The only real thing that the iPhone and the Gphone have in common at the moment are five letters.
Google’s plans for the mobile phone market have caused quite the stir Monday, even though the company’s press conference Monday morning didn’t add much to what we already knew about Android, a collection of software that could be a catalyst for Linux on mobile phones over the next few years. Still, when any company the size of Google makes noise about steering its ship in a certain direction, people take notice.
One nice development is that we can stop calling the damn thing the Gphone, which stopped being cute awhile ago in the fine tradition of J-Lo, A-Rod, and K-Fed. But while both Apple and Google will be selling mobile phone software in late 2008, the companies seem determined to walk a fine line in their new dual relationship as trusted partner and wary competitor.
Android is a nice idea; take the promise of Linux as a mobile operating system and finally give it a backer with some legs. This could set Google up nicely for the future if mobile phones continue to turn into little computers, since companies like Symbian and Microsoft are far from entrenched in this market.
Apple is also eying that future. Much of what Google said about Android during its press conference–such as the desire for a better Internet experience on mobile phones–was uttered by Apple CEO Steve Jobs in January during the presentation of the iPhone. And it’s already sold 1.4 million iPhones in three months.
So this time next year, are we going to be talking about the looming showdown between Google and Apple in mobile computing, or the surprising resignation of Google’s Eric Schmidt from Apple’s board of directors?
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This was a rare week when a new rumor about the long-awaited gPhone from Google arriving ANY MOMENT NOW did not emerge. If I had a nickel for every time a blogger has announced that the prospective device has been “confirmed,” I’d have a lotta nickels. So I’m going to go out on a limb and say: It ain’t happening.
Oh, I’m not saying that the reports of the gPhone’s development are false (note that the headline of this post says “Sell,” not “Make”). I’m saying that with its $185.4 billion market cap, the search giant is perfectly willing to pour millions into designing and stealth-marketing a device that may never hit the market. Why? To force the carriers and the handset vendors to play by Google rules.
In fact, the whole gPhone effort, at which I have no doubt dozens of Google elves are toiling away as I write this, may be a “wedge” tactic to force open carriers’ networks and vendors’ screens to the do-no-evil logo. Google wants real estate and eyeballs, not handset sales. Here are 6 reasons why Google won’t go into the mobile phone business:
1. Google is a software-and-advertising company, not a hardware manufacturer. Even Apple, which has made its living on stylish consumer equipment for its 31 years, took many years and lots of dough to come up with the iPhone. Even then, it didn’t exactly get it just right. Google has no established OEM partners, although it is said to be working with Taiwanese handset maker HTC on the gPhone. Making stuff people want to buy is hard. Just ask Sony.
2. The margins are low. Just ask Motorola’s Ed Zander. Margins on Google ads are low, too, but the cost of putting them out on each additional page is virtually zero. Google CEO Eric Schmidt is very familiar with the realities of marketing and selling phones. It’s not a business that he really wants to get into.
3. The competition is fierce. Nokia, Apple, Samsung, Sony Ericsson, Research in Motion, Motorola: that’s a formidable list of new competitors, able to respond quickly to new trends and new devices (just look at the iPhone knockoffs now emerging). Each is a potential partner for Google’s mobile ads and services. Schmidt won’t anger them unless he has to.
4. No carrier will sell it. It would be entirely against the Google ethos to release a phone exclusively, locked to designated carriers’ networks, but at present that’s the only way to sell phones in any volume in this country. Google is busy striking partnerships with every carrier, domestic and international, it can entice to the table. Buying spectrum and putting out a cheap Google-branded phone is not the way to get them there. Threatening to put out a phone may be.
5. It’s not fun. Google has already been drawn into the telecom struggle over the upcoming FCC auction of valuable wireless spectrum in the 700 MHz band. Two years ago it opened a D.C. office with a genuine Capitol Hill lobbyist. Becoming a handset vendor would entail altering the company DNA even more. The example of Apple, for whom the iPhone has been a raging sales success but increasingly a PR nightmare, has to be evident to Schmidt and his team.
6. Google doesn’t need to. Why take on the headaches of actually building and selling devices when the vaporware of the gPhone is already having the desired effect of forcing open carrier networks and greasing the skids for deals with the handset vendors? Let’s put it this way: Google’s share price is up almost 20 percent in the last six weeks alone. Do you really think this is a company being forced to undertake a major new venture that’s outside its competencies and carriers substantial risks for shareholders?
I think not. A mobile operating system, running on a raft of handsets from a variety of vendors, is far more likely.
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