Google bets big on mobile

A Google VP spoke to investors on Monday about the company's hopes for the mobile market

Google has high hopes for the potential of the mobile market, executives said on Monday during an investor webcast.

"Google has bet big on mobile," said Vic Gundotra, vice president of engineering for Google's mobile group.

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Gundotra and two of his colleagues shared some general data about mobile traffic to Google services but stuck with the company line on potentially controversial subjects like Android in China and Apple's lawsuit against HTC.

In the past two years, Google has seen mobile-search traffic grow by five times, Gundotra said. Those searches are not taking the place of computer-based search, he said. "When we see desktop usage decline, like when people go out to lunch, that's when we see mobile spike. We think these are brand-new searches that we would never have seen previously," he said.

In addition to search, Google plans to optimize all of its services for mobile users and has had some notable success doing so already. For instance, Gundotra said that there are now 50 million active users of Google Maps for Mobile.

The company is hopeful that its investments in mobile advertising will pay off. Currently, 25 percent of Android and iPhone users who download applications spend up to two hours a day using those applications, Gundotra said. That presents an opportunity for Google in advertisements that appear in applications. It is testing an application advertisement system with hand-picked applications including Urbanspoon, a restaurant finder, and Shazam, through which users can buy and chat about music.

It is also trying to acquire AdMob, a company that places advertisements in applications, but the deal is being scrutinized by the U.S. Federal Trade Commission. Due to that regulatory review, Gundotra said he couldn't talk much about the potential of that acquisition.

Regardless of where the advertisement is displayed, Google thinks that mobile ads could become as valuable or even more so than the equivalent on the desktop. When the vast majority of phones on the market were feature phones, the cost per click was dramatically lower than that on the desktop, Gundotra said. But with the growing use of smartphones, the mobile cost per click has risen dramatically, he said. "With improved technologies like location capabilities, we hope and believe that there's even a chance that it can exceed the desktop in the future," he said.

Google also expects that the number of search queries originating from phones will make up a bigger portion of total queries, but Gundotra wouldn't describe the current proportion of phone versus computer queries. Because the growth of phone-based queries is moving at a much faster clip than the growth of computer-based queries, "it's only natural to assume it will represent a bigger and bigger portion of our business," he said.

When asked about how Google's recent threat to pull out of China due to the country's censorship requirements might affect Android sales there, an executive didn't reveal more than the company has so far. Because Android is open-source software and is thus available for any handset maker to use, "China is another great market in which Android should flourish," said Patrick Pichette, Google's chief financial officer.

They also would not say more about the role that Google might take in the recent lawsuit that Apple filed against HTC. "We're not a party to the HTC lawsuit, but we stand behind the Android OS and our partners," said Mario Queiroz, vice president of product management for Android.

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