Google: Tablet Ads Might Bring a Windfall
Earlier this week at Google's I/O Conference, I got some time with Google's Senior Vice President for Social, Vic Gundotra.
Don't let his title fool you: Vic has quite a history in mobile, having led Google's mobile app and advertising efforts before new CEO Larry Page put him in charge of strengthening Google's weakest flank. (Google has foundered in social media as Facebook has risen.)
In my one-on-one with Gundotra, he gave some intriguing stats about smartphone growth, tablet monetization, and how Google plans to cash in.
An edited transcript:
Q: One of the concerns of the financial community is that while Google is still growing by leaps and bounds, spending is growing, too in areas like mobile. Can you give more color on how mobile is starting to emerge as more of a business?
A: We announced about six months ago that the mobile search business had exceeded a billion-dollar run rate. That business continues to track with smartphone sales. We're very optimistic and enthusiastic about the future of the business as consumers move to smartphones and do searches on those smartphones just like they did on the desktop. In addition to search, however, we think there are many other exciting revenue streams.
Q: You said tracking smartphone sales, but in your hand you're holding an Android tablet. What about tablet sales? Is that a display ad opportunity?
A: That's a great question. The tablet device is a bigger device. Our data shows that a tablet device seems to have the same kind of monetization as a desktop. It's even more like a desktop than a smartphone. We're not exactly sure of the reasons why. We think maybe people spend more time on it, it's easier to read, people spend more time browsing and searching, less task oriented than they might be on a smartphone. So with think the explosion of tablet sales also gives us an opportunity that may, in fact, from a monetization standpoint, be even bigger than that of smartphones. So it's kind of early — we don't know for sure and we don't want to be premature in jumping to conclusions — but the early indications are super encouraging.
Q: Tell me how Google Music is going to affect the Android platform overall, and Google's other platforms.
A: One of the big announcements that we made this morning is that we are now activating 400,000 Androids every day. That is a staggering number. What we're trying to do is to make the Android platform better, and what we've heard consistently from our users is they want a better music experience. Whether their music is on their Windows machine or whether it's in iTunes, they want the power of the cloud. What Google does so well is to take that music and unlock it from a single machine.
Q: One of the criticisms that's been lobbed against Google — one of Steve Jobs' favorite criticisms — is about fragmentation. There are so many different Android devices out there running different versions that it's hard for developers to know how many they're targeting at any given time. You made an announcement that you hope will help clear that up over time?
A: First of all, you're right: There are hundreds of Android devices, giving consumers tremendous choice. Literally dozens and dozens of carriers, and all different kinds of form factors. Developers who build for this wide variety of choice have asked us to make it easier so that when they're developing an application, that application can span the entire class of devices. And we announced that in an upcoming release, Ice Cream Sandwich, there will be services that make it easier for developers to target this wide class of devices.
For consumers as well, we want to make it easier such that when they buy a phone, they have a degree of confidence that the phone will be upgraded to the latest versions of Android and that upgrade will happen within a reasonable timeframe.