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Google CEO Eric E. Schmidt has stated in interviews that Google is investing heavily in the mobile phone and mobile phone applications market.  (Source: Philippe Wojazer/Reuters)
Is Google about to produce the next iPhone? Find out here!

Google, the internet media giant, has had a large group of engineers working on a secret project for nearly two years now.  Rumors had leaked that Google was planning to manufacture a next generation of cell phones, which some observers creatively dubbed the "GPhone."  Now as a new report indicates Google's true intentions, it appears that the company has not only done a good job keeping the wraps on its secret project, but that the project is much more complex than expected.

Google has been working on developing a software platform for cell phones, which it hopes will create a new business sector.  It begins with the phone operating system (OS).  The OS that Google has been working on is a modified version of Linux, the open source OS.  Atop the OS, Google is modifying its Office suite, organization tools, maps, messenger, and email, along with the rest of its programs to run in cell phone environments.  The final piece of the puzzle is what Google hopes will make the phone truly profitable -- advertising.

Currently cell phone advertising is a fairly small and specialized business.  Google hopes to expand and transform this niche into a thriving new market sector.

To demonstrate its technology, it turns out that Google did build phone prototypes, which it has shown to manufacturers.  It has given no indication that it will put these designs into production, though.  Analysts think that such a move would be unlikely, due to Google's lack of hardware expertise.

Karsten Weide an analyst for IDC spoke to the possibility of them developing phone hardware. “Running a Web site and a search engine is one thing, but developing a phone is a whole different game. It will not be easy for them,” said Weide.

While no definitive word has been released by Google at this time, it seems clear that developing hardware was not the focus of its project.

Rather than competing with the iPhone, these developments reveal that Google intends to challenge Microsoft for mobile phone OS dominance.  Google has one clear advantage when it comes to its OS: the software comes at no cost, while Microsoft charges cell phone companies for use of its Windows Mobile OS.

Some see deeper motives to Google's moves than simply gunning for Microsoft.  They see Google's moves as an attempt to loosen the control that cell phone carriers have on their services and software on their network.

This may trouble some carriers such as AT&T and Verizon who have poured millions into developing proprietary network services.  As a resulth, they are unlikely to jump at Google's new technology until they see returns on their own.

Few have voiced opinions on Google's move, but the move is being criticized by one of Google's own partners.  Arun Sarin, the chief executive of Britain’s Vodafone Group, which currently carries Google Service on its phones, said it is unclear what compelling functions Google's platform would offer that are not currently available.

Sarin elaborates, “What is it that is missing in life that they are going to fulfill?  It is not a no-brainer. You can reach Google already through a number of devices. You don’t need a Google phone to do that."

Google’s actions over the past few years seem to confirm speculation that it is looking to cut control that carriers have over their network software and services.  The company recently successfully lobbied the Federal Communications Commission (FCC) to impose a set of rules on any carriers that win wireless spectrum bids in the upcoming auction.  The rules state that winning bidders who use their spectrum must open their phones to software and handset applications from any company.  Google may even bid for part of the spectrum according to recent reports.

Google's mobile phone team was built largely around Android, a small mobile software company it acquired in 2005.  Andy Rubin, co-founder of Android, had founded Danger, which produced the popular T-Mobile Sidekick.  Rubin is currently working on the mobile phone projects at Google's Mountain View headquarters.

Its chief competition, Microsoft, has released multiple versions of the Windows Mobile OS and is currently on its sixth iteration.  Microsoft currently has distribution agreements with 48 handset makers and 160 carriers around the world. Microsoft does not have a huge market share, though.  This year 12 million phones have been sold that are based on Microsoft’s software, giving it only 10 percent of the smartphone market, according to IDC.  This leaves much of the market up for grabs, which is where Google hopes to muscle its way in.

Richard Doherty, director for the Envisioneering Group consulting firm, thinks small carriers will be among the early adopters as they will jump at Google's free software offerings. If these are well received, carriers may be forced to adopt Google's platform. “No one wants to be the last carrier to endorse Google,” Mr. Doherty said.

Yet another possibility is that if the software platform is easy to download and install on a majority of phones, individuals who enjoy Google's online offerings may download its OS for their phones.  Such a system would be highly dependent on user effort, but users’ ability to unlock the iPhone has demonstrated that they can have the willingness and the ability to modify their phones, as long as helpful software is provided.  If Google goes this route, carriers like AT&T and Verizon with proprietary technologies may try to lock their phones from Google's software or "brick" phones that carry it, similar to Apple and AT&T's latest move to "brick" unlocked iPhones.

