Thursday, October 2, 2008

For your information...

How much do you pay to call information (411) from your home phone? How much from your cell phone? How would you find the nearest Italian restaurant on the fly? It might surprise many that dialing information from a cell phone is free and easy, thanks to Microsoft’s Tellme, Google’s GOOG-411 and several other services. According to Tellme, 40 million people in North America find information each month with its service, which is available on any phone but more common as a downloadable application on smart phones. When integrated with other tools, the service allows user to, say, search for a movie theater showing the latest blockbuster, get a map to the theater and buy tickets. Google’s service is by most accounts less impressive than its rivals, but followers of emerging-market news may have noted that the company just made it available in two of the largest cities in India, and plans to expand into three more.

Google may be on to something. The value proposition for a voice-based information service in India is different than it is for users in developed countries, where information is relatively easy to come by through other means (phone books, websites, maps). In India, as in many other emerging markets, information tools such as phone directories and maps with street addresses are often not as readily available. There is evidence that Indian mobile phone users are ready and willing to use their handsets to find information. JustDial, a local start-up, claims that 24 million Indians have used its phone-based information service, though the company has been criticized for selling phone numbers to marketers. Google has not announced plans to make its voice-search service profitable; the company claims that it is simply building a phoneme bank to develop its voice recognition systems. But it’s not difficult to see how Google could turn a profit from voice-based search. Unlike web-based ads, the “click rate” for results of a phone query would be very high. In fact, users might not even know whether the results they receive are “sponsored links” or regular query results.

Though operators in India (and elsewhere) are hesitant to partner with Google, they may as well accept voice-based information services as a means of motivating mobile users to spend more minutes on the phone, thus increasing ARPU. If Google (or a competitor) begins to generate ad revenue from the service, operators could negotiate a small cut of those revenues in exchange for promoting one service over others. In the long term, Google has the opportunity to make itself a primary source of information for a large and potentially lucrative customer base – the same role it plays in more-wired mature markets, only through mobile phones instead of computers. Growth opportunities will spread initially to local content providers acting as information brokers, and then – as more people in emerging markets acquire data-enabled handsets – to software developers who integrate other applications (e.g., geosyncing, m-payments) with information services.

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