Google wins Japan's mobile net battle

Kenji Hall
20 Feb 2008

At Google's (GOOG) offices in Tokyo, they talk about 'John's magic.' That refers to the Internet search giant's dealmaking frenzy in Japan since John Lagerling joined the company more than a year ago as manager for strategic partner development. To the astonishment of many insiders, the trim, blond 31-year-old Swede has finessed tieups with Japan's two biggest wireless carriers, giving Google's search technology top billing on the tiny screens of as many as 82 million mobile subscribers.

Even Yahoo Japan, which boasts the country's most popular Web portal, lags far behind. Fewer than 18 million mobile subscribers whose service is with wireless operator and Yahoo Japan owner Softbank own handsets that go directly to Yahoo's search page.

Last month's deal with NTT DoCoMo (DCM) adds to Google's edge in the fast-growing Net search and advertising business in one of the world's most sophisticated wireless markets. Now, the first thing DoCoMo mobile subscribers see when they go online from their handsets is the carrier's site featuring a search box and the phrase 'enhanced by Google.' Ditto for KDDI users. That means someone in Tokyo's Shibuya shopping district who wants to find a store selling vinyl records no longer has to type in Google on a numerical keypad to gain access to the company's search engine.

A similar plan for other countries

Google's online traffic will likely surge. While relatively few Americans use their mobile phones to tap into the Net, millions in Japan do so daily. Government data show that Japanese are as likely to go online from a mobile handset as they are from a desktop PC. And when they do, they often search the Net, look at maps, and check train timetables. Those activities rank third among the most popular online activities from a mobile handset, behind e-mailing and reading news stories, according to research firm comScore (SCOR). (Google's mobile services cover all of these areas.)

What's happening in Japan is likely to be repeated in other countries, Google officials say. Their courting of Japan's carriers suggests that the battle for control of the mobile Net"”with operators on one side and companies like Google, Yahoo (YHOO), and Microsoft (MSFT) on the other"”won't necessarily be the bloodbath that many analysts are predicting. In a report last November, Oppenheimer & Co. (OPY) analyst Sandeep Aggarwal said winning over wireless carriers and handset manufacturers would be one of Google's biggest challenges.

Google and DoCoMo officials have taken pains to stress their cooperation. They will share search data and split ad revenues, and stand to benefit in other ways. Google gets access to a huge pool of behavioral data about cell-phone users in Japan, which it needs to make its online software easier to use and more useful (, 2/14/08). It also gains more sites to sprinkle with mobile ads and make search results more accurate. DoCoMo's and KDDI's sites for video, music and ringtone downloads, comics, and other exclusive services are no longer off-limits to Google. The carriers, meanwhile, can piggyback on Google's search know-how and rely on its transcoder, which converts Web sites normally formatted for PC or laptop software into a readable format for a tiny mobile-device screen.

Deadlines vs. 'Managed Chaos'

Sound like a natural fit‾ Hardly. For Lagerling and his team, it was a constant struggle bridging the cultural gap. Google was lucky to have him.

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