In case you didn’t hear, Google just missed on estimates for the quarter. There’s a good analysis on Breakout (here). What it boils down to is that mobile traffic is growing rapidly, and mobile users pay a lot for bandwidth, so are less likely to click on ads.
I’ve written previously that several factors are going to push big tech companies into the telco industry. The exorbitant cost of mobile bandwidth is another one to add to the list.
There is a chasm opening between existing telcos – who make their money selling bandwidth – and manufacturers of mobile devices, who largely make money from their users consuming that bandwidth.
If Google makes money selling ads, and the cost of connecting to the internet via a cellphone prevents users from clicking on those ads, then Google is going to be under pressure to reduce the cost of connecting. A similar factor holds true for Apple and its App Store – yes, you can connect to WiFi from home, but the overall usability of mobile devices improves dramatically if you can use it everywhere, transparently.
I suspect a few things are going to happen:
- More open feuding between device manufacturers and telcos
- Some new joint ventures between them, particularly with smaller telcos (maybe Softbank isn’t crazy?)
- Possibly a big tech company actually buying a telco (although how that would get through antitrust, I don’t know)
- A big push to find other ways for users to connect to the internet.
Stay tuned. It should be interesting.