Google seems bent on claiming a larger piece of the wireless pie, but the search engine king could find some obstacles stateside. As the world awaits Google's confirmation on just what its next steps will be, analysts are beginning to highlight the obstacles of making a Google-powered phone a reality in the U.S.
According to the Wall Street Journal, Google is expected to announce advanced software and services designed to pave the way for handset makers to bring Google-powered phones to store shelves by the middle of 2008. The Journal cited sources familiar with the matter in its Monday report. Google could not be reached immediately for comment.
Google is reportedly working on a suite of applications -- including maps, e-mail, social-networking features, and video -- optimized for the wireless experience. But Current Analysis analyst Avi Greengart said that's not a new revelation. Google has been developing its own suite of applications for some time.
The Carrier Conundrum
"Google has an Internet search advertising machine, a tremendous stock valuation, and lots of money. Google has assets it could leverage to change the economics of the wireless search business. So it remains to be seen just whether they will," Greengart said, noting that the promise of a Google phone seems more about the potential for advertising-funded handsets or services than a phone itself.
As Greengart noted, Google brings two things to the table: search and money. But that might or might not be enough to strike deals with U.S. carriers who hold the key to a Google-powered phone. Google would have to make an attractive offer to get on the deck of phones serviced by Verizon, Sprint, and AT&T, Greengart said.
U.S. carriers aren't confirming or denying the possibility of working with Google, although Verizon did admit to active talks about putting Google applications on the phones it offers, according to Reuters. Reuters cited "people familiar with the matter."
Interest in Status Quo
"Are U.S. carriers likely to embrace another vendor? It really depends on the value proposition both from a consumer perspective and a carrier perspective," Greengart said. In the U.S., carriers control which handsets come to market, he noted, whereas European wireless carriers make it easier for consumers to choose the handset they want.
Google is vying for a larger piece of a growing mobile advertising pie. Frost & Sullivan figures the mobile advertising market in the U.S. alone will generate $2.12 billion in revenue by 2011 compared to $301 million in 2006. The Shosteck Group estimates $10 billion globally by 2010, while EJL Wireless Research pegs the worldwide mobile advertising market at $9.5 billion by 2011. But Google might have to concede more than it thought it would to get a big share of this market.
"In some cases, carriers already have search-engine partners for various reasons," Greengart said. "At least in the U.S., Google is entering a market where carriers have a vested interest in the status quo, and they'll have to shift that. There has to be a reason for U.S. carriers to offer something new."