Google Phone, New Ad Platform

    August 2, 2007

The tech world is buzzing with rumors about a Google phone. The Wall Street Journal ran an article today, quoted at SearchEngineLand, that provides some details of the development process. Apparently, Google is taking a two-pronged approach: developing their own handset, but at the same time opening up the specifications to allow other manufacturers to offer compatible phones. And, unlike Apple’s iPhone, the Google Phone (GPhone?) should be available from multiple wireless companies.

[Google] is drafting specifications for phones that can display all of Google’s mobile applications at their best, and it is developing new software to run on them. The company is conducting much of the development work at a facility in Boston, and is working on a sophisticated new Web browser for cellphones, people familiar with the plans say…

Google is hoping that multiple operators will offer its phone. And Google is ready to relinquish some control over design, allowing manufacturers to create devices based on a common set of specifications. Google has approached several wireless operators in the U.S. and Europe in recent months, including AT&T, T-Mobile USA and Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, people familiar with the situation say. T-Mobile USA, a unit of Deutsche Telekom AG, appears to be the furthest along in considering it, these people say. Andy Rubin, who helped design T-Mobile’s popular Sidekick phone, now works at Google and is involved in its handset project. [From the WSJ via SearchEngineLand]

The overriding goal seems to be not slugging it out in the intensely competitive cell phone hardware market, but rather creating a new platform for Google advertising. Free, ad-supported phone service isn’t out of the question. One thing that Google has discovered in the past is that “free” is a very attractive price point. They have taken costly web analytics software and offered it free to users, who can better manage their paid Google Adwords campaigns. In addition, Google vacuums up even more data for its insatiable effort to better understand Web users and site traffic patterns.

Wireless Market Disruption. It’s not outside the realm of possibility that Google could cause some major restructuring in the stodgy U.S. cell phone market. The big carriers that dominate wireless service in this country also dominate cell phone hardware distribution – greatly to the detriment of U.S. wireless users. Hardware choices are limited compared available those in Europe and Asia, and U.S. carriers sometimes even cripple hardware features to boost service revenue. Apple did nothing to break these oligopolistic practices when they introduced their iPhone – rather, they released it through a single carrier. It’s likely that Google will find it easier to cooperate with the U.S. wireless giants too, but they may shake up the market by offering new hardware at dramatically lower ad-supported hardware pricing.

Google Smart Phone. What would I love to see? A Google-designed smart phone. I’ve been patiently waiting for the Verizon XV6800 to release (OK, maybe not patiently), and even though I want this phone I’m sure I’ll find it has important limitations and compromises. With Google’s demonstrated creativity, I think they could probably shake up the smart phone market, too. Every employee would have one, and by the time Smart GPhone 2.0 came out, I’m sure it would rock.