Google-AOL, ERTS and Google U.

A lot has happened since my last posting. Most recently Google [nasdaq:GOOG] announced that it would be investing $1 billion for 5% of AOL. Most of the mainstream business press seemed to focus on the advertising - Google getting access to the AOL network and selling a broader range of ads. I think the ad stuff is a bit of a Trojan horse. The future as George Gilder has been preaching, is all about the so called "teleputer" or cell phone. I think Google's main interest is in AOL's instant messaging network. Google has its own Google Talk instant messaging Voice over IP service and hooking up with AOL's 43 million U.S. IM accounts will give its service huge traction. Vonage has 1 million VoIP telephone subscribers and Wall Street is drueling in anticipation on an IPO. Just imagine what a powerful telecom GOOGLE/AOL becomes with a huge footprint of Internet phone users. You saw what Ebay paid for Skype- $2.6 billion. In the meantime you are already seeing Google trying to get into the WiFi municipality market by proposing free WiFi access for San Francisco. Using Voice over IP , these WiFi networsk could easily become cell phone networks and then Gilder's teleputer revolution becomes a reality and Google is the telecom provider in cities like San Francisco. It is no coincidence that Google just started promoting that its Gmail service was available via cell phone. In my opinion all of the big broadband cable companies and wireless service providers like Verizon should be nervous. Google will be big in wireless, maybe even bigger than service providers like Verizon Wireless. And just imagine what happens to "ARPU" when Google offers free wireless phone service supported by contextual advertising. ... stay tuned.

On a different front Electronic Arts [nasdaq:ERTS], maker of Madden 2006, Need For Speed Most Wanted, and Medal of Honor, recently announced that it would purchase wireless gaming company Jamdat Mobile [nasdaq:JMDT]. Forbes Wireless editor Nik Hutheesing has long been a Jamdat bull and we have been saying that the big gaming companies were eager to gain share in wireless gaming. Jamdat was created by former executives at Activision. There will be more such mergers, and I predict that even bigger media companies, perhaps Disney [nyse:DIS] will go after a video gaming company like ERTS (think convergence of ESPN and ERTS stranglehold over the best sports video games.) For the established console companies cell phone gaming is huge. For starters, many more millions of people have cell phones with games on them than consoles, or play computer games. The video gaming companies need to expand beyond their core demographic, teens to 30 somethings. Cell phone games reach people who would never even pick up an Xbox controller. One gaming company that is extremely proactive at addressing video game makers' stuck in the hardcore gaming rut is Nintendo. It doesnt get that hung up on graphics or high def, like Microsoft. They want to improve gameplay and thereby broaden video gaming's audience. I believe the Nintendo Revolution , coupled with the release of Zelda will be huge. Too bad Nintendo isnt listed here on Nasdaq.


Lastly I would like to point readers to my very bold prediction for 2006. On Forbes.com I looked way out in the future and predicted that eventually we might see a Google University. The point is the University Education market is ripe for disintermediation. Content providers (ie professors) arent getting rich, but their University employers raise tuitions every year and have coffers brimming with billions. Google’s stated mission is to “organize the world’s information and make it universally accessible and useful.” It has already been busy scanning the libraries of venerable institutions like Stanford ( which was in on the Google IPO), Harvard, University of Michigan and Oxford. It also has a fledgling broadband video operation. Why couldnt say Stanford and Google create smart curriculum using full multimedia over the internet? And would parents sick of paying $40,000 per year mind terribly if they the price dropped to $5,000 per year provided that small text ads run in the margins of Junior's online texts or video courses? To read all of my "Sneak Peek 2006" predictions on Forbes.com, including prescient calls on the rise of Eastern Europe, Vonage, ETFs and the Real Estate Boom, click here.
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