Wireless Federation

Google says it will have an Android-powered phone on the market in 2008, rebutting a source’s claims to the contrary.

According to a source familiar with the situation, although a large number of people are hard at work on the Gphone and the open-source operating system/platform for mobile devices (Android) the actual Gphone will not be ready for release this year.

That would mean that Apple’s  second-generation iPhone, and the ever-growing list of about-to-be-released handsets (like the Garmin nuviphone, Research In Motion Blackberry Bold and Thunder, Sprint/Samsung Instinct and SonyEricsson Xperia) will now have a huge head-start over the Gphone.

However, a Google spokesperson says “We’re still on track to announce Android-powered phones this year. Some of our partners are publicly stating that they plan to ship Android phones in the fourth quarter.”

The source on the initial story would not speculate on the possibility that other devices that might run on variants of Android would be ready in time for the Christmas shopping season, nor would the source elaborate on exact reasons for the delay or a possible release date for the Gphone or various Android variants.

Android, based on the Linux operating system, is being jointly developed by Google and the Open Handset Alliance. The 34-member group includes mobile operators China Mobile, NTT DoMoCo, Sprint Nextel, T-Mobile, Telecom Italia, Telefonica, software companies , Google, Living Image, NMS, Nuance Communications, PacketVideo, SkyPop, semiconductor companies, Intel, Marvel, Nvidia, Qualcomm, Texas Instruments  and handset manufacturers HTC, LG, Motorola and Samsung.

Missing from this impressive list of Android companies are some very well-known cell-phone leaders AT&T, Nokia and Verizon’s Verizon Wireless.

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After many months of speculation, we have finally gotten some whispers on Google’s plan for taming the next great Internet conduit, the mobile phone. Contrary to speculation, the Google phone, or GPhone as “the cloud” has named it, is not a hardware offering but a software initiative. The plan is to provide an operating system for mobile phones that will be based on open-source Linux software. Google will then port and refine its applications for the mobile platform including mobile search and maps.

The approach seems as appropriate for Google as the iPhone is to Apple. Apple is, at its very core, a company that provides elegant hardware solutions enhanced with innovative software. As you may recall, efforts to provide the Apple OS to third parties, enabling “clone Macs” were scuttled when Jobs took the helm again. Google, however, is a software company that has dominated the Internet. Google is among the premier advertising aggregators. Providing a software OS or handset client to enable optimal Internet based applications and digital advertising is in their core competency.

At this point, it is important to note that the analysis presented here is based on “whispers.” It has not been confirmed by any official Google announcement. Normally, MultiMedia Intelligence does not base its analysis on rumors; however, there are a handful of companies that have game changing capabilities. Google is certainly on of those.

The purported Google strategy seems to lead to the advent of an open-source competitor to Windows Mobile. This is a development that will make the environment for Windows Mobile much more challenging. Although Microsoft has agreements with almost 50 handset vendors, it’s software still will only power 10 to 15 million phones that will be shipped this year.

What’s the big deal?

Google’s need to enter the wireless market seems obvious when you consider the alignment of industry and Google-specific trends.

First, the mobile industry is embracing mobile advertising. Mobile advertising, segmented across mobile messaging, mobile search, mobile TV, and mobile internet, promises to see explosive growth over the next 3-5 years. MultiMedia Intelligence forecasts a US$2 billion opportunity by 2011 in mobile video advertising alone.
Second, the mobile industry is embracing location-based technology. Location-based technology will be vital in an emerging set of applications, with advertising being critical.
Third, the mobile industry converging with the Internet.
All three of these trends play to Google’s core capabilities.

A Google entry into the market promises to turn the economics of cellular services on its ear. Instead of offering a fully subscription based revenue model, the cost of the phone may be partially subsidized by advertising. We have already seen a host of trials by companies looking at providing services based on advertising supported subsidies. The key is the opt-in. Consumers and advertisers must give something to get something.

The cellular handset is a particularly intriguing platform for delivering advertising as it is inherently interactive and personalized. Interactivity and personalization gives advertisers and vendors detailed and specific advertising metrics and unmatched targeting capability. This not only provides value to advertisers, but value to consumers since advertising is more relevant. Once consumers see value from advertising, they would sign up for more. In the end, the conversion from advertising to purchase would be higher, since customers have identified specific product interests and buying intention.