The developments from Google are intriguing.  While it becomes clear that its focus is on providing a software platform, the possibility of a Google-backed iPhone smartphone competitor remains.  Perhaps the party that should be most worried, however, is Microsoft, as Google looks to provide an OS with similar capabilities to Microsoft's free of charge.  Furthermore, Google's new advertising based business dynamic is set to provide the latest chapter in an ongoing move to provide media content for free, funded by advertising.

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Not necessarily
By FITCamaro on 10/8/2007 10:08:37 AM , Rating: 3
Google has one clear advantage when it comes to its OS: the software comes at no cost, while Microsoft charges cell phone companies for use of its Windows Mobile OS.

I wouldn't say this is true. Linux may be free but Google is developing its own iteration of it. They are able to sell it if they so choose. And I find it hard to believe that Google will invest 2-3 years into a mobile phone OS and then give it away for free. Yes ads would help pay for it, but I just don't see people liking the idea of ads on their cell phone regardless of the format. I know I don't want them.

RE: Not necessarily
By TomZ on 10/8/2007 10:31:46 AM , Rating: 4
I know I don't want them.

For me it depends - if the phone and the service are free, then ads would be okay. If I'm paying monthly like now, then forget about it.

RE: Not necessarily
By FITCamaro on 10/8/2007 10:50:23 AM , Rating: 2
As Google would not be providing the service or the phone, you would undoubtedly be paying for the service. You might get the phone free though from signing a two year contract.

RE: Not necessarily
By TomZ on 10/8/2007 11:23:21 AM , Rating: 2
If that's what Google has in mind, then it would be a "no go" for me, since I already get a new phone for free from Verizon every two years.

But just because I reject the idea doesn't mean that others won't go for it.

RE: Not necessarily
By murphyslabrat on 10/8/2007 1:55:11 PM , Rating: 2
You may get a new Cell-Phone, but do you get a $300 Cell-Phone? The idea is for those phones in the way upper-class, such as the iPhone and such.

So, the prospect of cheaper prices and/or a better margin could entice many providers. At the very least, it would pose a thundercloud on the horizon, in a similar fashion as y2k, that would spur innovation/cost-cutting.

RE: Not necessarily
By TomZ on 10/8/2007 3:32:49 PM , Rating: 2
I see your point, but I also don't personally need a $300 phone. In addition, I expect the cost of "smartphones" to continue to be driven down even without advertising subsidies from Google.

RE: Not necessarily
By creathir on 10/9/2007 11:56:51 AM , Rating: 3
If you are after an expensive phone, and have the money to spend, do you not think people willing to pay for the more expensive phone would also be willing to pay for phone service instead of ad-support phone service?

This idea is doomed to failure. Consuming entertainment and watching an ad is one thing, but listening to an ad to call my wife to check on the kids is another.

- Creathir

RE: Not necessarily
By therealnickdanger on 10/10/2007 8:50:43 AM , Rating: 2
but do you get a $300 Cell-Phone

Yes, actually. If you are persistent and talk to the right rep, you can get a free $500 phone.

RE: Not necessarily
By HrilL on 10/8/2007 9:34:24 PM , Rating: 2
Well if Google does what I think they very well may. They will get part of the new wireless spectrum and come out with phones with their OS and service will be free because they'll be pushing adds to your phone. I would be willing to have adds if service was free.

If Google does take this route I don't see any other option for the Major carriers then offering a similar service. But I'm sure there will always be some people that would rather pay then have adds.

RE: Not necessarily
By Master Kenobi on 10/8/2007 10:37:03 AM , Rating: 5
Exactly. Advertisements are something most people are sick and tired of seeing. I most certaintly do not want advertisements on my cell phone of all things.

RE: Not necessarily
By djcameron on 10/8/2007 12:22:52 PM , Rating: 3
Screw the ads! I won't even use the free 411 where you have to listen to the ad first. On the other hand, I would allow them to have a one pixel ad...

RE: Not necessarily
By glitchc on 10/9/2007 1:24:58 AM , Rating: 2
Perfect! A dead pixel that now moves....

RE: Not necessarily
By Polynikes on 10/8/2007 1:03:01 PM , Rating: 2
As awesome as some of the stuff Google has been doing has been, this focus on advertising is something I really don't like. I know it's profitable, but who the heck wants ads on their cell phone?

Normally the cell phone is used for quick stuff; looking up a phone number and dialing it being the most common. I'd lose my mind having to wait for an ad to display for 3 seconds before, during or after that short action. It seems to me this advertising will only be annoying and intrusive.

