Friday, August 03, 2007


ComputerWorld is reporting that Google is showing around its cell phone prototype, and it may reach markets within a year. It "plans to offer consumers free subscriptions by bundling advertisements with its search engine, e-mail and Web browser software applications," ComputerWorld says, sourcing the Wall Street Journal. The move involves partnering with one or more existing telecoms, and that draws comparisons to the iPhone:
The move would echo another recent product launched by a phone industry outsider, Apple Inc.'s iPhone. But Google's product would draw its revenue from a sharply different source, relying on commercial advertising dollars instead of the sticker price of at least $499 for an iPhone and $60 per month for the AT&T Inc. service plan.
And relying on ads makes wireless/telecomm analyst Jeff Kagan skeptical:
"The average adult who can afford a cell phone is not going to want to listen to ads. So this is mainly for teenagers, twenty-somethings, high schoolers or people who can't afford a phone," said Kagan.
Four quick reactions:
  1. Is Kagan misreading the plan? Earlier in the article, the advertisements were said to be bundled with "search engine, e-mail and Web browser applications." Text ads on these services are not the same as listening to ads when you have to make a phone call -- phone calls are about immediacy.
  2. Is Google planning to avoid competing with the big vendors, instead taking a chunk out of pay-as-you-go phone service such as Virgin's?
  3. Google tends to chip off competition in long-tail markets with free stuff, such as Google Docs. Is this a continuation of the same strategy? Will it be willing to let the gPhone be a loss leader?
  4. If Google is partnering with existing telecoms, why does it want to bid for wireless spectrum?
Report: Google shows phone prototype to vendors

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