Mobile firms warned against battling Google over search

Mobile operators looking to take on search engine giants Yahoo and Google should be wary, warn analysts.

Over the weekend, the Sunday Telegraph reported that several massive telecom firms - Vodafone, France Telecom, Telefonica, Deutsche Telekom, Hutchinson Whampoa, Telecom Italia and Cingular - were planning to secretly discuss joining forces on mobile search at next week's 3GSM trade show in Barcelona.

Google, Yahoo and directory services firm Yell all offer search services designed specifically for mobile phones. Because search queries entered on mobile phones can be targeted geographically, potential advertising revenue is expected to be high.

A UK executive from one of the companies told the Sunday Telegraph: "There is a big play in mobile search that we need to be part of, and we are exploring those options at a very high level."

But some analysts think mobile operators should stick to phones and leave search to those already proven in that field. "It's not a bad thing per say, but I suspect they won't be successful," said Bob Tarzey, service director at consultancy firm Quocirca.

Google and Yahoo are such successful brands that competition for users will be tough, he said. "People want to use services they're already used to," said Tarzey. "They'll turn to sources they're already familiar with." For example, users tend to choose news services they already know, such as the BBC, rather than switching to specialized mobile news offerings, he said.

Dr Windsor Holden, a senior analyst at consultancy firm Analysys, agreed. "Google and Yahoo have a very strong brand in this area," said Holden.

Even if a mobile phone has a search engine built into its interface, he expects people to continue using the mobile versions of the big online search engines. "It's two ends of the see-saw - one end is the brand strength of Google, the other is mobile operators being the first port of call."

As well, the cost of developing a new, competitive search engine could be high. "It might not make economic sense spending money creating a search engine," said Holden. "It's all about risk assessment." Larger operators could afford to go it alone, said Holden, but there's a stronger economic case for smaller, national operators to join forces.

Indeed, it's financial reasons which are driving mobile firms to consider developing their own search capabilities. They are looking to protect their own business and protect against future losses, said Tarzey. "They want to try and build a walled garden around their own services," he said.

"It's one way of potentially protecting their share," said Holden. "They're losing their control over mobile customers. Theoretically, this keeps customers with them an extra step of the way."

However, Google's success rate makes them a tough competitor - especially in their original market. "At the end of the day, Google's core competency is with search," said Holden.

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