Interesting article. Also, interesting discussion about the true impact Google might have on development here in the US. I do, however, believe the author, along with everyone else in this space, may have missed the point.

Google's wireless strategy, while important in the US, is likely more interested in impacting the rest of the world. The US, Japanese and Western Europe wireless markets are getting mature FAST. This fact, combined with the fact that the major carriers have very low churn (% of customers leaving/switching to another carrier each month) means breaking into these markets will be very difficult and extraordinarily expensive.

The rest of the world, however, is a bit different. In China, China Mobile (one of Google's partners) signs up about as many customers as ATT or Verizon have in total every 8 months or so. CM has a big problem on the horizon though: how do you squeeze revenue out of the very-poor remaining population. Google has a potential answer: advertising revenue!

Google can enter developing markets, with partners, and grab some market share cheaply. The also will be able to subsidize expensive handsets like we do in the US. Most other markets have very limited handset subsidies because consumers can typically port handsets from one carrier to another. Therefore, if a provider subsidized a handset they stood a risk of never making back the investment.

If, however, the subsidy was coming from ad revenue versus from the network provider, the revenue could get paid back regardless of which network the consumer uses.

In short, I think the headline was spot on but the article was not. Google really is after the WORLD. The US is just a nice thing to drag along with it...

BTW, "Do no evil" is a great motto to live by...especially if you get to define evil! :-)

neoliberal:

China Mobile (one of Google's partners) signs up about as many customers as ATT or Verizon have in total every 8 months or so. CM has a big problem on the horizon though: how do you squeeze revenue out of the very-poor remaining population. Google has a potential answer: advertising revenue!

Missing the point, indeed!

What kind of advertisers do you believe Google ought to target for their market penetration of the "very-poor remaining population"? Any rational advertiser will want to target their advertising on that segment of the population with the means to buy their product, and the primary problem with the very poor is their lack of cash. They live and work in a non-cash environment, and owning a cell phone is not an important goal in their lives. Feeding their kids is the number one goal.

I'll make you a wager: go the richer part of town and look at the products in the grocery store, then go to the poorest part of town and do the same. I will bet you will find a different mix of products and I'd bet you won't find a payday loan office next to the grocery store in the rich part of town.

What kind of advertisers do you believe Google ought to target for their market penetration of the "very-poor remaining population"?

To steal Jobs' hiring pitch to Sculley - companies that make Sugared Fizzy Water would very much like to sell to this population. As would a host of other low end vendors. Note also that one of the earliest initiatives of the Grameen Bank was the Village Phone iniative. This puts a shared cell phone in the hands of a lcoal villager who now runs a business of renting out that phone - ala the old rural "party line".

A GPhone that runs on advertising would be that much easier to spread this way. And the advertising would have that much broader impact. And the ROI on this would be HUGE for someone like Google.

One problem with your scenario. Africa is a possibility, but China is notoriously protective of local products. China is the big market, but are companies like coca Cola, Pepsi, Nestle, etc going to get market access so they can advertise?

That's why this is such a strong play for Google - they already have an advertising presence in the PRC and their ability to drive ad revenue for products targetting even the lower rungs of the economic ladder is pretty powerful. If its not Coke, then its the PRC version of Coke.

Coke would be faced with a dismal choice. Sell Coke there and get almost no royalties, or allow a counterfeit version to be sold there and get nothing.

Again, many of you are thinking like rich, white westerners!!

Who said Google's ad partners are even going to be American companies. The beauty of their model is they don't care who/what is advertising.

The likely advertisers on a mobile phone are not going to be giant western companies even in the US. The real value in mobile advertising is location services. Meaning the local pizza shop, car wash, whatever, will be able to direct advertising (likely based on search results) to a local consumer.

These very targeted ads will be very, very valuable in a similar way to adwords.

I should have been more clear. I completely agree with you about how you aren't going to need to rely on large conglomorates and internationals for your advertising in many of these venues. Since they are targetted, their ROI will be the greatest if they offer goods or services easily available to those local populations.

I picked Coke mainly to demonstrate a product that is so cheap that it can be sold for a profit pretty much anywhere and also a product that is so ubiquitous, it already has a presence in much of the 3rd and 4th world.

But you are right, most of the products will be local to the nearby economy