It's not like there's a lot of screen real estate on most cell phones, so you would be hard pressed to make ads that are readable and effective (at selling whatever's being hawked) that don't take up the whole screen.

RE: Not necessarily
By FastLaneTX on 10/8/2007 9:50:06 PM , Rating: 2
OTOH, this could be an entirely new form of ads. For instance, Google could track that you like certain types of food, and flash passive advertisements on the screen when you're near that type of restaurant. Or, it could detect you're a geek and passively flash specials at the nearest electronics store. Or it could be some sort of system where you list your friends and when you go near a movie theatre it advertises what movies your friends have liked and what it thinks you'll like. There's all sorts of possibilities once you consider a phone (a) knows where you are (and thus what you're likely to be doing), and (b) can flash ads without requiring the user to visit specific web pages.

RE: Not necessarily
By MonkeyPaw on 10/8/2007 3:56:09 PM , Rating: 4
I can see it now, adblock for cell phones!

RE: Not necessarily
By Rampage on 10/8/2007 5:29:12 PM , Rating: 3
Actually, I welcome things coming free with ads.


Because back when cable television first was coming, they said if you paid to get your TV programming you wouldnt have to deal with commercials.

Instead, we got to pay + got commercials.

Consumers would be taking considerable strides forward, as would businesses, if they got back to an appropriate model.
Thankfully with Google, we have a company willing to compete and create things that work for free due to advertisments.

Maybe this will mean that a "pay cell phone" would not only be cheaper, but also have the zero ads that you so desire.

regular OS please!!!
By dennisjr42 on 10/8/2007 9:38:11 AM , Rating: 2
If the mobile OS goes well it would be very interesting to see Google take a shot at Microsoft in the PC sector. A company with the reputation of Google would be able to get the backing of other software makers that to this point only support Windows.

RE: regular OS please!!!
By BucDan on 10/8/2007 9:49:22 AM , Rating: 1
I would like to see that myself. Seeing how Microsoft is the software giant of this world. It would be nice to see a bit of competition; even tho Google doesn't have any experience in that field. Maybe they are better off staying away from OS's but try to get a Mobile Linux out.

I am liking their idea of a new phone though, it's a great way to expand the company to compete against other phones, but more like against the iPhone, c'mon now Gphone???

RE: regular OS please!!!
By GreenyMP on 10/8/2007 10:52:37 AM , Rating: 2
I think they will do well. If there is one thing that has plagued the mobile phone industry it is poor user experience and ugly design. And it is not the hardware. Windows mobile is clunky and slow. Blackberry is ugly. And the carrier proprietary operating systems are worse. Why do you think so many people were so interested in the iPhone? It wasn't for the hardware. And if there were one company that has proven that they can do user interface design where others have failed, it is Google. If they can produce something as compelling as the iPhone OS, but compatible with multiple phones and carriers -- they will win big.

RE: regular OS please!!!
By OblivionMage on 10/8/2007 9:59:58 AM , Rating: 2
Unless everything is cross compatible with the other OS's, that would just screw things up, 3 popular OS's would suck.

RE: regular OS please!!!
By xbbdc on 10/8/2007 10:14:24 AM , Rating: 2
windows, mac and linux... you already got 3. google os would be # 4.

RE: regular OS please!!!
By Chudilo on 10/8/2007 11:46:17 AM , Rating: 2
Actually Google OS would be Goobuntu (Ubuntu Linux based), the one they are helping to push progress with throught their "summer of code" program.

RE: regular OS please!!!
By glitchc on 10/9/2007 1:27:01 AM , Rating: 2
Am I the only one who giggles at the thought of "Goobuntu"?

RE: regular OS please!!!
By Griswold on 10/8/2007 11:21:49 AM , Rating: 2
Yes, daydreams can be nice!

Am I the only one thinking....
By Locutus465 on 10/8/2007 10:24:53 AM , Rating: 3
That this is one venture google could really fail miserably at... Consumer electronics just isn't something they're familiar with, they seem to do really well with geeky cool things, which is not what I think sells cell phones.. Snazzy shiny make a statement coolness is what really sells consumer electronics devices like cell phones... If the OS looks anything like I think it'll lose to the iPhone/Venus/Windows Mobile devices.

I could be wrong though, obvioiusly we'll need to see what the end user experience is like before any real judgment can be made.

RE: Am I the only one thinking....
By mcturkey on 10/8/2007 10:57:48 AM , Rating: 2
Actually, their mobile apps thusfar have been pretty darn good.

