Posts Tagged ‘Verizon’

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Google Phone: Is this a good business idea?

October 12, 2007

Google (GOOG) is synonymous with search. The first thing that would come to everyone’s mind for search is ‘Google’. We would be lucky if we had a google search running to home to help us search our home keys, car keys, wallet, etc.

Google has built a huge domain of businesses based on the revenues generated from its core business ‘Search’. Google Mail, YouTube, Google Video (now defunct, thanks to their purchase of YouTube), Orkut, Google Office Suite all have been possible thanks to huge revenues generated by their ‘sponsored search results’ and ad revenues through ‘AdSense’ program.

The latest buzz doing the rounds of Wall Street and other major markets is that Google now plans to get into the Mobile Phone market and creating its own operating system. But I would only be discussing the latest rumor of Google Phone.

Do I think it’s a good business opportunity for Google to get into the Mobile Phone Business? No.

Do I think there is more revenue for Google through Google Phone? I doubt.

Wireless Industry in the United States is worth $130 billion. Major players include AT&T, Verizon, T-Mobile and Sprint (Nextel) provides wireless services to every nook & corner of the country. Each spectrum licenses for wireless service and broadcasting go for billions of dollars at every auction. Google sure has the cash flow to buy these spectrums. The other rumor doing the round is that even Apple is planning to bid for one of these spectrums. So, is it really worth for Google to compete with big players in wireless technology and the new entrant ‘Apple’? And, it won’t be long before Microsoft decides to enter the competition with a Smartphone running on their Windows Mobile Platform. And if you ask me why they would enter….the answer is Coz they can.

Google shares a warm relationship with Apple by providing their services on iPhone – Google Maps, YouTube. With the GPhone, it would be competing with the company that revolutionalised the Smartphone and Multimedia phone industry with iPhone. I don’t see that going down well for the Google – Apple relationship. It might open doors for Yahoo to tie-up with Apple in providing Maps, Search functionalities and much more.

Entering into the cell phone market involves great challenges for Google which includes, hardware manufacturing and software development. Foraying into the hardware business is something that Google probably won’t do. They could tie-up with Motorola, Samsung, Nokia for phones and forget their worries about manufacturing, logistics, demand and supply. They would primarily concentrate on the software development aspect which would focus on serving local ads to the consumer based on his/her location. This would be Google’s bread and butter for GPhone – serving local ads.

To serve local ads, it is imperative for Google to have small businesses and large business utilize Google’s mobile ad serving platform and pay hefty prices as marketing revenue to attract customers. But, will these business venture into this new form of marketing when the profit margins are going down in every sector which has forced them to lower prices in order to just survive the big players. How much money can a mom n pop store and local restaurants, pizzerias afford to shell out to attract new customers? Not much.

More so, how would you as an end user like if your phone frequently buzzed or vibrated serving you local ads. Consumers hate unwanted ads be it on TV or the on the web and hence have installed pop-up blockers and other anti-spam filters to get rid of the nuisance. Would GPhone allow the user to block unwanted local ads? Will the user be allowed to choose and make preferences in what ad content be delivered to their phone and at what times? Does a free phone service warrant us to get rid of the privacy in our lives just to save a few bucks? Google needs to answer these questions and much more before deciding to take huge step of coming out with GPhone.

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