Google Educational Webcast on Mobile Part 1

Uploaded by GoogleIR on 15.03.2010

MARIA: Which will be conducted using Google Moderator found at As
a reminder, we will only be taking questions that pertain to our mobile business and strategy
today. Before we get started, let me quickly cover the safe harbor. Some of the statements
we make today maybe considered forward-looking, and these statements involve a number of risks
and uncertainties that could cause actual results to differ materially. Please note
that these forward-looking statements reflect our opinions only as of the date of this presentation.
And we undertake no obligation to revise or publicly release the results of any revision
to these forward-looking statements in light of new information or future events. Please
refer to our SEC filings including our annual report on Form 10-K for the year ended December
31st, 2009, as well as our earnings press release for a more detailed description of
the risk factors that may affect the results. Copies can be obtained from the SEC or by
visiting the investor relations west section of our website. Now, I will turn it over to
Patrick Pichette. >> PICHETTE: Thank you, Maria. Hello, everybody.
My name is Patrick Pichette. I'm Google's chief financial officer. And please welcome
to this third of the series of our webcast. In December, you'll remember we spoke about
our display business, and today we're going to talk about another really exciting space
for Google which is the mobile business and our space or investments there. First, we'll
hit Vic Gundotra, who's going to talk to us about the space in general and our mobile
strategy. And then, we'll also--we'll be joined by Mario Queiroz, who is also tied to the
next, this one launch that you may have heard Mario in the past. So first, Vic is going
to cover the whole mobile then Mario and Vic and I will be taking your questions. We'll
be using Google Moderator. So, please don't hesitate to log in your questions. And then,
one final reminder is Google is in quiet period right now. So please understand that Google
will not be answering any question that is outside the topic that is covered today. So
please do us a favor. And once again, do not ask those questions because you'll see that
we can't answer them. Thank you again. And with that, no further ado, I'll let Vic cover
the topic for today. Thanks. Welcome, Vic. >> GUNDOTRA: Thank you, Patrick. Good afternoon,
everybody, nice to have so many join us on today's Educational Webcast on our Mobile
Strategy. And as Patrick mentioned, my name is Vic Gundotra, vice-president of engineering
responsible for our mobile applications. And today's afternoon's presentation is broken
up into three broad areas. First, I'm going to talk about some industry trends. Trends
that are really reshaping our industry and ones that we're very excited about at Google.
Second, I'm going to talk about what drives our product and engineering philosophy as
we deliver services to mobile phones. And I think you'll see that it's pretty unique
and exciting. And then finally, we're going to close the presentation off with a focus
on mobile advertising and how that changes in our mobile world. Let's begin by talking
about industry trends. Now, it should be obvious that each successive computing era has had
a greater impact on society than the previous one, and mobile phones are no different. Today,
mobile phones and their connected nature lead to a larger impact than all the previous eras.
But the reality is you probably already knew that. In fact, you may argue, "Well, Vic,
there have been a billion phones were sold last year." And certainly, it's been many
years that the run rate of mobile phones has been in the hundreds and millions. What is
new? What's different now? Well, that's what this presentation is about. We're going to
talk about the real change that has occurred in our industry. And that is the arrival of
the mobile Internet. And why that change occurred? We believe it occurred because of simpler
data plans, better browsers, and a new class of smarter devices. Let me talk about each
of these specifically. Let's talk about data plans. You know this emergence of a new class
of phone like the iPhone or the Android phone or the Palm phone really has changed the dynamics.
