Google Grabs Next Foothold

Google's(GOOG Quote) deal with Clearwire(CLWR Quote) is a big win for the search giant, but mostly because it sets the stage for much bigger things to come.

On Tuesday, wireless broadband provider Clearwire announced a partnership with Google that would incorporate the search giant's applications, including Mail, Calendar and Talk into Clearwire's wireless Web platform.

Under the agreement, Google will power some of the Web infrastructure that Clearwire customers will use, while Clearwire will control the look and feel of the interface.

What Google-Clearwire Deal Means for the Web

The deal marks another key win for Google's Apps offerings, which the search giant identified as a key component of its strategy -- along with search and ads -- last year.

Landing Clearwire, which counts about 350,000 users so far, is certainly a win for Google. But the longer-term strategic implications may well outweigh its short-term consequences. Google has a virtually identical deal in place with Sprint(S Quote), which is in the process, albeit slow, of rolling out its own broadband wireless technology based on WiMax -- which is also part of the Clearwire network, and will play an increasingly large role -- that is expected to reach 100 million users by the end of 2008.

The Clearwire deal will provide Google an invaluable testing ground for delivering its application suite over wireless broadband technology to a large but relatively manageable size of users under live conditions before it has to boost the scale in a huge way.

And the prize for getting it right is enormous. For starters, there's the potential 100 million additional users once Sprint finishes its network at the end of 2008.

While Google won't comment on the financial aspects of these transactions, there are several ways the Google can reap financial benefits a user base that large. The company could charge a fee to design and maintain its application suite for its partners, like it does for some of the businesses using its applications.

Google also serves ads in its email service, which generate revenue for Google each time a user clicks on them. And the partnership also could allow Google to place ads on Sprint's portals and embed Google search boxes -- as it has done in Clearwire's case -- which would generate more income.

Such growth prospects are key for a company that has seen its stock drift lower since crossing the $700 level in early November. Google closed Tuesday down 2.5%, to $637.65.

But more than the financial nuts and bots, it's the way that WiMax technology -- which blankets entire regions with a powerful broadband connection -- jells with Google's vision about the future of computing that makes these partnerships especially valuable.

As Google CEO Eric Schmidt often points out, the company sees "cloud computing" as the most important technology trend to emerge in decade. In this vision, the bulk of user data is stored in central server -- preferably the massive data centers Google is assembling, if the company had its way -- rather than lying on scattered individual PCs. Users could then connect to this data from anywhere and through any device through the Internet.

Not coincidentally, this trend would also usher in Google to replace Microsoft(MSFT Quote) -- the company that dominated the era of the PC -- as the most important technology company in the world.

By providing pervasive, high-speed broadband connections in the regions they cover and blurring the line between PCs and wireless devices, companies such Clearwire and Sprint are helping usher in Google's vision of the future.

A user on Clearwire's network, for example, could check their Google email account from their home laptop by connecting through a broadband access card. But that user could also step out to the grocery store and use a mobile device to connect to the same Clearwire network and access the same email account.

"What we find so compelling about Clearwire is their philosophy of an anytime, anywhere, any device broadband Internet experience," says Matthew Glotzbach, product management director, Google enterprise team. "They want to give users an untethered Internet experience, and we want to be part of that."