Google talk
Rumours are mounting that Google will launch a cellular handset to rival Apple’s iPhone. The Web search giant hasn’t confirmed the project yet, but, if true, it could have a profound impact on the way the telecommunications industry works.
Google, the phone company? It’s not as far-fetched as it might sound. The Web advertising machine is developing advanced software for mobile phones to help it profit from an expected boom in cellphone advertising, according to a report published earlier this month in The Wall Street Journal. “The company is conducting much of the development work at a facility in Boston [where it] is working on a sophisticated new Web browser for cellphones,” the newspaper says, quoting unnamed people familiar with the plans.
The news follows Google’s announcement that it is considering bidding for wireless spectrum licences at an upcoming US government auction. The spectrum, in the 700MHz frequency band, will be freed up in 2009, when US broadcasters complete their switch from analogue to digital terrestrial television. Google’s move is seen by some industry analysts as a prelude to its becoming a full-fledged cellphone operator.
Some of Google’s Web software is already available for download on devices from companies such as Nokia and Motorola. The company has ported applications such as Gmail, Google Maps and YouTube to mobile phones. But getting consumers to download the software is not easy — people tend to use only the software that comes with their handsets — and network operators have reportedly been reluctant to bundle Google applications on handsets they sell.
The solution may be a Google-branded phone, or Gphone. But Google may not build the handset itself, rather outsourcing it to third parties. “The company has suggested the phones could carry the Google brand alongside the brand of the operator, or they could be distributed without the Google name,” according to The Wall Street Journal.
The newspaper says Google has developed a set of specifications for a high-end phone with built-in Wi-Fi and 3G connectivity. The Gphone could also include GPS technology for satellite navigation. Korea’s LG Electronics is reportedly interested in building it.
There are potentially rich rewards for Google in mobile advertising. The company wants to extend its advertising reach beyond the PC. It recently launched Google Print Ads, which allows companies to place advertisements in 225 US newspapers.
The Wall Street Journal, quoting research firm eMarketer, says worldwide spending on cellphone advertising was US$1,5bn last year. “That figure is projected to grow to nearly $14bn by 2011.”
Interesting new models could emerge. Imagine receiving free 3G Internet access or being able to make free voice over Internet Protocol (VoIP) calls in return for viewing Google-brokered ads. It could turn the telecom industry on its head. How would cellular operators respond? Would they partner Google? Would they build rival advertising systems? It’s difficult to know.
What is clear is that a Gphone would put Google on a renewed collision course with arch rival Microsoft, which has its own designs on the cellphone market. Microsoft has had few successes in convincing handset manufacturers to use its Windows Mobile operating system. Many handset manufacturers, including market leader Nokia, distrust the software maker. They fear that if they deal with Microsoft they will become little more than low-margin hardware manufacturers while the software giant creams off all the profit, much like it does in the PC industry.
Will handset manufacturers be more open to dealing with Google? Unlike Microsoft, the company plans to give its software to them free of charge. But will that be enough?
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