Google Turns to Mobile Phones in China

Google Turns to Mobile Phones in China After Trailing Baidu.

Google Inc., trailing in China's online search market, expects to process more Web queries from mobile subscribers than computer users locally by 2011, aided by an alliance with the nation's largest wireless carrier.

``In some quarters, our mobile traffic will double, whereas it will take perhaps a year to double on the PC side,'' Google China President Lee Kai-Fu said in an interview broadcast on Bloomberg Television today. The volume of mobile search may exceed that from computers ``in three years,'' he said.

The U.S. company, which is also developing an operating system for mobile phones, leads Baidu.com Inc. in Chinese wireless searches after gaining exclusive rights to process queries from China Mobile Ltd.'s customers. Mountain View, California-based Google earns less than half its local rival's online advertising sales from Chinese computers.

``Google has looked for newer avenues due to the strength of Baidu's position on the Internet side,'' said Jim W. Oberweis, president of Oberweis Asset Management Inc. in Lisle, Illinois, which looks after $1.5 billion, including Baidu shares. ``Both Internet-based search as well as mobile search are large potential markets,'' said Oberweis. He added he expects Baidu to follow Google in stepping up efforts in the mobile search market.

Baidu accounted for 60 percent of China's market for search- based online advertising sales in the fourth quarter, compared with 58 percent a year earlier, according to Analysys International. Google's market share rose to 26 percent from 17 percent, the Beijing-based researcher said.

``We believe the opportunities in the wireless market will increase'' after the government issues licenses for so-called third-generation phone services, Baidu spokeswoman Helen Zhang said. The Beijing-based company said this month it would offer search services for China Netcom Group Corp., the country's second-biggest fixed-line operator.

`Affordable 3G'

China hasn't set a timetable for issuing licenses for 3G services, which allow Internet browsing on mobile phones. Fixed- line operators China Telecom Corp. and China Netcom both said they have applied for 3G permits to enter the faster-growing wireless market.

At the end of February, China had 565.2 million mobile-phone users, more than the combined populations of the U.S. and Japan, according to data from the Ministry of Information Industry. China's Internet users totaled 210 million at the end of December, after increasing 73 million in 2007, the government-backed China Network Information Center said.

``Looking over a 3-year horizon, I know that affordable 3G will happen,'' Google's Lee said in the interview in Hainan, southern China, where he attended the Boao Forum For Asia conference. ``We find that Chinese mobile users are very cost- sensitive.''

In January 2007, Google agreed to be the exclusive provider of search services for China Mobile's Moternet wireless portal. The Chinese company, the world's biggest phone company by users, was among carriers including NTT DoCoMo Inc. and Sprint Nextel Corp. that agreed to develop services based on Google's Android operating system for mobile-phones.