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Mobility, Re-Shaping the World of Search

Mobility, Re-Shaping the World of Search

Changes in Search see Growing Number of Investments Towards Mobile Applications

By Ann-Marie Fleming, www.InternetSearchEngineStocks.com

November 2005

The mobile arena is heating up as a variety of traditional Internet search firms have turned their attention to mobile search applications. As this movement picks up from companies such as Google, Yahoo! and Microsoft, questions still surround feasible revenue models to take advantage of the growing number of mobile users, through innovative search services.

As Robert Enderle, President and Principal Analyst of the Enderle Group explains, "The overall goals of companies in this space differ. Microsoft is primarily a platform company, Yahoo is more of a portal pure-play, and Google, at least for now, is a search pure play. All three companies have search and have major efforts with regard to search, but Google is the only one that only does search at this particular point. However they are expanding to capture a wider array of activity so that you are constantly connecting through them in one way, shape or form to the vendors that they support."

Google, in identifying the mobile arena as a high priority, has launched a variety of mobile initiatives and are currently involved in several beta projects. Deep Nishar, Director of Product Management describes Google's mobile involvement, "A year ago we launched Google SMS Search in the U.S. and the UK which allows users to send in queries using SMS and giving responses back on topics such as weather, movies, directions, stock quotes and other generalized queries. We recently launched the Google Local for mobile application, a downloadable Java application that works on more than 100 phones and is currently available on Cingular and Sprint. The mobile version has the same searches as Google Local on the web, but given that it is an application it provides additional interactivity and features for a more seamless experience."

Microsoft's MSN Search was released in beta this summer for MSN Mobile customers in the U.S. This service allows consumers to benefit from local search, instant answers and other MSN Search capabilities now available via mobile devices, providing them with easy access to precise answers from any location. According to a MSN Spokesperson, "MSN is investing to deliver rich communication experiences for consumers, ultimately bringing our consumers closer to the people and information that matter most - anytime, anywhere."

There are key differences between the ways that companies provide search services on the Internet versus a mobile device. While handsets have come a long way in their level of sophistication the fact remains that screens are small, users are on-the-go and information must be direct. As Jay Smith, Associate Professor, Kagoshima University Inamori Academy of Management & Technology in Japan explains, "The cell phone presents its own challenges due to space constraints. Wading through pages of search results is really not a good option and much of the web, particularly outside Japan, consists of pages that aren't really set up for mobile viewing. That's why services that actually answer questions or provide a service/solution are fundamentally more useful."

Companies such as AskMeNow, a mobile search provider that gives users the ability to ask virtually any question found on the Internet and receive a direct and relevant answer rather than links in return, are focused on the concept of simplicity. Based on the realization that users of handheld devices are more likely drawn to applications that suit the mobile platform in terms of simplicity, suitability and efficiency, the Company believes their direct answer approach appeals to the needs of the mobile user. AskMeNow's CEO, Darryl Cohen explains, "The Internet in its current form is not easy to navigate through on the average phone, therefore the format needs to be adapted for ease of use and access to relevant information. Our application is built around the need for simplicity so that users can get direct answers to their questions. We have created an interface that is incredibly user friendly and together with our back end, allows for the input of questions through either natural voice or free form text."





Answers.com, an answer based search engine that aggregates over 100 different reference sources in order to present answers to users' queries as an alternative to link responses, has extended its web service to the mobile platform with 'Mobile Answers'. "We look at the mobile version of Answers as an extension of our strategy to the handheld market where people need quick access to a lot of information on a topic whether they are visiting a place or trying to find the answer to a question they are discussing over a meal or a business meeting. With Mobile Answers, we are giving quick access to the comprehensive information we provide on over 1 million topics," describes Jeff Cutler, Chief Revenue Officer. Answers Corporation is utilizing their mobile extension to deliver on their mission of providing comprehensive information anytime, on any device and to extend their branding. "It is our hope that people who use Mobile Answers will be that much more inclined to use Answers online," explains Cutler.

Google is also focused on the mobile behavior as a model to shape their services by. "We continue to focus on the best possible user experience in the mobile arena. In the last 12 months we have launched a great deal of products focused on easing the customer's interactions with the mobile device. The goal is to make sure that users get content that is relevant as well as formatted for their devices. We do things such as taking sidebar links and putting them appropriately on the face so they do not take up the first ten screens," describes Nishar.

As companies operating in the mobile space begin to explore the possibilities for growth, diversification and differentiation, traditional search firms have yet to fully exploit the potential of this new avenue. However, recent moves by firms such as Google reveal exploration of a variety of opportunities. According to Enderle, "For the most part companies such as Google, Yahoo and Microsoft are not looking at the mobile platform as something unique,


but more as an adjunct to something that you would typically be doing at your desk. This is not atypical of a new class of device or a new service because people tend to do what they know, taking a little while to realize that differences can lead to new avenues and opportunities as they begin to explore the edges of the technology to find that niche that specifically leverages the mobile aspects of the product."

