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Why the iPhone is scaring the hell out of Google

Paul Nesbitt

Apple opened a new front in its escalating war with Google, when it unveiled a brand new interactive mobile advertising platform for the iPhone and iPad.

Apple launched iAd during a high profile press launch for iPhone OS 4.0 and Apple CEO, Steve Jobs, made it crystal clear that Apple is gunning for Google.

‘On a mobile device, search is not where it’s at; not like on the desktop. They’re spending all their time on these apps — they’re using apps to get to data on the Internet, not generalized search,’ he said.

Jobs couldn't have been clearer in spelling out what industry insiders have been saying for months. Google is terrified that the success of Apple's App Store and the use of apps, rather than a web browser on smartphones poses a fundamental threat to Google.

If more and more people use smartphone apps rather than their laptops and browsers to look for information, Google is in serious trouble. Google's business is based on one source of revenue: people using its search engine via their browsers to find stuff. Google charges companies to appear at the top of its search results. If you use a restaurant finder app on your iPhone, rather than a mobile browser, Google is cut out.

If you ever wondered why a search company like Google got into the smartphone market, this is it.

And Jobs said that because iAd ‘is in the OS itself’, it will be much easier for companies to deliver compelling adverts from within an application. He added that this would also make it possible for developers to keep their apps free of charge, because they will be able to generate advertising revenues.

‘We want to be even more interactive than the ads on the web, and we want to get some of that interactivity from video. The ads keep you in your app,’ he said.

Jobs then showed off three demo ads that Apple had produced to show off the potential of iAd.

One was a dummy Nike ad, showing basketball dunks through the decades; by shaking the iPhone you got to see a new score. Another ad mocked up for the Target retail stores used a game in which the user decorates a dorm style room with items, which can be purchased at Target.

‘The ad agencies we’ve talked to have been super excited about this. For the first time, they’re seeing how to bring their storytelling skills to digital ads. They’re really excited about hiring technical people to create these kinds of ads to combine them with their storytelling,’ said Jobs.

In a direct attack on Google’s search advertising business model, he added: ‘Why is this so different? These 185,000 [iPhone] apps don’t exist on computers. This is a new phenomenon; this is the first time this kind of thing has ever existed. We never had that on the desktop, so search was the only way to find a lot of things.

‘We do not have plans to be a worldwide ad agency. We don’t know a lot about advertising, but we’re learning. We tried to buy AdMob, but Google snatched them up because they didn’t want us to have them, so we bought another smaller company, Quattro. But we’re babes in the woods,’ he added.

Jobs' self-deprecation will not leave Google and its Android partners feeling secure.



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