InnoWiser

Is it a bird? Is it a plane? No, it’s not even a Google Phone!

So Google has thrown its hat in the mobile phone business in a big way. Blogs and papers were rife with rumours and newsbytes about the new, new thing from Google. Yesterday Google announced its Open Handset Alliance of partners and the Android platform. Absent from the announcement is a true hardware, the GPhone. It is probably only a matter of time before a real GPhone appears.

To a large degree it matters little what structure of the new thing is. What matters more, perhaps, is how Google is taking on the key stakeholders - mobile carriers, handset makers, semiconductor manufacturers, etc. and crafting a new approach to developing and selling mobile phones. It is perhaps a smart strategy by Google to not compete directly with the bigger players by making its own phones, but instead focus on the guts, the Android software platform and its specifications. Let a dozen handset manufacturers battle it out amongst themselves; Google will provide them all with ammunition. (Not that Google wants them to kill each other off. No, that would rather defeat the purpose.)

By providing the specifications for a mobile platform (operating system) and collecting a cadre of mobile partners, Google is ensuring that it remains at the center of the mobile ecosystem. Operators and handset makers will have the ability to customize services on their new hardware; however, Google will retain the ability to add new services on the phones, ensure consistency of basic look and feel, and most importantly, revise and update the specifications as and when required. This is battle of the platforms, rather than a battle of phone makers per se. It’s a Google mobile operating system versus (Nokia led) Symbian, Windows Mobile and Palm OS. But mostly it is Google vs. Microsoft.

What does Google hope to gain from this initiative? In short, new channels for mobile advertising, expected to be the next, hot battlefield of Internet advertising. Everything else would probably be just gravy on the top. True, operators would like to be seen as innovative by supporting an “open” initiative, and the larger the number of partners, the more open the alliance looks.

Let’s look briefly at the current partners in the alliance.
Mobile Operators:
Asia - China Mobile, KDDI NTT DoCoMo
Americas - SprintNextel, T-Mobile
Europe - Telecom Italia, Telefonica

Handsets Makers:
HTC, LG, Motorola, Sansung

Semiconductor:
Audience, Broadcom, Intel, Marvell, Nvidia, Qualcomm, SiRF, Synaptics, Texas Instruments

Software:
Ascender, eBay, Emertec, Google, LivingImage, NMS Communications, Nuance, PacketVideo, SkyPop, SONiVOX

Commercialization:
Aplix, Noser, TAT (The Astonishing Tribe), Wind River

(Source: Open Handset Alliance)

Conspicuous by their absence are large existing players with their own offerings. Nokia, with its Symbian OS. AT&T, which exclusively released Apple’s iPhone. And other European or Asian operators like Vodafone, Bharti, etc. Perhaps they all are taking the wait-and-see approach. More likely, they see Google as a rising competition. More on this later.

There are several reasons why Google is likely to succeed, and a few where it will face tremendous hurdles.

Success
Partnerships. For any alliance to be accepted, the size of its partnership matters. It is a testament to Google’s leadership that it has indeed been able to sign up over 30 partners. Perhaps others will join as they see a benefit in reaching more consumers.

Abilty to “act” neutral. By defining an “open” alliance, by offering its Android platform free of charge and thus opening up the platform for various applications, Google indeed has shown that it is serious about neutrality. It also puts the platform squarely against Microsoft’s Mobile platform. Other platforms such as Symbian, J2ME, and Linux are indeed open so there is definite aspect of competition.

However, GigaOm is not impressed with this move. Om thinks it is at best a PR move for now, and perhaps a real GPhone hardware from Google will be out in 2008. It is a point worth pondering.

Hurdles

Google’s power in the Internet world makes carriers suspicious. Carriers like to think that they “own” the mobile customers, and that they should be make the largest chunk of money from their customers. Too bad that the carriers do not innovate as effectively as other, smaller startups do. (Think top twenty of the latest mobile innovations and count how many have the carriers developed themselves. Most mobile innovations today are coming from the fringes, such as Apple, Twitter, Dopplr, Jaiku [bought recently by Google] and so on.) So they are likely to thwart Google’s entry in the ecosystem, especially where Google is likely to monetize the trump card - mobile advertising. The only reason carriers might actually work with Google is where they get a good chunk of the advertising pie.

More importantly, large players like AT&T, Verizon Wireless have been sparring with Google on its bid to buy wireless spectrum and change the rules of the game. They see Google’s move as a precursor to an entry into the carrier business.

What does it mean for end consumers? In short, there’ll be more choice in handsets. A more open phone, with no “walled garden” from suspicious mobile carriers will indeed be a refreshing change. Indeed, the phones might offer a better surfing experience with familiar Google applications - Gmail, Maps, Search, Docs, etc. - all preloaded on the phones. On the other hand, there’s no concrete drool-worthy design such as the iPhone yet announced.

Ultimately, the battle will be won in the marketplace, as it almost always is.