Applications that take users directly to e-commerce sites and other Web service destinations threaten search providers such as Google, Yahoo and Microsoft Bing, according to BroadPoint AmTech. Some vendors are making it even easier for consumers to visit their site and make purchases. For example, Amazon, eBay and Best Buy have mobile apps that enable full browsing and purchasing functionality. Consumers who download these mobile apps right to their smartphone deck can go straight to the source Website and buy what they need. Why should people use the search box?
News Analysis: There are several opportunities to make money from
pairing ads with search engines on smartphones and other mobile computing
gadgets, but applications that take users directly to e-commerce sites and
other Web service destinations threaten search providers, according to
Mobile Web search and queries are on the rise and will continue to soar once
consumers begin to leverage more location-based mobile services such as
Foursquare and Gowalla. It's no wonder Google swore its allegiance for the
space by bidding $750 million for mobile ad maker AdMob.
BroadPoint AmTech said 10 percent to 30 percent of the mobile searches
consumers trigger for Amazon.com, eBay and the like go through the Google,
Yahoo or Bing search box on their iPhones, Google Android devices and other
smartphones. Ads served with these navigational queries cultivate decent click-through
But many vendors are making it even easier for consumers to visit their sites
and make purchases. For example, Amazon, eBay and other e-commerce players have
mobile apps that mirror the way users can access their sites from desktop
Consumers who download these mobile apps right to their smartphone deck can
go straight to the source Website and buy what they need without opening a
browser, entering queries in a search box, said BroadPoint AmTech analyst Ben
Moreover, it isn't just the big companies that are creating mobile apps to
drive e-commerce to their Websites.
For example, instead of using Google, Yahoo or Bing to search for movie
times and buy tickets online, users can download the Fandango mobile app and
buy tickets. Google, Yahoo and Bing lose out because if users don't navigate to
their search box, the search engines can't serve them ads. Schachter wrote:
"While the emergence of these types of Apps is clearly a positive for
consumers, we believe they pose a risk to the established search engine model.
Search engines such as Google and Yahoo have become a critical component of the
typical Web user's product shopping/browsing/researching process online. New
e-commerce apps may increasingly exclude the established search players from
this product 'discovery process,' resulting in fewer product-related
Indeed, Schachter suggested that perhaps the battleground for the mobile Web
has shifted to the smartphone deck. Users may have 15 to 30 or more apps on
their phone, but likely use the ones sitting most prominently on their phone's
This presents Google, Yahoo, Bing and other mobile search engine providers
with an interesting quandary, or intriguing options, depending on how they
choose to approach this new turf war.
These providers can secure search toolbar distribution deals with phone
makers such as Apple and wireless carriers such as Verizon Wireless, grabbing
the scraps from the tables of mobile app providers.
Or these Internet companies can build their own mobile apps for prominent
placement on smartphone decks. For example, Google has recently released two
powerful apps, the Google Maps Navigation turn-by-turn GPS
program and the Google Goggles visual search app.
Both are currently available only on Android. Google hasn't discussed how it
might make money from these free apps, but serving local ads with its GPS
app and its visual search app seems to be such an intuitive task that it would
be surprising if Google did not undertake it.
In any case, Schachter believes Google is headed in the right direction with
the impending Nexus One smartphone, a fast-performing HTC
device based on Android 2.1:
"With Google scheduling an Android press event for January 5 (where it
is speculated the company will formally introduce its own mobile handset),
Google seems to be focused on making sure it can guide the development of the
mobile Web while protecting and expanding its own business model."