Advertising in Hardware

Although it does not look like it is the approach of Google, advertising in hardware holds the potential to bring the solution to another level. Ideally, subsidized devices need to be hardwired so they are dedicated and solely designed for the brand they represent. Hardwiring guarantees the investment of the branding company. Just ask AT&T. Hacking the iPhone seems to be a trophy, allowing hackers to offer free unlock programs for iPhones. Hardwiring or hard coding a phone would prevent this and maintain the integrity of service and the advertiser’s revenue. Phones, computers, TVs and similar products can all be “dressed-up” with brands, but its just skin deep. Advertisers subsidizing a product at an integrated device level would be different, essentially creating a portal to everything about that brand.

Going to the extent of hardwiring the branding will be argued to be excessive by some. Much of the branding at which we are looking can be done at the surface with simple software applications, such as the rumored Google solution. However, creating branding at the software level creates two problems. First is that the software can be overwritten. Even the strongest of protections will be broken, resulting in the brand owner losing the ROI for the device subsidy. Second, hardware allows for optimized solutions that software cannot deliver.

Implementing Advertising in Hardware

There are many potential solutions for hardwired branding. Semiconductor manufacturers are not currently offering designs that enable advertising in hardware; however, they have the ability to easily integrate circuitry that would in effect, brand a device permanently. In other words, advertising would be permanently hardwired into the core of the main electronic system components (also known as SOCs or systems-on-chips). The resulting devices in which the chips are integrated would be owned by the “Brand” that paid or subsidized the chipset. Each component can be branded in multiple ways. For example, video or display drivers could hold hardwired watermarking that ensures the when the screen is on, the brand is always displayed. Any I/O device can insure the brand is intact. Various forms of memory can be hardwired or have permanently burned cells that maintain a brand owner’s image.

Utilizing sophisticated processors or SOCs, branding can be taken to a completely different level. Hardwired or hardcoded into the SOC could be instructions to reach-out to the Internet or operator network and pull new images, updated information, or coupons specifically for the branded device. It could also tell the brand owner that phone is not being used for the proper service or has been tampered. This brings a new level of security to the OS owner as well. The chip manufacturers could enhance margins by implementing this level of brand control.

Brand owners could then start dealing with customers that really want their product not waste money on inefficient advertising. The customer is happy, the brand owner is happy, and everyone benefits.

The End Goal

Whether in hardware or software, Google’s foray into wireless is indicative of a much larger trend. Advertising in wireless is an inevitability as marketers salivate over reaching billions of subscribers with targeted, interactive campaigns. Google’s combination of Internet-dominance, interactive advertising expertise and powerful applications makes for an impressive hand as they turn their strategic focus to the billions of wireless subscribers.

This MultiMedia Intelligence Brief is based on recent research, “Advertising & Technology Collide: Semiconductor Companies, Technology Providers, Media Companies and Ad Agencies Partner to Move from Disruption to Monetization,” (MMI070301DA). The research examines the impact of new technologies on the advertising industry. It first examines why current advertising is becoming less effective and the critical role of the DVR. It then addresses the resulting impact on the “upfronts” and the impact on ratings providers, such as Nielsen. Digital technologies, platforms and the impact on advertising will subsequently be examined. This includes such platforms as set-top boxes, PCs, game consoles, DVRs and portable devices. It will finish by discussing new and creative ways that advertisers can utilize core technologies and examining some of the new digital advertising opportunities, including Internet advertising, IPTV advertising, Internet TV, mobile TV advertising, and in-game advertising.

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Speculation is mounting that Google is plotting the launch of a mobile phone in partnership with computer giant Dell.

Senior industry sources claim the two companies will reveal their plans at next month’s 3GSM telecoms conference in Barcelona, al-though Google insiders deny an announcement is due in the near future.

But the rumours will once again throw the spotlight on Google’s mobile strategy, which has been the subject of much conjecture over the last year.

There had been widespread talk of Google launching its own handset, known as the “Gphone”, to go up against Apple’s iPhone, which launched in November last year.

But the world’s largest search engine surprised the industry by announcing an operating system for mobile phones called Android. The software makes it easier for developers to create mobile applications that run on many different handsets.

Android, which will be available this year, will bring all of Google’s online services to mobile users.

At present, mobile phones use a variety of operating systems to access the internet, including systems from Microsoft and London-based Symbian.

