Can Google Change an Industry With the GPhone?

I have been hearing a lot about Google's GPhone for serveral months now, and usually try to avoid commenting on products that are this far out, but this reference story caught my eye in a couple of ways. First off, my sensitivity to the notion that Apple's iPhone has changed the face of mobile phones is at an all time high. The article quotes Karsten Weide, an analyst for IDC, saying, “The iPhone was a milestone in terms of how people use a mobile device. The GPhone, if it does come out, will help Google with distribution for their online services.” I not only disagree with the first part of this statement, but I also believe that Weide will probably be wrong on the second part as well. PDAPhones have been doing what the iPhone can do (and more) for years... the only thing the iPhone brings to the table is a slicker interface... hardly worthy of being called a milestone in the industry.

So what's the GPhone all about? Google has been working behind the scenes for quite a while trying to develop a way to exploit mobile devices as another outlet for their vast advertising business. With the competition continuing to heat up from Yahoo and Microsoft it its primary market, it is looking elsewhere and the when you look at the numbers... mobile phones make sense. They've apparantly determined that the best way to tap this market is at the operating system level.

The core of the GPhone will be a new Google developed Linux based OS that they hope to see in mobile phones next year. They will most likely steer clear of the hardware end of mobile phones, and leave that to the likes of Motorola, Samsung, HTC, and others. They will go head to head with Microsoft, who has been selling their Windows Mobile platform for some time now. But how will they penetrate this market? According to IDC, Microsoft has been doing it for years, has agreements with 48 handset makers and 160 carriers worldwide and still only sold with 12 million handsets a year. But Googles motivation and approach I believe are very different from Microsoft.

Microsoft is a software company, and their interest in Windows Mobile is Windows Mobile. They want to sell their OS on as many devices as they can...and the key word in that statement is "sell". But Google is a different beast. Most of us, as consumers, use Google products daily and have never paid a penny to Google. I doubt most can say the same thing about Microsoft. We do use them everyday, and we do pay them a lot of money. If Google continues its current model, then they would likely not charge for their mobile OS. This would certainly gain the attention of the handset makers and carriers, because in this highly competitive market, saving the cost of the OS would increase their margins. If Google can find a way to tap the advertisers to fund the OS like they have done with their search engine, then they could have a new mousetrap to sell... or I mean, to give away. And beause their name would be tied to it, they would surely want to support it as well, making it a win-win for the handset makers and carriers.

But the picture isn't quite that rosey. Google would like to see the mobile phone market look like the internet.... that is that it is totally open and not controlled by anyone. The world of mobile is nothing like that. It is a world dominated by proprietary devices and carriers that are very protective of their turf. I believe that if the carriers had their way, there would be nothing open and all the phones they sold would not be available from anyone elses. But most consumers would like cellphones to be like home phones. When you buy a home phone, you don't have to know who your service provider is in order to make sure its compatible. You buy it, you plug it in, and it works. With cellphones, at least in the US, you pretty much have to get them from the carrier, and they only work with that carrier. You can buy them elsewhere, but it is very expensive and you may not be well supported. Google would like to see this change and is making moves to try and open things up with the GPhone. This might result in the very companies they need to partner with shutting them out.

If Google is succesful, however, we may see the cost of being a consumer of a mobile phone take a turn. Sites like PDAPhoneHome are free to consumers, primarily because of Google (and its competitors) that allow the profits from advertising to help pay for the service provided. It would seem that the same thing could happen with phones. Would you be willing to have your cellphone bill be zero, or even half what it is now, in exchange for a small ad at the bottom of the phone all the time? I'd give it serious thought. On top of that, phones could play rotating ads while you are on the phone... while the phone is in standby, etc. When you are talking on the phone, you are often doing nothing... so why not look at some ads? And I'm sure Google has many more ideas than this to integrate all their cool applications into a mobile device.

No... I don't think the iPhone was a milestone for the industry... maybe a milestone for Apple and Jobs, but not the industry. But, I believe that Google has a chance to have a milestone product. Of course this will depend on them being successful and there are lots of opportunites for them to fail. Lets home they do succeed, because it could be a good thing for us all.