Google Inc., the world’s largest Internet company, is building solutions to merge “voice and data” in text messages sent from mobile phones, and is hoping to aggressively push these in India, among the fastest growing markets for cellular phone services in the world.
Google is also working on increasing local content in Indian languages and also content for various regions, as it aims to tap business opportunities beyond urban regions.
Google India managing director Shailesh Rao
India is emerging as the largest growth market for Google, as more small and large businesses in the country advertise through Adwords, the target based text-advertising programme of the search engine.
A majority of the more than 180 million Indian mobile subscribers use their phones to talk with others, but firms such as Google and rival Yahoo Inc. are looking at business opportunities such as embedding advertisements in text and other messages between mobile phones, depending on the content, much like their targeted advertising on Web searches.
“The primary killer application is still voice. What nobody has figured out in the world, including India, is what is the proper marriage between data and voice. I think we have an opportunity, particularly in India, to explore that question,” Shailesh Rao, managing director of Google India Pvt. Ltd, a local unit of the Internet giant, said in an interview.
The Canada-born Rao, with roots in Karnataka, who took over as Google’s India head in April, said the volume of text messages—or short messages—in India was far less in proportion to the user base compared with markets such as China.
“It is incumbent on all of us in India to really work hard and figure out what is the proper marriage of voice, for mobile devices in India, so that we can see this kind of data growth,” he said, declining further details on the company’s plans in this area.
Google will work with telecom operators—it has a tie-up with Bharti Airtel Ltd—content providers and other Internet firms for building the soluti-ons. Rao said there would be more such partnerships “and an aggressive, focused attention to the mobile space.”
In June, Google’s smaller rival Yahoo entered into a pact with Idea Cellular Ltd to allow the telecom firm’s more than 15 million subscribers in 13 telecom circles or regions such as Delhi, Himachal Pradesh and Kerala, search for information on Yahoo’s OneSearch service. Microsoft Corp. tied up with Vodafone Essar Ltd (then called Hutchison Essar Ltd) in November 2006 to offer its mobile search and Windows Live services to customers of the Mumbai-headquartered pho-ne firm.
Mountain View, California-based Google has a huge presence in India—several hundred graduates work in its operations base for Adwords in Hyderabad and Gurgaon and a few hundred researchers at its research base in Bangalore. The company is expanding in Hyderabad and recently signed an agreement with the Andhra Pradesh government to acquire land but did not disclose investment details or growth targets.
Google plans to take the mobile products and solutions built by researchers in India for the local market to other regions in Asia, Latin America and Eastern Europe.
“Our aspiration is not just to build great products in India, but (to) take the lessons from here and make India a leading indicator for the rest of the emerging world,” Rao said.
India’s online population is expected to cross 100 million by 2008, predicts Internet and Mobile Association of India, which tracks Internet usage patterns in the country.
Though Google is bullish on the India market opportunity, it feels the Internet sector in the country is “under invested” and not enough applications, content and products are coming online, Rao said.
“This is why if you see the user statistics in India, proportionately, Indian users are not coming online as quickly as they should and if we did all things correctly as we expected to,” Rao said.
Rao declined details of Google’s investments in start-up companies in India, but an executive close to the development, who did not want to be identified, said the Internet firm is acquiring a 30% stake in the $15 million venture fund Ventureast Tenet Fund II, launched by Hyderabad-based Ventureast and Andhra Pradesh Industrial Development Corp.
This is the third Indian fund Google has invested in. It had previously backed Mumbai-based Seedfund and Bangalore-based Erasmic Ventures. A Google spokesperson declined comment.
Google’s investment in the early-stage fund is in keeping with its India strategy of indirect investments. In other markets, Google plugs into start-ups directly, either by buying a stake or through acquisitions. Google paid $1.6 billion for online video hosting site YouTube Inc. last year. In the India market, however, Google is being cautious, choosing to be a fund-of-funds for early-stage venture capital firms, rather than approach companies directly.
Namitha Jagadeesh contributed to this story.