Google phone coming soon

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Report: Google phone coming soon
A move into the hardware business would be a huge shift for the Internet search giant - promises to turn the cell phone industry on its head. Fortune's Michal Lev-Ram reports.
By Michal Lev-Ram, Fortune reporter
October 10 2007: 10:16 AM EDT


SAN FRANCISCO (Fortune) -- Google built its empire on the search engine business, and now it appears to be quietly working on the product that Wall Street analysts say will help company shares break the $700 mark - the mobile phone.

Just hours after Lehman Brothers issued a report stating that the so-called Gphone "could launch as early as February 2008," Google (Charts, Fortune 500) announced it purchased Jaiku, a Helsinki-based company that develops blogging software for the mobile phone.


Google CEO Eric Schmidt sees the mobile market as the company's biggest opportunity for growth.

"The mobile world has much greater reach than the wired Internet," says Avi Greengart, a principal analyst with research firm Current Analysis. "Google sees this as the future."

Google's bold entry into the cell phone market promises to shake up the $127 billion wireless industry. The company has made no secret of its goal to make mobile phones free for consumers, where revenues are generated through advertising and no single carrier has a lock on users.

In the short run, the Gphone also threatens to dethrone the Apple iPhone as the wireless industry's newest star. Google and Apple (Charts, Fortune 500) have worked closely in the past, but the Gphone could test that cozy relationship and force Apple to make the iPhone a more open device than it is today.

A Google spokesperson would not comment on the company's plans, but there's no question that Internet giant has ambitious plans for the mobile market.

Google comes calling
The company has focused heavily in the last several years on developing services like Gmail, video, search and map applications for cell phones. Google has indicated too that it plans to bid on an upcoming auction of wireless spectrum.

Late last year, CEO Eric Schmidt told analysts that Google sees the mobile market as its biggest growth opportunity.

"The key for Google is getting better distribution," Greengart says. "They already have several of their applications ported for mobile use, but the problem is that consumers have to go and download them themselves, and in many cases they don't do that."

That's why many are speculating that Google is making its own handheld device for the masses. Lehman analyst Doug Anmuth says the Google phone will be a "low-priced, simple form factor handset with an operating system specifically designed for Internet applications."

He said that a prototype has already been developed and that Taiwan's HTC Corp. is the phone's likely manufacturer.