Debate continues as to the most effective means for generating revenue from services such as mobile search as existing formats built upon Internet services may not necessarily prove effective on the mobile platform. "There needs to be an effective business model in place to accelerate the adoption of mobile search," states Cutler. AskMeNow, while offering a free version of its search service, is also pursuing a per-use revenue model through the Company's AskMeAnything service targeted towards users (small fee of .49˘ per question) who prefer to ask questions not available under their standard formatted questions. "We have an interesting revenue model that will create ongoing transactional revenue for the carriers to share in through our AskMeAnything feature, which based on beta testing is a fee-per-use service that consumers are interested in using," describes Cohen.



Mobile Advertising:

For companies such as Yahoo and Google with a significant focus on revenue from advertisements retrieved via web searches in the traditional sense, mobile advertising presents significant challenges to this business model. With limited screen size, and thousands of advertisers, a shift in how ads are integrated and targeted is inevitable in order to take advantage of this arena.

Companies that are developing the business model around the mobile arena are seeing value in alternative options for advertisers to solicit customers through search results. "We are building a database of customers that have toll-free or call through capability provided through our search results and accessed with a simple click on your device. We have created a mechanism that will allow local advertisers to advertise with us very economically and be able to share all of their pertinent information with our end-users without our end-users having to access or search for them on the Internet. We use the Internet as a mechanism for bringing you the information, but we don't make users go onto the Internet to obtain their answers. We give you an answer that we do not want you to go hunting for; instead the answer will open up right in front of you on your screen," explains Cohen

As industry players focus in on mobile advertising that is relevant and suitable to wireless users, Cohen explains that there is considerable opportunity in local search utilizing the sense of urgency that is more prevalent in mobile device usage versus traditional Internet use. "It is not about finding the location of a business that you already know; it's about taking advantage of an offering from that business when you are interested. For example if you need a prescription filled, you are leaving your office and want to order ahead to your pharmacy to be able to pick it up on the way home. First you will want to know the pharmacy in your area that has the cheapest price, then you can choose which pharmacy to order your prescription from, all made possible from your handheld device. This will be part of our application in the near future," describes Cohen.

Market Drivers:

As the technology for mobile handsets continues to evolve and the comfort level of mobile users strengthens, growth in this market will continue. "What broadband has done for the Internet and advertising, broadband to the handset has the potential to be the driving force behind the growth of this arena," describes Bruce Smith, VP, Investor Relations and Strategic Development for Answers Corporation.

Examples of technology driving the market and the revenue potential of mobile services can be seen in Japan, a nation with 89 million cellphone subscribers (75% of population over 15 years of age) out of which 77 million have data service accounts. "There clearly is a market available for advertisers as well as user services. Cell phones have become a complete consumer electronic entertainment device serving as a PDA, messaging center, entertainment device, and phone. The cellphone is the one continuous connection. KDDI Corporation (#2 provider after NTT) has been a driver in pushing 3G (nearly all phones) and now 3.5G fast speed services. All of which allow for more types of services, faster downloads so you aren't waiting for advertising. They have also driven data service, photo exchange usage forward with flat rate plans versus previously expensive packet charges by NTT Docomo, "discussed Professor Smith.

With multiple players focusing their efforts on the potential of mobile search and mobile advertising, within a market that Juniper Research forecasts as reaching 2.7 billion worldwide subscribers by 2010, the opportunities to service this growing population appear lucrative. As described by Juniper Research, "Increased sales of handsets and higher Average Revenue per User from data services will come primarily from the ability to provide easy-to-use and intuitive/dynamic services that customers can both understand and manage, or, better still, that manage themselves contextually."

Ann-Marie Fleming Ann-Marie Fleming completed her MBA in the United States, where she attended Webster University. She also holds an Honors B.A from the University of Toronto. She has over fifteen years of experience within the financial industry to include retail banking and brokerage, investment banking, and mortgage brokerage within the United States and Canada, with a firm background in corporate research.

Disclaimer: www.InvestorIdeas.com/About/Disclaimer.asp,

©Copyright InvestorIdeas 2005



About the author:

Ann-Marie Fleming completed her MBA in the United States, where she attended Webster University. She also holds an Honors B.A from the University of Toronto. She has over fifteen years of experience within the financial industry to include retail banking and brokerage, investment banking, and mortgage brokerage within the United States and Canada, with a firm background in corporate research.

 

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