Marketing Week revealed last year that Dell was also planning a move into mobile phones after poaching Motorola executive Ron Garriques to run its new global consumer group (MW March 1, 2007).

Dell already produces personal digital assistants (PDAs) and strategy analytics director Neil Mawston says: “It makes sense for Dell to have a high-profile entry back into the market because its last effort with PDAs pretty much flopped.”

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Google Inc  on Monday spelled out long-rumored plans to enter the mobile phone market in 2008 by building software that could help the industry make the Internet run more easily on phones.

German mobile network powerhouse T-Mobile, Deutsche Telekom’s  mobile unit, plans next year to start selling Google-software-based phones, while China Mobile Ltd,the world’s largest mobile carrier, and top carriers in Japan said they would offer Google-based handsets.

Google, which has no immediate plans to make phones of its own, said it was working with 30 companies, including phone makers Motorola Inc  Samsung Electronics Co Ltd and High Tech Computer Corp. Also taking part are major communications chip makers, including Qualcomm Inc ,Texas Instruments Inc  and Marvell Technology Group Ltd.

The leading Internet company has long been rumored to be working on a new class of free or low-cost advertising-supported mobile phone of its own, popularly known as the “Gphone.” Google’s Schmidt would not rule out the company developing its own devices but said it had no imminent plans to do so.

The Web search company is looking to expand the range of Internet services it now offers through computer browsers to the far larger mobile phone market, where a range of conflicting handset designs and software standards have hobbled Internet use.

The move will put Google in competition with major mobile device operating systems backed by Nokia and Microsoft Corp . A number of Google’s partners said they would continue to work with those rival systems.

Google said it aimed to deliver software kits to handset makers in a week and sees phones based on its platform becoming available in the second half of 2008.
“It will open the mobile phone to do things that people now do on their PCs,” said Todd Greenwald, a financial analyst with Nollenberger Capital Partners in San Francisco.

“This approach is going to be far less costly,” Greenwald said, contrasting Google’s open partnership to proprietary phone industry strategies. “It should position Google to be an early leader in the mobile advertising market.”

The Mountain View, California-based company has set up an industry consortium including 30 partners so far that it calls the Open Handset Alliance.It said the software system, known as Android, will be “the first truly open and comprehensive platform for mobile devices.”

Android was the name of a small start-up Google acquired in 2005 that was founded by Andy Rubin, a veteran Silicon Valley gadget designer. Rubin earlier this decade created the innovative “Sidekick” mobile Internet device while at start-up Danger Inc.

Sprint Nextel Corp, the No. 3 U.S. mobile service and a member of the alliance, said the system will be based on open-source Linux code and available to phone makers and carriers without license fees.

It is expected to support applications from different developers as well as Google Web search, e-mail and mapping, according to Sprint.

Sprint said it has not committed to putting the software on its phones but is in negotiations with Google about financial terms with a view to offering the system to its customers eventually. Sprint did not give a time frame.
John Garcia, Sprint senior vice president for product management, said an agreement between Google and Sprint could cover everything from delivering mobile ads to putting Google’s brand on phones designed especially to support its operating system.

“Rather than trying to restrict customers and saying you can only use my services, which we think has limited growth potential, we’d rather give customers exactly what they want and benefit that way,” said Garcia.

Google shares were up 1.9 percent, or $13.32, to $724.57 on Nasdaq after reaching a new intraday high of $730.23 earlier.

The stock traded around $500 in mid-August before speculation about the impact of Google’s push into mobile phones — as well as new forms of online advertising, such as video — propelled shares to current record levels.

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ExpressIndia writes…Google Inc is building software to run services on mobile phones rather than gearing up to build its own phone, as many industry sources have speculated, one Wall Street analyst said on Thursday.

Piper Jaffray analyst Gene Munster said in a research note to clients that Google appears to be building software for Web search on mobile phones and location-finding services to work with Apple Inc’s iPhone and other mobile phones.

“We believe Google is working with, not against, Apple in the mobile world,” Munster said.

In recent months, various reports have described how Web search leader Google could be developing a ‘Gphone’–a low-cost, Internet-connected phone with a color, wide-screen design. Newspaper and blog reports in recent months have Google shopping its phone design to potential mobile phone manufacturing partners in Asia.

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