It changed the dynamics because those phones come with data plans. Simple to understand
data plans. This chart gives you a powerful proof point of what happens when you give
a consumer a simple to understand data plan. At first glance, this chart may seem counter
intuitive to you. That green line represents MetroPCS, a small U.S. carrier with five million
subscribers and the chart represents Internet usage as measured by a proxy via Google. That
bottom line is a carrier in the United States with similar Google placement on their phones
and 10 times the number of users. But look at the usage, what's the difference between
these two. Now, what are the difference in addition to some different phone models is
that MetroPCS chose to go with a very simple to understand data plan. And that drove usage
very, very high. In addition to data plans, becoming attached to these new phones and
simple data plans that better understandable, the other big see change has been the inclusion
of a new breed of Web browser. In our industry, technically, we call these Web browsers WebKit-based
browsers because it represents the open source engine that powers that browser. But let me
put it in simpler terms for you. It's a browser that works. You know two or three years ago,
I suspect most of you wouldn't have believed that it was possible to visit your favorite
websites:, on your mobile phone. Your mobile phone was too small. Connectivity
rates were too low. The browser didn't work. And yet, what we're seeing in the industry
is a rush to where high-fidelity Web browsers that are capable of running and rendering
full websites. And that is a see change and one that's very exciting for Google. The final
change is in fact that the phones themselves are becoming incredibly capable. Today--or
before I talk about today, if you just recall a few years ago, the smartphone category represented
about 2% of the market was about a $600 phone at least. And the idea that a $600 smartphone
would go mainstream is recently is two years ago it had some doubt. But in fact, that's
what happened. Today, the average sucker mom or sucker dad has a smartphone, a phone that
is replacing the feature phone category and that bodes very well for Google's business.
And we'll talk about that in a minute. It's not just theories, it's data that really proves
this see change. This chart is once again very enlightening. What it highlights is a
share--a percentage share of Internet usage. Now I suspect you would believe that without
seeing this data that the phones that have the highest market share would have the highest
usage share. That is not true. Phones like the iPhone and Android devices that have powerful
WebKit browsers with flat data plans associated with them, in fact, had dramatically higher
market usage than their market shared numbers would indicate. What does this mean? It means
that it has all these other vendors come out with more powerful browsers. We should expect
similar usage patterns to go up. The mobile Internet is happening on mobile phones. And
that makes us at Google very excited about the opportunities. But let me talk about what
Google has seen in its business. First of all, the simplest measure of our momentum
is search traffic. And that search traffic on mobile phones has gone up five times in
the last two years. And as you can see by that chart, it is a trend that is accelerating.
It's not just Google search, it's the use of our applications on mobile devices. That
middle chart, we chose to highlight one of our popular applications, Google Mobile Maps.
Would you believe that we have 50 million active users of that product and the growth
there has been spectacular? And finally, that last chart is also one that's incredibly enlightening.
Now to understand that last chart, you must think about how Google advertised on mobile
phones a few years ago. A few years ago, feature phones dominated the landscape. And Google
search what was called a WAP ad. A WAP ad is an ad for these feature phones that's designed
for the very limited functionality that that phone has. Well, WAP ads had very limited
inventory. But the emergence of the smartphone category, the super phone category bent browsers
that were capable of rendering desktop websites and rendering desktop ads. And so, we were
able to take ads out of our desktop inventory and serve them to these high-end phones which
are increasingly becoming mainstream. And that chart represents the makeshift of our
revenue to these high-end phones. A trend that we think is incredibly exciting. All
right, that's an overview of the industry and some of the changes: smartphones going
mainstream, data plans being associated with phone, the emergence of WebKit based browsers
across these devices. Let's now shift to talk about Google's applications. Now, when you
look at Google's applications for mobile phones, one thing becomes immediately clear. Google
has bet big on mobile. If you take your phone and go to, you get a list of
just some of the apps, the services that we have. And it seems that across the company
whether it'd be Gmail or YouTube or a blog or services or Reader Services, they have
versions that we've delivered for mobile phones. Particularly, those mobile phones are capable
of these services. But I wanted to highlight that it is not our strategy to take our desktop
products and simply create mini versions of those products for the mobile phone. We believe
that would be a mistake. A mobile phone is different and it offers us a new opportunity
to rethink our applications or deliver new kinds of applications. How is it different?
Well, think about your mobile phone. Your mobile phone has a speaker. It's got a microphone.
