Google Mobile: Winners and Losers

Google (GOOG) is reportedly rolling out its mobile operating system and one thing is clear: It’s going to make a big splash. The question is who will drown in Google’s wake?

The reports about Google’s Android phone software are multiplying at a rapid rate. The New York Times did a big profile of Andy Rubin, the guy behind Google’s mobile plans (you don’t think that access would have been granted if this launch wasn’t happening do you?). Rubin joined Google when the search giant bought his company–Android–in 2005. News.com’s Tom Krazit reports that Google will announce its mobile phone software stack Monday and has some detail on the 30 companies lined up as partners.

But once the details emerge the real handicapping begins. What’s the impact of Google’s mobile moves? Will Google really reshape the wireless industry? Here’s a look at some of the winners and losers and a few companies left on the fence:

Winners:

• Google: The search giant has managed to line up a big chunk of the wireless industry, cordoned off some mobile advertising inventory and may have found a way to commoditize the wireless operating system. If reports are to believed, Google’s operating system won’t appear until the middle of 2008. Couple Google’s Android plan with its OpenSocial movement and the search giant looks like it can rally partners with mutual interests.
• Sprint: (S) The wireless carrier is struggling and needs a plan. By aligning with Google–by most counts Sprint will be on the partner roster–Sprint may give itself a much needed spark. This effect may be magnified if Verizon Wireless isn’t on board with Google. AT&T isn’t expected to get cozy with Google yet.
• Developers: Google’s mobile software stack is giving developers some open field to play with. I’ll be one of the many who will be curious to see what they do with it. At the very least, Google is giving developers another software development stack to tweak. This is part of Google’s new openness–moving away from proprietary software where it makes sense, meaning accelerating the growth of the Web overall, breaking down the old order and creating more inventory to monetize.
• Open source: Google’s Android is expected to integrate parts of Linux. This is a mobile victory for the open source movement in what remains a proprietary wireless world. The leading mobile software players are all proprietary.
• Handset makers: Google’s mobile software stack sounds like it’ll come cheap–like free. This fact enables handset makers to push the envelope on the hardware side of the equation. Add it up and you may get cheaper phones with more features and maybe even a cut of ad revenue.

Yet to be determined:

• Apple: (AAPL) A few folks have taken Google’s leap to surmise that Apple will be hurt somehow. There may be some potential impact, but there’s a cure for this line of thinking. Repeat after me: Apple sells hardware. Apple sells hardware. Apple sells hardware. Think about it. Apple’s game is selling Macs, iPods and iPhones. Sure software helps, but Apple lives and dies by hardware sales. With that perspective, Google’s mobile operating system doesn’t look like that big of a threat. Apple wasn’t planning for OS X to dominate the mobile world anyway. And if Google gets too much mojo Apple could just sell you iPhones with Google preloaded. After all, Google CEO Eric Schmidt is on Apple’s board of directors.
• Microsoft: (MSFT) The open source supporters and technology’s talking heads will try to lead you to believe that Windows Mobile is toast. Don’t hold your breath. Windows Mobile is entrenched, has a big footprint in the corporate world and is a key partner to wireless carriers and developers. Whatever Google cooks up isn’t likely to change that equation overnight. Just like Windows vs. Linux it’s not a zero sum game.
• Consumers: Mobile phone users will apparently get better software out of this Google move. But if the trade off is more ads on your phone it may be a wash for some.

Losers:

• Palm: (PALM) Man it gets tiring kicking Palm, but it’s clear this former high flier has major problems. Wasn’t Palm trying to cook up its own Linux based operating system? Yup. It’s late to the party and looks like Google will get any momentum that may come its way. The Palm OS is rapidly becoming a footnote to the history of the wireless market.
• Wireless carriers’ current business model: Wireless carriers have a model that is extremely controlling. These companies tell you what handsets you can buy, what you download and impose limitations. Google’s software could pry the standard wireless model open. What carriers wind up in the loser category vs. yet to be determined remains to be seen. AT&T (T) and Verizon Wireless (VZ) are entrenched and aren’t going to be immediately impacted. Sprint will be a winner. In the grand scheme of things, Google is nibbling away at the standard wireless business model.

Comments

[Hayweed]

Loser will also be Rimm on their consumer phones. The business phones will not be affected initially. Also, Rimm is all about being a buddy to the carrier when the shift is to the end user and phone manufacturer. If Rimm can't get on board with the shift they will have a phone with a small unique software platform that few companies will write software for.

[Duff]

The carriers will always have a control problem

[Tom B]

My prediction: zero "android" phones will ever be deployed.

[reinharden]

Let's not forget Symbian (and by extension the owners of Symbian).
04.5% - Samsung
08.4% - Siemens
10.5% - Panasonic
13.1% - Sony Ericsson
15.6% - Ericsson
47.9% - Nokia
Their investments in Symbian have arguably decreased in value due to the gPhone consortia.

UIQ and the various companies that invested in UIQ similarly are definitely square in the sights of the gPhone.


There's no doubt that Windows Mobile / Windows CE / whatever the other Windows-based phone OS's are are losers in the sense that they'll be negatively impacted. But it's definitely not clear whether or not they're losers in the sense that they've lost. So I agree that this has yet to be determined.

reinharden

[User 49894]

i disagree, Apple sales are about its Software

[vitaminc]

How would carriers lose is beyond my comprehension; more off-the-shelf wireless devices drives higher wireless/data traffic and more contract signed.

Tight control exercised by carriers? IMO they are just doing quality control. iPhone connection problems in UK were a result of poor hardware design and time constrained validation process.

If you buy an off-the-shelf phone and it works poorly with AT&T, guess who you would blame? AT&T. Not the white-box cellphone maker, even when a proper AT&T validated device is having full bars at the same spot.