Google getting in phone business

WSJ writes: "Within the next two weeks, Google is expected to announce advanced software and services that would allow handset makers to bring Google-powered phones to market by the middle of next year"

Can a Google Phone Connect With Carriers?
By AMOL SHARMA
October 30, 2007

Google Inc. is close to unveiling its long-planned strategy to shake up the wireless market, people familiar with the matter say. The Web giant's ambitious goal: to make applications and services as accessible on cellphones as they are on the Internet.

In a move likely to kick off an intense debate about the future shape of the cellphone industry, Google wants to make it easier for cellphone customers to get a variety of extra services on their phones -- from maps to social-networking features to video-sharing. To get its way, however, the search giant will have to overcome resistance from wireless carriers and deal with potentially thorny security and privacy issues.

Google is trying to loosen the grip wireless carriers have over the software and services consumers can access on cellphones. Carriers have considerable clout, especially in the U.S., where they control distribution of phones to consumers through their retail stores.

Within the next two weeks, Google is expected to announce advanced software and services that would allow handset makers to bring Google-powered phones to market by the middle of next year, people familiar with the situation say. In recent months Google has approached several U.S. and foreign handset manufacturers about the idea of building phones tailored to Google software, with Taiwan's HTC Corp. and South Korea's LG Electronics Inc. mentioned in the industry as potential contenders. Google is also seeking partnerships with wireless operators. In the U.S., it has the most traction with Deutsche Telekom AG's T-Mobile USA, while in Europe it is pursuing relationships with France Télécom's Orange SA and Hutchison Whampoa Ltd.'s 3 U.K., people familiar with the matter say. A Google spokeswoman declined to comment.

The Google-powered phones are expected to wrap together several Google applications -- among them, its search engine, Google Maps, YouTube and Gmail email -- that have already made their way onto some mobile devices. The most radical element of the plan, though, is Google's push to make the phones' software "open" right down to the operating system, the layer that controls applications and interacts with the hardware. That means independent software developers would get access to the tools they need to build additional phone features.

Developers could, for instance, more easily create services that take advantage of users' Global Positioning System location, contact lists and Web-browsing habits. They also would be able to interact with Google Maps and other Google applications. The idea is that a range of new social networking, mapping and other services would emerge, just as they have on the open, mostly unfettered Web. Google, meanwhile, could gather user data to show targeted ads to cellphone users.

"The most likely scenario from a Google perspective is to build some, if you will, inspirational platform [applications]; but primarily focus on getting third parties to do it because that's where the innovation will come from," said Google CEO Eric Schmidt, speaking at the All Things Digital conference in May. He said that "the new model of these phones is going to be person-to-person" with people exchanging videos and other types of data.

While many software developers are likely to cheer Google's open wireless platform, there are some potential risks for consumers. If Google isn't careful, sensitive user information could end up in the wrong hands, leading to spamming, stalking or other invasions of privacy.

There is broad momentum already to make software development on mobile phones easier and more open. Apple Inc. initially limited the kinds of applications it allowed outside developers to make for its iPhone, but the company recently said it would release tools next year to broaden the range of features allowed. (Handset maker Nokia Corp. said its new Internet and multimedia platform, Ovi, is open to third-party applications.)

Microsoft Corp.'s Windows Mobile operating system already gives software developers access to a range of tools to build programs for consumers, though the company does put all new services through a certification process to screen for programs that could hack into a customer's phone or pose other risks.

Microsoft executives question what impact Google will have. "The idea that there are all these things software developers can't do -- it's just not true," said John O'Rourke, general manager of Microsoft's Windows Mobile unit said. "It's hard to imagine what huge breakthroughs [Google] is going to have."

Google's push comes as carriers are under pressure on other fronts to relax their hold on the wireless market. They face litigation over "locking" of phones, which prevents people from transferring devices from one provider to another.

Sprint Nextel Corp. agreed this month to unlock the phones of departing customers as part of a settlement in a California class-action lawsuit. Google and others, meanwhile, have criticized carriers for being a bottleneck on what software and services consumers can access.

Google helped push through controversial rules for a coming spectrum auction at the Federal Communications Commission that would result in a new cellular network open to all devices and software applications, even those not favored by an operator. Google has said it will probably bid for the frequencies.

For now, the company knows it has no choice but to work with operators to make its open platform successful. D.P. Venkatesh, CEO of mPortal Inc., which makes software for wireless operators, puts it this way: "There are a few things carriers control that will always keep them in charge at the end of the day."