It's got a GPS chip. It might have a touch screen. So some of you may say, "Well, what's
so different? I've got a microphone and camera before." Remember, what makes it different
is that this sensor-rich device is connected to a Google Cloud. And that connected nature
transforms these humble elements turns a speaker into something that can understand human voice.
It turns a camera into potentially something we can apply computer vision against and become
a digital eye. It turns a GPS chip into something that we can apply very amazing location magic
to. Now I could talk about this for half an hour. But let me just show you some demonstrations.
These demonstrations are designed to show you what happens when you combine a sensor-rich
device with the connected nature to a powerful set of computing resources in the Cloud, okay?
Let's switch over to demos. Now the first demonstration I'm going to give to you is
our voice search product. This is a product where you speak into your phone and our systems
transcribe that back into text. Now some of you are going to say, "Well, voice recognition
has been with us for 20 or 30 years," and that's been true. But if you think about the
voice dictation or recognition systems you may have had on your personal computer. Remember
the engine that did the recognition, lived on your PC. What I'm about to show you is
different. We take your voice, we compress it, we send it to the Google Cloud via the
connected nature of the device and then not one device but maybe hundreds or thousands
of computers in our Cloud process that and we deliver the result back which leads to
higher accuracy. It leads to things that were not possible before. Today we've deliver English,
Mandarin Chinese, Japanese and this month we'll also deliver German. It's nothing short
of our goal than to deliver support for all the major languages of the world. But seeing
is believing. Let me give you an example of this. Now, I have a microphone on so the reverb
may cause some issues but let's try it. Let's try a query that I would probably never type
into a phone because it's too long. Pictures of Barak Obama with the French President at
the G8 Summit. Clearly a query that probably wouldn't type in that took about a second.
It completely nailed the query and brought the Google search results back. Now that's
magical. If you haven't tried that, I encourage you to try that on the iPhone, on the Android
device--devices and you get an idea of really the power there. Now that was voice recognition
working within Google Search. We want to enable that everywhere. In fact, we delivered a feature
in the latest versions of Android called Voice Everywhere. And here's what it means. It means
that anywhere on the phone where you can use a keyboard, you can instead choose to use
voice recognition. Let me show you. You're looking at the text messaging capability in
Android and note there's a keyboard. But look at the bottom of the keyboard next to the
space bar. You see that new button we just added? That enables you to input via voice.
Let me try this. I'm going to be late. Go ahead and start dinner without me. Okay, one
letter off but you get the idea within a second of the complete magic here. And certainly
we continue to improve these systems and make them better and better as we collect more
usage. Our systems are self-learning and accuracy levels continue to rise. We are at the beginning
of this investment. It's very exciting to contemplate what the next several years of
computer science innovation will lead to. Now that was the use of the humble microphone
and turning it into something that can understand human speech in multiple languages. What about
the camera? If you pull your phone out of your bag now, look at it, you turn it around,
it's got a camera but what if we could attach that to Cloud-based resources. That's exactly
what we did with the product called Google Goggles. Google Goggles allows you to take
a picture, and submit that picture at your Google as your query. When would you find
this useful? Well, let me give you an example when I found it useful. When we were in the
early days of testing the product before it was released, I had some friends come over
for dinner. They arrived at my front door. They have been stuck in traffic for an hour,
so the very first thing they asked for was to go to the restroom. And of course I showed
them to the rest room and my friend handed me a bottle of wine they had brought and said
this is for you. While they were in the restroom, I used Google Goggles to take a picture of
the product of the wine label. Of course Google Goggles told me how much the wine cost. But
it also told me hints--tasting hints like that the product of the wine had hints of
apricot and hibiscus blossom. Just then my friend came out of the bathroom I put my yet
unreleased Google product away and she made me pour the wine. It was her favorite wine.
She said, "Vic, what do you think?" And I said, "Hey, it's got hints of apricot and
hibiscus blossom." Now, I don't even know what hibiscus blossom is. But Google Goggles,
a powerful service connected to the Cloud let me get some information about that product.
