Google’s Newfound Strategic Advantage in US 4G Market Goes Largely Overlooked.
While coverage of last week’s WiMax Mega-Deal largely focused on how the new venture would affect Sprint, Clearwire, and its largest investors (Comcast and Intel), there was strangely little attention payed to the tremendous up-side Google stands to reap from its relatively minor investment of “only” $500 million (as compared to Comcast’s $1.05 billion, Intel’s $1 billion and Time Warner’s $550 million investments).
With little fanfare, the WSJ reported that “Google will become the preferred software developer on the WiMax network, meaning its search service would be the default on new mobile devices.” Additionally, Sprint “agreed to put Google’s mobile operating system, Android, in some Sprint phones.” While the second point is not that surprising (Sprint, as well as Intel, are both members of the Android-focused Open Handset Alliance), the first point may have tremendous impact on the long term landscape of the US mobile search market.
Historically, the major US carriers have been reluctant to grant Google access to their customers, resulting in the search giant’s well-documented difficulties in penetrating the domestic on deck Mobile Search market. Now, as WiMax is likely years ahead of competing domestic 4G technologies such as LTE, Google sits atop a de facto mobile search monopoly in the US wireless broadband space (3G services, while a significant improvement from their predecessors, can hardly be deemed a true “broadband” product experience).
This is a tremendous strategic advantage that may extend beyond mobile search into other highly lucrative areas such as mapping, email, and perhaps event streaming video (YouTube), depending on what Google’s position as the venture’s “preferred software developer” ultimately means. True, consumers will likley be free to navigate to and/or download competitive services from the likes of Yahoo!, MSN and even IAC, but we all know that the majority of users will be content using the default services preloaded on the device.
Google’s advantageous position is further enhanced by the venture’s aggressive cable system partners (Comcast, Time Warner and Bright House), who view the platform as the ultimate response to the “quad-play” service bundles currently offered by Verizon FIOS and AT&T U-verse. The cable companies are locked in a no-holds-barred, block-by-block, all out war with the telcos, and no one should doubt the MSO‘s willingness to fiercely market their advantage in wireless broadband. Google, of course, will profoundly benefit from these marketing efforts.
All told, the real value of Google’s first mover advantage in the domestic 4G space will be their opportunity to define their mobile brand in the best of environments, while Yahoo! and company must more or less wait for AT&T and Verizon Wireless to roll out their LTE networks – content with their standard 3G-based services that will no doubt seem primitive in comparison to Google’s souped-up WiMax products.