BY MIGUEL HELFT
New York Times
Published October 7, 2007
For more than two years, a large group of engineers at Google has been working in secret on a mobile phone project.
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As word about their efforts has trickled out, expectations in the technology world for what has been called the Google phone, or GPhone, have risen, the way they do for Apple loyalists ahead of a speech by Steve Jobs.
But the GPhone is not likely to be the second coming of the iPhone - and Google's goals are very different from Apple's.
Google wants to extend its dominance of online advertising to the mobile Internet, a small market today, but one that is expected to grow rapidly. It hopes to persuade wireless carriers and mobile phone makers to offer phones based on its software, according to people briefed on the project. The cost of those phones may be partly subsidized by advertising that appears on their screens.
Google is expected to unveil the fruit of its mobile efforts later this year, and phones based on its technology could be available next year.
Some analysts say that the Google project's affect on the wireless industry is not likely to be as profound, at least initially, as that of Apple's iPhone, whose revolutionary look and features have redefined consumer expectations for mobile phones.
"The iPhone was a milestone in terms of how people use a mobile device," said Karsten Weide, an analyst with IDC. "The GPhone, if it does come out, will help Google with distribution for their online services."
At the core of Google's phone efforts is an operating system for mobile phones that will be based on open-source Linux software, according to industry executives familiar with the project.
In addition, Google is expected to develop mobile versions of its applications that go well beyond the mobile search and map software it offers today. Those applications may include a Web browser to run on cell phones.
While Google has built phone prototypes to test its software and show off its technology to manufacturers, the company is not likely to make the phones itself, according to analysts.
In short, Google is not creating a gadget to rival the iPhone, but rather creating software that will be an alternative to Windows Mobile from Microsoft and other operating systems, which are built into phones sold by many manufacturers. And unlike Microsoft, Google is not expected to charge phone makers a licensing fee for the software.
"The essential point is that Google's strategy is to lead the creation of an open-source competitor to Windows Mobile," said one industry executive, who did not want his name used because his company has had contacts with Google. "They will put it in the open-source world and take the economics out of the Windows Mobile business."
Some believe another major goal of the phone project is to loosen the control of carriers over the software and services that are available on their networks.
"Google's agenda is to disaggregate carriers," said Dan Olschwang, the chief executive of JumpTap, a startup that provides search and advertising services to several mobile phone operators.
Google declined to comment on any specifics of its mobile phone initiative. But its chief executive, Eric E. Schmidt, has said several times that the cell-phone market presented the largest growth opportunity for Google. "We have a large investment in mobile phones and mobile phone platform applications," Schmidt said in an interview this year.
Industry analysts say that Google, which has little experience with complex hardware, faces significant challenges.
"Running a Web site and a search engine is one thing," said Weide of IDC. "But developing a phone is a whole different game. It will not be easy for them."
Weide added that Google's impact on the industry will depend to a large extent on its ability to sign deals with wireless carriers that distribute hundreds of millions of phones each year and often control what software and services run on them.
Some carriers, especially in the United States, are likely to give Google a cool reception. Companies like Verizon Wireless and AT&T have spent billions of dollars building and upgrading their networks, establishing relationships with customers, subsidizing handsets and creating their own mobile Internet portals. Now they want to make sure those investments pay off, in part, through mobile advertising, and they see Google and other search engines, who are after the same ad dollars, as competitors.
As a result, most carriers in the United States have chosen to shun the major search engines for now. Instead, they have promoted the search engines and ad systems of small technology companies like JumpTap and Medio Systems, whose services they can stamp with their own brands.