Now, some of you maybe saying, "We'll I'm not going to take a picture of a wine bottle."
Let me give you another example. Imagine you're traveling in a foreign country, like suppose
you're in Japan. And you come across this famous monument. Now you know it's a famous
monument, but you don't speak Japanese. So how will you ever research it? What kind of
query would you type in? But with Google Goggles, you can simply take a picture. Let me show
you. I'm going to start up Google Goggles. I'm going to take a picture of that--of the
screen. Pretend I was in Japan. And let's come back here, you'll note there in about
a second. Right at the top, that famous Japanese Shrine is identified. So you get an idea of
the power of Google Goggles across products, across places, and once again, an area of
computer vision that we're just beginning our researching. Now another capability that
is unique to the mobile device largely is its use of a GPS chip. Not only do we use
the GPS chip, but we can use cell tower information, other techniques to really help identified
the location of a device with the user's consent and permission. That enables all sorts of
new scenarios. Let me give you an example of one. Let me switch over here to the iPhone
for a moment. And you'll note this is the new homepage on your iPhone meaning
just go and to the browser and type in And there's a subtle new feature you may not
have noticed. That blue dot says that I'm in Mountain View. And note this case for this
purposes of this demonstration, we have hard-coded the location to be that on Castro Street in
Mountain View. But if you do this on your iPhone now, you'll likely see it show the
city that you're in. Not only do we show the city that you're in, but we also show you
what's near you now. Watch what happens when I click this button, this "Near me now". Boom,
it shows you right there that you're probably standing in front of this restaurant. And
not only can you see what you're standing in front of but everything that happens to
be nearby you. Now take a look at this. There's a restaurant right there. Maybe you want to
know something about that restaurant. If I select that, it'll take me to a mobile-optimized
place page that tells me everything I want to know about that restaurant. Isn't that
fantastic? And no typing, clearly, I just said, "Near me now," clicked on it, found
out what I, with my own eyes, were seeing. I was able to have Google help me find more
information about that. Okay, let's move on to one other demonstration of a feature that
we just launched on Wednesday of last week. So this is truly hot off the presses. This
is use of location to help a consumer with a product search. In this case, I've done
a product search for a Nikon D90. And we use your location right there to say that you're
in Mountain View. But what we introduced on Wednesday of last week was something right
here. You see that blue dot right there? That says "in stock nearby". When I select that
blue dot I'll see where that Nikon D90 is available based on my existing location. So
you can see here, for example, that best buy has that product in stock and it's only 5.7
miles away from me. We think consumers will absolutely love this. We think advertisers
will love this, and of course it's a great way to make Google Search even more valuable.
Finally, let me show you the use of location and voice in a connected turn-by-turn navigation
product. Now, some of you will likely say, "I know turn-by-turn navigation, I have it
in my car." What's different about Google's approach? We'll what's different about Google's
approach is that we optimized for a connected device. Did you realize that of all the navigation
systems out in the world only a few small, percentage of them are connected? So I'm going
to show you a demonstration but I'm going to show you six features that could only be
delivered because we are a connected turn by turn navigation product. Let's begin by
starting up our maps product. Then I'm going to navigate to a hotel in San Francisco, The
Hilton. Now I suspect that, like myself, many of you have to write down the address of where
you're going before you get in the car. Or maybe you text message it so it's on your
phone, email it to yourselves so when you're in the car, you have the address. Guess what?
You don't need to know the address in a Google product because we use the cloud to disambiguate
location. Let me show you. I'm simply going to tell the product to take me to the San
Francisco Hilton. So I'll type in SF Hilton, no address and Google will figure it out.