However, Microsoft is actually (IMHO) doing a pretty good job with smartphone software. I actually prefer Live Search to Google Maps, partly because of interface, but mostly because of the ability to quickly locate restaurants, movies, etc near a location, then add all their information into your contacts list. That type of integration is something that I've come to expect from Microsoft, so we'll have to see if Google can match it.

My only complaint over Windows Mobile is that it is a bit slow to respond sometimes, although that is probably as much a hardware issue as anything, considering just how much these phones can do now. But I would certainly like there to be more competition in this market, because a complacent Microsoft with a stranglehold on the OS would be pretty bad.

By Locutus465 on 10/8/2007 2:02:10 PM , Rating: 2
There is however a difference between making a nifty map application and a hip consumer electronics device/platform. There needs to be a style to it, which has to be consistant across the board, and hip is where I think google might fail. Just look at the iPhone, really it doesn't do anything that any other smart phone can't do (in fact its a bit limited), but it's very hip, with shiny slick UI and is designed to be easy to use by the average consumer.

RE: Am I the only one thinking....
By sxr7171 on 10/9/2007 12:38:33 AM , Rating: 2
Stranglehold on the OS? Ha Ha! You made me laugh. Symbian OS has 72% of the market and particularly S60 on Symbian has greater than 50% of the worldwide market.

BTW, they have a large marketshare that both Live Search and Google Maps is Available on it + Nokia Maps + pretty much every 3rd party mapping and GPS program out there.

Also, these devices are more responsive than Window Mobile devices. No matter what application you are running and even if it freezes you can always go back to your phone with one click and your phone will work.

By Murst on 10/8/2007 12:29:50 PM , Rating: 3
How can you claim that Microsoft is Google's main target in this sector and at the same time say that Microsoft only has a 10% market share?

IDK about you, but if I was building a mobile OS, I wouldn't go after a small player in the field. Google's main target in the field should be Symbian, not MS, as Symbian has about 2/3s of the market.

Of course, Google vs MS is a much better headline than Google vs Symbian, considering most people have no clue what Symbian is.

RE: Weird
By KamiXkaze on 10/8/2007 8:39:39 PM , Rating: 2
Two of the most hidden companies in the cell phone arena Symbian and Qualcomm both dominate in there respected areas.


RE: Weird
By sxr7171 on 10/9/2007 12:44:52 AM , Rating: 2
That's right. Most people don't know that. There's a whole wide world out there. Qualcomm though has a pretty limited platform, I don't think you can even call it an OS. When they do make chipsets for high-end phones those phones tend to run Windows Mobile.

Symbian on the hand is a real OS and sits in 72% of smart phones worldwide. In Japan thanks to NTT DoCoMo, in Europe thanks to Nokia, Sony Ericsson and believe it or not: Motorola. Here in the US finding a Symbian powered device is tough. Cingular carries one or two at any given time, compared to dozens carried by European, Asian and Middle Eastern carriers.

RE: Weird
By Alexstarfire on 10/8/2007 9:49:46 PM , Rating: 2
I'm assuming it has more to do with what the OS will offer in respect to what Microsoft's Mobile OS offers. I would guess that the OSes themselves will be competing against each other, i.e. they will be very similar. However, should that not be the case.... then F^%& if I know. Maybe cause MS is well known?

By sirdowny on 10/8/2007 12:51:51 PM , Rating: 2
I get a kick out of Sarin's statement:
“What is it that is missing in life that they are going to fulfill? It is not a no-brainer. You can reach Google already through a number of devices. You don’t need a Google phone to do that."

I really hope his reasoning goes deeper than that. I'm one of the many users that's constantly being frustrated by the lack of well-integrated productivity apps. What I mean is I recently bought a Blackjack (Windows Mobile OS) and in order to sync it with my Contacts & Calendar, I've had to switch back to the MS office apps. Yeah the Office suite is functional, but due to its expense, you either pay an arm and a leg or you pirate the crap out of MS. Plus there are some things Google just does better IMO (Gmail). I'd buy the gPhone if the one thing they accomplished was an smooth integration among Gmail, Google Calendar, Contacts, and To-Do lists between the phone & the software suite on my PC.

I know there are kludgey, semi-functional ways to do it now, but its not seemless. Isn't one of Apple's biggest selling points, "It just works"? Judging from Google's current online Docs / Google Desktop initiative, it seems like this is something they can get right.

RE: Integration
By sxr7171 on 10/9/2007 12:51:06 AM , Rating: 2
At a minimum they have to bring the integration you speak of. As for me personally, I'm a little old school and I don't like the idea of having my stuff "out there." I want my information on my devices whether it be my laptop or desktop or phone, but in the hands of Google, I don't know. Even to this day my Gmail account is my junk mail account. My school e-mail is primary. After graduation, I might be better off paying for a good account than have my e-mail on "hey let me serve you up some advertising based on the e-mail you get" Google.

