Mobile Search: The Epic War for Your Words and Wallet

Bill is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Tech titans Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL), have commenced an epic battle for supremacy in mobile search and mobile payments -- and it's literally happening right under your nose. They're fighting to determine how verbal searching will change mobile search and jumpstart mobile payments.

Both companies are dreaming of a new world of search, where mobile computing devices will hang onto your every spoken request and whim -- and turn it into a recurring tsunami of mobile search and payment revenue.

A Mobile Customer = A Big, Walking Bag of Money

When a consumer accesses their smartphone or tablet, they are far more likely to be out and about - which makes them a prime customer. After all, we still make most of our purchases while we're away from home. So it's easy to see why Apple and Google must drool at the thought of the money to be made via on-the-go searches and transactions.

Just look at the vast resources both companies have invested in their mobile mapping technology. They're not doing so out of altruistic concern in your navigation; if they know where you are right now, and to know where you are going, it's easier for both Apple and Google to sell you things along the way. 

What Makes Mobile Search Different

The phrase "Google" is already synonymous with search, so it's easy to imagine that the company would dominate on the go the way it already does on the desktop. But the rapid move toward voice search -- Apple's Siri, Google I/O -- may change that. Talking, not typing, led to a phenomena that I call the "OS hand off".

In voice search, it's now the mobile operating system's (OS) job to determine how your search will be handled. For example, using Apple's Siri, a search for restaurants or lodging launches Yelp, while a request for movie times launches Fandango.

Note, that in traditional online search, it was the user that chose the search service, whether it was Google, Bing, or some other search engine. However in mobile, the opportunity exists for the OS to create an intermediate "search platform" which "hands off" search queries based on search criteria and business partnerships.

In the case of Apple: Movie searches go to Fandango, dining searches to Yelp, and sports searches to Yahoo.

The rapid increases in the sophistication of voice recognition search provides a huge revenue opportunity to the company controls the mobile "search platform" that "hands off" the search.

Gartner estimates mobile advertising/search will increase 400%, from $11.4 billion in 2013 to $24.6 billion in 2016. The Asia/Pacific region, where the adoption of handsets for digital consumption outpaces the West, is leading the charge.

The Power of Mobile Payments

However, mobile advertising is just half the story in mobile search. Both Apple and Google are also jockeying for position in mobile payment transactions. Providing a mobile platform that handles both search and payments, in my opinion, is quickly becoming the holy grail in the mobile services space.

To get an idea of the possibilities in this space, imagine a business traveler is searching for lodging. During the search, the traveler is offered a promotion that includes lodging, meals and entertainment from businesses she has already frequented. The traveler accepts, and the promotion offers are automatically stored in their mobile device. The offer discounts are then automatically included at the point of purchase through the mobile purchase system, removing any need for the traveler to worry about coupons, loyalty cards, etc. 

Gartner forecasts that mobile purchases will exceed $617 billion by 2016. The ability to integrate mobile purchases into a seamless search/promotion/purchase experience would provide a substancial source of incremental revenue for both Google and Apple, and significantly differentiate Apple's iOS and/or Google's Android from Windows or Blackberry.

Conclusion

Foolish long-term investors benefit when they can identify macro trends that will redefine an entire market. The rapid adoption of smartphones and tablets, combined with increases in the sophistication of verbal recognition technology, provides just such an opportunity to investors.

Stay tuned to learn more about potential winners and losers in this huge, ongoing shift. In the meantime, keep a close eye on Apple and Google as they work to position themselves in this epic war for your words and your wallet.


Bill Shambllin has a long position in Apple and Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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