It'll say, did you mean any of these Hiltons? And yes, the Hilton right at the top of the
financial district is the one I wanted to go to and off we go. That's feature number
one because it's connected. Feature number two that we can deliver because it's connected
is one of my favorite. Keep your eyes at the bottom of the screen. You see there that green
icon? That 48 minutes? If I touch that button, I'll get an overview of my entire route with
traffic that's updated every few moments. Now I know how to get from my home to Google
everyday. But I use this feature because I can see updated traffic along the entire route
for free. It's a fantastic feature because we're connected to the Cloud. Another feature
is our use of Satellite Maps. Satellite Maps are very popular on desktop. But imagine how
popular, how useful they are in a turn-by-turn navigation product where I'm able to get context.
I can see the location is around this building or around this school and we've seen consumers
react very, very positively to this ability to have satellite views in the turn-by-turn
product. Okay, let me move on to another feature that can only be delivered because we're connected.
How about search? Now you may have a product in your car that allows you to search for
ATMs or Gas stations, but what about if you want to search for Olive Garden? What if you
want to search for your favorite restaurant or a business, then what? We'll because we're
connected we can search on anything that Google knows about. In this case I'm also going to
show you search plus the ability to search along route. So let me do a search, I'll do
a search for something pretty benign. Gee, not Starbucks. I wanted--I could search for
Starbucks, but in this case I want to search for burgers. Okay? And what's amazing here,
if I zoom out, you'll really see the capability here. Is that what Google is doing is this--is
Google is giving me all the burger places along the route I'm traveling. So I can select
there's McDonald, there's another McDonalds, I can call the McDonalds if I wanted too.
In this case, let's try another one, there's a Burger King, there's another McDonalds,
there's a Rave Burger, there's a--I guess a generic burger joint, and there's an In
N Out burger, so just a powerful example of search associated with the route that you're
going on across anything that you want to do. Now finally, let me talk about another
thing that we provide because it's connected. Think about your navigation product today,
when you get to your destination, what does your navigation product say? Mine says "Your
destination is ahead 200 yards." My wife says a little bit better. Hers tells that is 200
yards ahead on the left. But that's about it. Now wouldn't it be great if Google could
take street view imagery and show you a picture of where you need to go? Well, we do all that
and more. We'll show you a picture, not only your destination, but of every turn. All you
have to do is double tap on the screen, we'll show you your next turn, show you a picture
of exactly what that turn looks like, and in fact, give you the ability to interact
with street view. So you can get a real sense of where you're going and where the key turns
are. Isn't that fantastic? Now one last feature, we realized that this application while incredibly
useful is often difficult to use when it was an arms length away on your dash. And so when
the Android device detects that has been put into a doc on a dash. We change the user interface
to be one that was friendly of an arms length interaction. All the buttons become bigger,
very easy to use. Now let me put all of this together, turn-by-turn navigation with disambiguation
of address with the inclusion of voice with this new UI. Suppose I want to go to the museum
that has the King Tut exhibit in San Francisco. I don't know the address. I don't even remember
the name of the museum. Watch this; navigate to the museum in San Francisco with the King
Tut exhibit. Absolutely nailed, the voice recognition in under a second and then Google
disambiguates the address, ahh--it's the de Young Museum right at the top. Absolutely
perfect and I'm on my way. Okay? So that concludes the demonstrations. Let's go back to the slides.
Okay and okay. So you got a sense there of how we're not just taking our desktop services
that consumers know and love and delivering them on mobile but how we're really optimizing
for the unique capabilities of that mobile device. Excuse me just one second. Okay, so
optimizing for that mobile device really also includes not just the applications but includes
advertising. And now let's shift our focus and talk about advertising in the mobile space.
Advertisers see the same magic that we're seeing. They're seeing the consumer adoption
of mobile devices and smartphones everywhere. But from the eyes of the advertiser it's a
nightmare. How do you build advertising solutions that work across Rim, BlackBerry, iPhone,
Nokia, Windows mobile, Android? Oh don't forget about J2ME and Java. Oh what about--what about
the carrier specific regions of the world? What about KDDI and Docomo and the ecosystems
they've created? In fact, the fragmentation is far worse than I just described. Because
when you say BlackBerry, you don't really mean BlackBerry. You mean the entire top row.