There's no free lunch in this world.

RE: Integration
By Razgriz20 on 10/10/2007 2:28:42 PM , Rating: 2
There's no free lunch in this world.

Actually Google employees have free lunch everyday. =)

Most Exciting Part
By lukasbradley on 10/8/2007 10:01:34 AM , Rating: 2
They see Google's moves as an attempt to loosen control that cell phone carriers have on their services and software on their network.

For the US market, I feel this is the most exciting part. US consumers have been hamstrung in many ways in the mobile and traditional digital services by providers who are lackadaisical at best in their innovations, new services, and price points.

While *way* to early to tell what their true intentions are, I hope Google can begin to be a part of an industry shake-up.

Great article, Jason.

RE: Most Exciting Part
By Zoomer on 10/8/2007 11:40:14 PM , Rating: 2
Phones in the US are ridiculously crappy. You can get way better cheap (sub $50) or free phones that are way better in east asia. By good, I meant something like the k610.

And they don't make a killing on the 2 year contract, either.

It's also curious to see that there aren't really any high end, non-pda phones here.

By the way, many asian markets would consider the iphone's base price tag cheap. It's just $499 at launch, and it doubles as a $199 ipod. That makes it effectively $300. There are people who snap up $500 phones (with 2 year contract) at launch, and they aren't necesarily rich by any means. Many of these would fall into the lower half of the tax bracket.

Google could challange MS with OS
By Ravenlore on 10/8/2007 1:21:40 PM , Rating: 2
This can be done in several ways.

One way is to back a single Linux OS and get companies to Join in like Adobe... and other companies that are battling MS in other areas (thats a lot).

Another way if for Google to buy a few of the leading Linux OS companies such as susy, linspire, ubuntu.... and come out with a leading Linux for dealers and sales. Agan Google would get many companies compeating with MS to join in to be native on it.

In any case I see many companies conspiring to nip and MS till its knocked down a peg or two for their own survival. Too many of MS copies of other peoples ideas have taken over and now the tide is turning just look at

Apple with Itunes, Ipod, Iphone and increased sales of computers.

Firefox- browser increasing in use and acknologement

struggles of MS in the moble market, and their problems with their OS which was once seen as the best and now seen in less gleamering lights with Vista.

RE: Google could challange MS with OS
By Murst on 10/9/2007 10:30:44 PM , Rating: 2
What purpose would buying a Linux distro achieve? The purchase would be extremely expensive, and there's no real profit that you can point to. Just look at how much Novell brings in every year... and then try to imagine how much Novell would ask in terms of price.

Also, all these companies that you list as taking a piece of Microsoft.. what piece are they exactly taking? Apple's iTunes, iPod, and iPhone? What piece of MS did these take? It's Microsoft that's taking a piece of (the) Apple in this, not the other way around.

And Firefox? Great... they're taking something that doesn't even bring in cash. Even if MS gets down to 50% of the browser market, you can't really link it directly to any profit lost... these apps are given out for free.

Microsoft is making more money than ever... I certainly wouldn't call that struggling.

Convergence between MID's and gphones...
By pugster on 10/8/07, Rating: 0
By Locutus465 on 10/8/2007 10:31:54 AM , Rating: 3
No they didn't, PDA's became "Smart Phones" which some people like me perfer to black berries...

All speculationss & vague
By crystal clear on 10/9/2007 8:12:26 AM , Rating: 2
There is no product announcement neither a press release by Google on this topic.

The contents of the article are of speculative nature,based on rumours circulating on various web sites.

What we all know is that-

Google is just buying up small software companies-well it sits on a mountain of cash.

Google hires a lot of engineers-a lot of secrecy around the projects they are working on/for.

Nothing definite/concrete on their future plans on the so called Gphone .

What we dont know-

Whats the inspiration to write this article in the first place.

By semo on 10/9/2007 4:55:36 AM , Rating: 1
Google, the internet media giant
that sounded a bit weird to me. shouldn't it be
Google, the internet advertisement giant

and yes i know they are a media company now

I trust google less than M$
By GlassHouse69 on 10/8/07, Rating: -1
RE: I trust google less than M$
By TomZ on 10/8/2007 11:21:59 AM , Rating: 2
You can't pay your way to the top of search results. The only thing you can do is place adwords ads that are placed alongside the search results. That's not the same thing.

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