Google has sent out specifications to handset manufacturers, requesting they design a phone that runs a Google operating system - complete with a new browser and integration with many of Google's popular online applications, according to The Wall Street Journal.
The company has invested hundreds of millions of dollars in the project, whose designs include a camera, Wi-Fi and possibly 3G and GPS, as well as a full QWERTY keyboard. Google apparently does not require manufacturers to license the design or the software, to encourage the development of an array of compatible handsets. Similarly, the company has not approached any single carrier exclusively, rather all the national U.S. carriers.
Just as its fortune was made through web advertising, Google intends to use new, mobile advertising revenue to offset service costs, allowing subscribers to use the phone for free. Essentially, it is looking to expand its pay-per-click business into the mobile web-browsing space.
“For wireless operators, the plans are a double-edged sword,” write Wall Street Journal reporters Amol Sharma and Kevin J. Delaney. “Google's powerful brand and its popular web services could help operators sign up more subscribers to data packages, on which they increasingly rely as voice revenue declines. However, operators have been wary about losing control over the mobile-ad market.”
They note that Google CEO Eric Schmidt expressed interest in mobile phone ads last May, saying they are “twice as profitable or more than the non-mobile phone ads because they’re more personal."
Last year, global spending on mobile-phone advertising, including placement of ads in text messages, web pages, video and all other content, was only $1.5 billion, according to eMarketer. But that figure is projected to grow to nearly $14 billion by 2011, the market research firm says.
Although a company spokesman recently declined to comment on a Google phone project, it was revealed that “we are partnering with almost all of the carriers and manufacturers to get Google search and other Google applications onto their devices and networks.”
Sharma and Delaney report the company's past efforts to get its software on cellphones have raised some concerns in the industry. Verizon Wireless Chief Executive Lowell McAdam said the carrier has chosen not to integrate Google's Web search engine tightly into its phones because of Google's demands to get a large share of search-based ad revenue.
Google has also announced that it may bid for wireless-spectrum licenses at a coming government auction, write Sharma and Delaney. On July 31, the Federal Communications Commission approved rules addressing some of Google's concerns about the sale.
“If it owned spectrum, Google might turn into a phone operator itself. However, such a project would take years to come to fruition and cost billions of dollars. For now, Google has to work with existing cellphone operators to get its mobile products to consumers.
“Google has generally had better luck in Europe than in the U.S. in getting its software on cellphones. It has forged a relationship with the United Kingdom's Vodafone Group PLC to provide the search bar on the carrier's branded Internet homepage, with results customized for cellphone users. T-Mobile in Europe integrates Google's search bar into its welcome screen for users who have a data plan designed for heavy Web browsing. It's unclear which carriers in Europe Google is working with on its handset plans.”
- allanp@iqmetrix.com
* To read more about Google and Emerging Mobile Trends, check out the following articles from iQmetrix News & Views:
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Text-message Coupons: Has the Future Arrived?
The Incredible Popularity of Text Messaging
Mobile Advertising Picking Up Steam
Mobile Data Service Revenues Growing Fast
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Virgin Mobile Offering Cellular Minutes for Watching Ads