You could mean a device that is touch screen, not touch screen, keyboard, no keyboard, and
that applies across every one of these variety of phones. And so advertising is not like
it was on the desktop. Where you could target a Firefox browser, Internet Explorer, maybe
Chrome and you could cover the vast majority of the market. It is incredibly fragmented
and complex. Google strategy can be described simply as making things easy for advertisers.
Now, that may sound like a marketing slogan. Let me show you how easy we've made it. What
you're looking at now is a screenshot of the tool that advertisers use when running advertising
campaigns with Google. It's called AdWords. What's amazing here is the simplicity of our
approach. Look at number two there. You see that second check box? iPhones and other mobile
devices with full internet browsers and advertiser merely has to have that box checked. And Google
will take the complexity out of the system. We will then look for phones that are capable
of running these ad creatives and serve them in all of the appropriate places. Maybe in
a Google search result, like you see there on the left or maybe in our--what some of
our most proper applications like Google Maps, you see in the middle or maybe it's a display
brand ad that we can run on one of our or our partner properties like YouTube. Now,
in addition to running campaigns there's another phenomenon that's worth mentioning and that
is the incredible usage of mobile apps. You know, some studies have comeback with data
that has even surprised Google. Like for example, did you realize that 25% of Android users
and iPhone users who download Apps spend up to two hours a day in those applications?
And so that's a tremendous opportunity for us and it's an opportunity we've been focused
on. Currently, we have in beta or trial or experiment phase, something called AdSense
for Mobile Apps. And this beta product allows advertisers who we've white listed to help
us build the right kinds of advertising solutions so that these ads can appear in a relevant
way in mobile applications. You see a couple of examples on the screen like Urbanspoon
and Shazam. And we continue to invest here. Now it's also probably intuitive to this audience.
That location can make an ad more relevant. If I search for pizza, I'd like to see someone
who offers pizza right around my location. And the same is true for almost all other
categories of search. And so it's no surprise that Google has invested a half decade in
location technology. That includes our earliest work with Google mobile maps, it includes
the building of a My Location platform that automatically knows where you are, and as
recently has included some of the demonstrations I just showed you with turn-by-turn navigation.
In fact, we collect hundreds of millions of data points with the users consent and permission
everyday. And that database really is helping us refine how we think about location and
advertising. And that's worldwide. Let me give you two examples of how we use that location.
On the left-hand side you see something called "Click to call" this is so simple you might
have missed it. We launched this just last month. You note there, there's an ad for Ruth
Chris Steakhouse. But in that ad is a phone number. That phone number is clickable and
it's a billable or chargeable interaction. Now what that means is that the advertiser
gets a call for the prize of a click. And its no wonder advertisers have responded so
well to this program. And of course, consumers love the ability to see an ad, click on the
number, call the business right away. And this is an example of something that's new
that we can really go do on mobile. The right-hand side you see something that's still an experiment
phase. But as some of you may have seen this and been part of our mobile experiments. That
is what we call a local ad layer. When a consumer does a search for a movie theater or coffee
shop or a hotel we'll offer that user the ability to show that on that map from here
on out added as a layer. And so for some users, whether it'd be their favorite hotel chain,
their favorite movie restaurants, their favorite coffee shops, they like the ability to go
serve that that brand right on that map perpetually. Once again, a win for the consumer, win for
the advertiser, something to of course that helps Google as well. Let me recap, the industry
trends are blowing in Google's favor. The internet that we have long waited for has
arrived on mobile. Flat data plans or simple data plans combined with powerful smartphones
that have gone mainstream. And most importantly, the emergence of the web browser that spans
all devices is something that we think is--which is very good for both the consumer and for
Google. Secondly, Google is investing in mobile across all our applications but we're doing
it in a way that leverages the unique connected sensor-rich nature of mobile devices. And
finally, mobile advertising is an area that we continue to be focused on and very excited
about. Not just because of what we've learned on desktop but because of how new technologies
like location can make ads even more relevant.