year was $16.6 Billion, we’d say the future of mobile looks pretty promising.

You can be sure that behind closed doors, the competition in the mobile space isn’t as friendly and unassuming as Peter Chou and Eric Schmidt make it seem on the surface. It’s fierce. It’s nasty. It’s bitter. As the gravitational force of the newly emerging mobile industry changes the long-term orbits are being put into place NOW. The battle for the “biggest source of profits,” that will be earned a decade from now are taking place today.

So yeah, on the surface, these officials can say whatever they want. But each company is a shaking bottle that could burst at any time. Isn’t the battle over this market share and revenue the reason Google and Verizon are in a tiff?

Things get a little trickier with the Android vs. iPhone relationship since Google CEO Eric Schmidt has been on the Apple Board of Directors since 2006. He has publicly stated that only a couple times has he had to excuse himself from Board Meetings in order to protect the proprietary knowledge and strategy for Apple’s iPhone. What did you expect him to say? It would be no surprise if he resigned that position due to an overwhelming conflict of interest that he is grossly understating.

It’s funny how things change – isn’t it? We’re talking about the 2 trailblazers of the mobile industry – Google and Apple. The iPhone has only existed for 1 year and Android is, in reality, still just a concept. Reading the following sentence on Google’s Corporate Site is somewhat… eerie: “In September 1998, Google Inc. opened its door in Menlo Park, California.”

That’s right – Google isn’t even a decade old. It wasn’t long ago that Google did search and only search. They have expanded into an unbelievable amount of parallel markets… mobile simply happens to be the one with the most potential.

And while they move into mobile, the industry that is expected to provide them with more revenue than any other in years to come, they’re gaining an ever increasing market dominance in the business Google was founded on: Search.

For months, publicly reported negotiations between Yahoo! and Microsoft pointed to the seemingly inevitable result of Microsoft swallowing Yahoo whole. That is, until Yahoo officials tried to pull off the bad beat of the year, asking Microsoft to push more money into the pot while they were only holding a 2-7 off-suit.

If you have no idea what we’re talking about, read this letter from Carl Icahn (top investor in Yahoo) to Yahoo Chairman Roy Bostock, heavily criticizing Yahoo’s missteps and proposing an alternate board to take control of Yahoo’s sale to Microsoft.

Google watched from the sideline, voicing their displeasure by saying the anti-trust issues with Microsoft acquiring Yahoo would be enormous. Now ANY deal between Yahoo and Microsoft seems to be completely dead, prominent Yahoo execs are dropping like flies and the share price is running downstairs. It appears that Google will try to court Yahoo instead.

Googlehoo anybody? Yoogle? Oodles of Yoogles?

The chances of Google buying out Yahoo are slim to none. Google has been openly against the whole “anti-trust” issues and Eric Schmidt himself as said any partnership would be structured so that anti-trust issues do not exist.

When asked about a Microsoft/Yahoo deal, Schmidt said, “We think an independent Yahoo is better for competition, for innovation and so forth.” You mean Independent as in… only dependent on Google?

Google could end up running many of Yahoos search functions, including using their own technology to serve Yahoo Search Marketing ads which have been nothing short of a disaster compared to the Google Adwords program. And while online revenues surge, traditional newspaper revenues are plummeting. Yet another void Google hopes to fill.

Schmidt says that assisting these newspapers in staying afloat and rebuilding their revenue streams is, “a moral imperative.” Google’s $3.1 Billion Dollar purchase of Double Click earlier this year will likely be the focus, helping Google to maximize revenue for online versions of traditional newspapers.

It seems like Google is putting their hand in every cookie jar possible and stirring up the structure of industry fixtures at every point along the way. But Google’s goal isn’t to “stir things up.” Heck, their goal isn’t even to dominate the mobile market or search market.

Eric Schmidt’s explanation of Google’s company goal might put things into a little better perspective: “The goal of the company is not to monetize everything; the goal of the company is to change the world,” and monetization is just, “a way to pay for that.”

Perhaps that’s why the first Android phone will be called the Dream?

Regardless, its clear as I’ve stated again and again and again, that Google has been successful by putting the needs and desires of its users and customers first. They create great products that customers love and find out how to best monetize them afterwards. Right now, for example, Google is losing money by operating YouTube.

The goal of “changing the world,” is a lofty one. It sounds too touchy feely to be true. But the fact remains: Google is willing to LOSE money to make a BETTER product. They’ll figure out how to make money from it later. This echoes what Eric Chu told me when stating, “There is no monetization strategy for Android.”

Whether or not you think Android will succeed or fail, you have to at least appreciate the vision. You have to respect the fact that Google is willing to lose money on Android in the hope of transforming the industry for the greater good. And if you want, you can believe that P.O.V. is a load of bull dung in the same vein as HTC saying they will be “unaffected” by iPhone 3G sales.

Google is changing the world… one industry at a time. But lets hope their downfall isn’t trying to change too many industries at one time.