Weeks ago I predicted that the companies competing in the smartphone market and which didn’t run Android as their OS (RIM, HP, Microsoft and Nokia) would want to emulate Apple and do their own in house advertising. Today the Wall Street Journal is running a story that RIM are shopping around for a mobile advertising company to buy. Assuming the WSJ article is correct, the question is not if but when.
RIM currently controls roughly 17% of the smartphone market and that 17% is a highly lucrative one in terms of the kinds of people who use Blackberry phones. It’s only logical that RIM would not only want to keep the advertising revenue from their phones and keep their competitor Google from skimming off that revenue but also keep the highly valuable statistical data being generated by ad clicks and location data to themselves.
The real story here continues to be Google’s experiment with Android as a tool to give Google the biggest possible share of wireless device advertising and concomitant statistical data. What percent of the market does Google need to make Android a better road to have taken? Would Google have been better off by just selling advertising or was entering the fray with their own OS the better move?
If Apple can retain 25% of the smartphone market 5 years from now, if RIM, Microsoft, Nokia and HP each follow the in house advertising model and control 30% of the market between them and if a few % of the market, let’s say 3% are belong to the category “other” (for example the oPhone or other similar developing world “cheapphones”) and Google is left with slightly over 50% of the market for their own advertising, then Google will surely make a decent return on investment but will it be enough to satisfy investors? With just over 60% of the world search market Google’s share price is lower today than it was in January so 50% of the wireless market, while good in principle would not be considered good enough IMO by investors looking for a good investment. Google continues to hunt around for a new revenue source that can get it back on the revenue superhighway and Android may not be it. No wonder they’re willing to sell out net neutrality in the wireless market to keep eir options open. Despite the fAndroid joy at passing the iPhone in market share, Android remains an open question and Google’s success is far from guaranteed.
