MWC 2010: Google predicts ad revenue shift to mobiles

Google's new watchword is 'The mobile is first'

Google chief executive Eric Schmidt has predicted a major shift of advertising revenues from the fixed web to mobile platforms, in a similar way that print revenues switched to the internet.

The change will happen because mobile advertising can be more precisely targeted, making it more effective, Schmidt said in a keynote at Mobile World Congress in Barcelona.

"The reason is that we know more about the person [using the mobile]. For a start, we know where they are," he said, referring to the fact that many handsets carry GPS and other location technologies.

Schmidt also echoed Ericsson chief executive Hans Vestberg's recent warning that mobile pricing will have to change as speeds increase.

"Operators will have to introduce some kind of tiered pricing to deal with the fact that one per cent of the users consume 70 per cent of the bandwidth," he said.

Schmidt faced some hostile questions from the audience, most of whom were from the mobile industry. One accused Google of stealing from network operators with voice-over-IP services like Google Talk.

But Schmidt insisted that this is simply consumer choice, and that it is up to the operators to find ways to make money from user behaviour. He pointed out that mobile operators have a billing arrangement with customers to facilitate this.

Schmidt said that 60,000 handsets using Google's Android operating system are shipping every day, and called Erick Tseng, Google's product manager for mobile search, onto the stage to demonstrate full Flash playing on an Android phone, stressing that it was not Flash Lite.

Microsoft chief executive Steve Ballmer said yesterday that Flash will not be supported by the new Windows Phone 7 platform, although Adobe will be free to implement it independently. Apple's iPhone and iPad do not support Flash.

Google also demonstrated voice recognition in German performed by computers in the cloud, and new image search technology. An Android phone snapped a picture of Barcelona's famous Sagrada Família church and delivered search results relating to the building.

Schmidt said that the combination of handset power, fast wireless links and the resources of the cloud is creating a transition as great as that from the mainframe to the desktop.

Google is not turning its back on the desktop, but its watchword is now: " The mobile is first."